## Facts

- M.S.A., a Belgian company, and Company M, a Swiss business, entered into an exclusive distributorship agreement covering territory that included Belgium.
- The contract contained (1) an arbitration clause and (2) a choice-of-law clause selecting Swiss law.
- A dispute arose under the distributorship relationship, and M.S.A. filed suit against Company M in Belgium rather than initiating arbitration.
- Company M invoked the arbitration clause and sought referral to arbitration under Article II(3) of the New York Convention.
- M.S.A. relied on a Belgian statute governing exclusive distributorships involving Belgian territory.
- The Belgian statute provided that when such a dispute is brought before a Belgian court, Belgian law applies, and it further stated that its provisions apply notwithstanding agreements to the contrary.
- The Belgian trial court refused to compel arbitration, concluding that the dispute involved a subject matter not capable of settlement by arbitration under Belgian law for purposes of the New York Convention.
- Company M appealed the trial court’s refusal to the Brussels Court of Appeal.

## Issues

1. Whether a dispute arising from an exclusive distributorship involving Belgian territory, subject to a mandatory Belgian distributorship statute, is “capable of settlement by arbitration” for purposes of enforcing an arbitration agreement under the New York Convention.
2. Whether the Belgian statute’s mandatory application (including its “notwithstanding agreements to the contrary” language) permits a Belgian court to deny referral to arbitration under Article II(3) of the New York Convention.
3. Whether the arbitration clause and Swiss choice-of-law clause could be given effect when their operation would avoid application of the Belgian distributor-protection regime in a case brought before Belgian courts.

## Decision

- The Brussels Court of Appeal upheld the refusal to compel arbitration.
- The court accepted the view that, in light of the mandatory Belgian exclusive-distributorship statute, the dispute was not arbitrable under Belgian law for New York Convention purposes.
- As a result, the Belgian courts retained jurisdiction over the dispute rather than referring the parties to arbitration.

## Legal Principles

- Article II(3) of the New York Convention requires referral to arbitration unless the agreement is “null and void, inoperative or incapable of being performed,” but a court may deny referral when the dispute concerns a category of claims that domestic law treats as non-arbitrable.
- A forum’s mandatory distributor-protection legislation may be treated as controlling when the statute directs application of forum law once a Belgian court is seised, even if the contract selects a different governing law.
- Where domestic law characterizes certain statutory protections as non-waivable and reserves their adjudication to state courts, an arbitration clause may be treated as ineffective for that dispute at the referral stage.
- A choice-of-law clause selecting foreign law does not necessarily displace overriding mandatory rules that the forum legislature has declared applicable notwithstanding party agreement.

## Conclusion

In *M.S.A. v. Company M*, the Brussels Court of Appeal declined to refer an exclusive-distributorship dispute to arbitration under the New York Convention, agreeing with the trial court that Belgium’s mandatory distributorship statute—applicable to distributorships involving Belgian territory and stated to apply notwithstanding contrary agreements—meant the dispute was not capable of settlement by arbitration under Belgian law, leaving the Belgian courts to hear the case.


M.S.A. v. Company M, 14 Yearbook Comm. Arb. 618 (1989)