## Facts

- The Republic of the Philippines and the National Power Corporation (NPC) sued Westinghouse Electric Corporation, its subsidiary Westinghouse International Projects Company, and Burns and Roe Enterprises over the design and construction of a 600‑megawatt nuclear power plant in Bataan begun in 1976.
- Plaintiffs alleged a wide range of wrongdoing, including breach of contract, fraud, negligence, civil conspiracy, RICO, antitrust violations, and related state-law claims.
- Plaintiffs alleged the contracts were obtained during the Marcos regime through improper influence and bribery involving a “special sales representative.”
- The prime contract between NPC and Westinghouse contained an arbitration clause (Article 24) providing for international arbitration of disputes connected to the contract.
- Defendants moved to stay the litigation and compel arbitration under § 3 of the Federal Arbitration Act (FAA), and alternatively sought a discretionary stay under the court’s docket-management authority.

## Issues

1. Whether FAA § 3 required a stay of claims “referable to arbitration” under the prime contract’s arbitration clause.
2. Whether the arbitration clause covered plaintiffs’ various tort and statutory claims in addition to contract claims.
3. Whether allegations that the overall contract was procured through bribery and corruption defeated arbitration, or instead were for the arbitrators under the separability doctrine.
4. Whether any non-arbitrable claims should nonetheless be stayed under the court’s inherent authority pending arbitration.

## Decision

- The court compelled arbitration and stayed litigation of virtually all claims against Westinghouse under FAA § 3 pursuant to Article 24.
- The court held that allegations of bribery and corruption challenged the validity of the contract generally, not the arbitration clause specifically, and therefore were for the arbitrators to decide.
- The court held that one tort claim for tortious interference with fiduciary duties (Count 3) and the portion of the conspiracy count premised on that tort (part of Count 8) were not subject to the arbitration clause.
- Those non-arbitrable portions were not stayed under FAA § 3 and were allowed to proceed in federal court.

## Legal Principles

- FAA § 3 requires a federal court to stay litigation of issues covered by a written arbitration agreement once the court is satisfied the issues are referable to arbitration.
- Broad arbitration clauses covering disputes “arising out of or relating to” a contract reach not only contract claims but also closely related tort and statutory claims; doubts about scope are resolved in favor of arbitration.
- Under the separability doctrine (as in *Prima Paint*), a challenge that the contract as a whole was induced by fraud or illegality is for the arbitrator unless the party specifically challenges the formation or validity of the arbitration clause itself.
- Claims that are conceptually independent from the contract’s interpretation or performance may fall outside the arbitration agreement and proceed in court, even while related arbitrable claims are stayed.

## Conclusion

The court enforced the contract’s arbitration provision under FAA § 3, sending most claims to arbitration despite allegations that the overall contract was corruptly procured, while permitting a narrow set of fiduciary-duty-based tort allegations (and related conspiracy theory) to continue in federal court because they were outside the arbitration clause’s scope.


Republic of the Phil. v. Westinghouse Elec. Corp., 714 F. Supp. 1362 (D.N.J. 1989)