## Facts

- A German shipping company contracted with a Japanese shipyard for the design and construction of a vessel.
- The shipbuilding contract contained an arbitration clause referring all disputes to arbitration before the Japan Shipping Exchange, Inc., under its maritime arbitration rules, with Tokyo as the seat and English as the language.
- The German buyer assigned its contractual rights/claims to a German assignee (plaintiff).
- The assignee alleged the shipyard charged an inflated price and excessive interest connected to the vessel’s final price.
- The assignee sued the shipyard in German courts and pleaded both contract-based allegations and tort-based claims under German law.
- The shipyard objected to German court jurisdiction, asserting the assignee was bound by the arbitration clause and that the clause covered the pleaded claims.

## Issues

1. Whether an assignee of contractual claims is bound by the arbitration clause contained in the assigned contract.
2. Whether an arbitration clause covering “all disputes” extends to tort claims that arise from the contractual relationship and its performance.
3. Whether, given a binding and applicable foreign-seated arbitration agreement, German courts must decline jurisdiction over the merits.

## Decision

- The court held the assignee was bound by the arbitration clause contained in the shipbuilding contract.
- The court construed the clause broadly and treated the pleaded tort claims as arising from, and closely connected to, performance of the contract.
- The court declined to adjudicate the merits in Germany and directed the dispute to arbitration in Tokyo pursuant to the parties’ agreement.

## Legal Principles

- Assignment of contractual rights generally carries with it the contract’s agreed dispute-resolution mechanism; absent contrary agreement, an assignee is bound to arbitrate disputes tied to the assigned rights.
- Broadly drafted arbitration clauses covering “all disputes” are interpreted to include non-contract claims (including tort) when the factual basis is essentially the same as the contractual grievance.
- A party may not avoid an arbitration agreement by re-characterizing contract-performance complaints as tort claims; courts may refuse jurisdiction to preserve the effectiveness of the arbitration agreement.
- Where a valid arbitration agreement provides for foreign-seated arbitration, the court should decline jurisdiction over covered claims and refer the parties to arbitration.

## Conclusion

The court enforced a Tokyo-seated institutional arbitration clause against a contract assignee and held that tort theories based on alleged overpricing and interest in contract performance fell within the clause’s “all disputes” language, requiring the German action to yield to arbitration.


Judgment of Feb. 17, 1989, XV Y.B. Com. Arb. 455 (Hanseatisches Oberlandesgericht Hamburg 1990)