## Facts

- Polytek Engineering Co., Ltd. (Polytek), a Hong Kong corporation, negotiated to sell rubber-recycling equipment to Hebei Import & Export Corp. (Hebei) for a project in China’s Hebei Province.
- Polytek separately negotiated with Jacobson, Inc. (Jacobson), a Minnesota manufacturer, to purchase the equipment Polytek would resell to Hebei.
- Polytek and Jacobson delayed finalizing their deal until Polytek’s contract with Hebei was completed.
- In February 1993, Jacobson communicated that it expected the Hebei contract to be attached to Polytek’s forthcoming purchase order.
- Polytek and Hebei entered into a written sales contract (the Hebei contract) that included an arbitration clause calling for arbitration before the China International Economic and Trade Arbitration Commission (CIETAC).
- In May 1993, Polytek sent Jacobson a one-page purchase order for the equipment and attached the Hebei contract, stating: “For detail specification and terms, please refer to the attached contract,” and that “[a]ll the terms and conditions should conform with the main contract attached.”
- After receiving the purchase order, Jacobson objected to a letter-of-credit provision in the Hebei contract, but the parties negotiated different letter-of-credit terms; Jacobson did not object to the arbitration provision.
- Jacobson supplied the equipment, which was delivered for Hebei’s project.
- Hebei claimed the equipment failed to meet specifications and obtained an award of damages against Polytek.
- Polytek then sought recovery from Jacobson, claiming Jacobson breached obligations found in the Hebei contract as incorporated into the Polytek–Jacobson transaction.
- Polytek initiated CIETAC arbitration against Jacobson and obtained an award of $1,700,367.41.
- Polytek filed a petition in the U.S. District Court for the District of Minnesota to confirm the foreign arbitral award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and Chapter 2 of the Federal Arbitration Act (FAA).
- Jacobson opposed confirmation, principally arguing it never agreed to arbitrate with Polytek because the arbitration clause appeared in Polytek’s contract with Hebei, not in a separate arbitration agreement signed by Jacobson.

## Issues

1. Whether Jacobson was bound to arbitrate with Polytek when Polytek’s purchase order incorporated by reference the attached Hebei contract containing a CIETAC arbitration clause, and Jacobson proceeded with the transaction after objecting only to letter-of-credit terms.
2. Whether Jacobson established any defense to recognition and enforcement under Article V of the New York Convention sufficient to defeat confirmation of the CIETAC award.

## Decision

- The court granted Polytek’s petition to confirm the CIETAC award and entered judgment enforcing the award in the amount of $1,700,367.41.
- The court found Jacobson agreed to arbitrate because Polytek’s purchase order clearly incorporated the attached Hebei contract, Jacobson expected the attachment, and Jacobson accepted the transaction while raising objections to other terms but not to arbitration.
- The court rejected Jacobson’s asserted grounds for non-enforcement under Article V of the New York Convention, concluding Jacobson did not carry its burden to prove a Convention defense that would bar recognition or enforcement.

## Legal Principles

- A party may be bound to an arbitration clause contained in an incorporated document when the operative agreement clearly refers to and includes that document, and the party manifests assent by accepting the transaction with notice of the incorporated terms.
- Under the FAA’s implementation of the New York Convention (9 U.S.C. §§ 201–208), foreign arbitral awards are presumptively enforceable in U.S. courts, and judicial review is limited.
- The party resisting confirmation bears the burden to prove a specific Article V ground for refusal, and those defenses are construed narrowly.
- The Article V(2)(b) public-policy defense applies only in exceptional circumstances—when enforcement would violate the forum’s most basic notions of morality and justice—not merely because a party disagrees with the result.

## Conclusion

The District of Minnesota confirmed Polytek’s CIETAC award because Jacobson accepted a purchase order that expressly incorporated the attached Hebei contract—including its CIETAC arbitration clause—and Jacobson failed to prove any New York Convention defense that would justify refusing recognition and enforcement of the foreign award.


Polytek Engineering Company, Limited v. Jacobson Companies, 984 F. Supp. 1238 (1997)