## Facts

- McCreary Tire & Rubber Co., a Pennsylvania distributor, and CEAT S.p.A., an Italian tire manufacturer, entered a distributorship arrangement for CEAT-branded tires and tubes in the United States.
- McCreary claimed it held exclusive U.S. distribution rights and alleged CEAT breached by enabling competing U.S. sales involving the same tread design under different labeling and by allowing U.S. sales of CEAT-labeled tires manufactured by a partially CEAT-owned Indian company.
- Prior to the formal contract, CEAT sent a letter stating it would use “best efforts” to secure the Indian company’s recognition of McCreary’s exclusive distributorship; McCreary alleged CEAT failed to do so.
- The written contract selected Italian law and required arbitration under International Chamber of Commerce rules in Europe, placing the arbitration agreement within the New York Convention framework.
- McCreary first sued CEAT in federal court in Massachusetts; that court compelled arbitration and stayed the action, and the First Circuit affirmed.
- McCreary then initiated a separate Pennsylvania foreign-attachment action seeking prejudgment attachment of CEAT-related funds at Mellon Bank to secure roughly $2.75 million in claimed damages.
- After removal to the Western District of Pennsylvania, CEAT moved to dissolve the attachment and sought dismissal, transfer, and a stay pending arbitration; the district court denied relief.
- CEAT appealed; by argument, arbitration proceedings had begun.

## Issues

1. Whether the district court’s refusal to stay the action pending arbitration (and related relief) was immediately appealable.
2. Whether the New York Convention and the parties’ arbitration clause required the federal court to stay the Pennsylvania action and refer the dispute to arbitration.
3. Whether maintaining a prejudgment foreign attachment in aid of a dispute committed to international arbitration was permissible where it would interfere with the Convention’s command to arbitrate.

## Decision

- The Third Circuit held the order denying a stay pending arbitration was appealable.
- The court concluded the arbitration agreement governed the dispute and fell within the New York Convention.
- The court reversed the district court and directed that the Pennsylvania proceedings be stayed in favor of arbitration.
- The court further directed that the foreign attachment be discharged or modified to the extent inconsistent with the stay and the Convention’s requirement that the merits be resolved in arbitration.

## Legal Principles

- When an action concerns a matter subject to a valid international arbitration agreement within the New York Convention, a federal court must stay litigation and refer the parties to arbitration.
- The Convention’s mandate, reinforced by federal arbitration policy, limits the use of litigation procedures that would sidestep or pressure around the agreed arbitral forum.
- Prejudgment remedies such as foreign attachment may not be maintained in a manner that conflicts with the court’s obligation to enforce the Convention by staying the case and channeling the dispute to arbitration.

## Conclusion

The Third Circuit enforced the parties’ ICC arbitration clause under the New York Convention, requiring the Pennsylvania federal action to be stayed and preventing McCreary from using foreign attachment as a parallel litigation tactic that would interfere with the agreed international arbitration process.


McCreary Tire & Rubber Co. v. CEAT S.p.A., 501 F.2d 1032 (3d Cir. 1974)