## Facts

- Tennessee Imports, Inc., a Tennessee corporation, entered a distributorship agreement with Prix Italia S.R.L., an Italian manufacturer, granting Tennessee Imports exclusive North American sales rights for certain pricing and labeling machines.
- The agreement contained a dispute-resolution clause requiring contract-related disputes to be submitted to arbitration before the Arbitration Court of the Chamber of Commerce in Venice, Italy.
- Tennessee Imports alleged the contract remained in effect and that Prix gave notice of termination in 1989.
- Tennessee Imports alleged that in 1989 Prix’s export manager, Pier Paulo Filippi, traveled in the United States to discuss distribution rights for Prix products and made statements implying Tennessee Imports had no relationship with Prix.
- Tennessee Imports sued Prix for breach of contract and sued Filippi for tortious interference with contract.
- Defendants moved to dismiss based on the arbitration clause (and related venue/jurisdiction arguments), and Tennessee Imports sought leave to amend to add an additional related corporate defendant.

## Issues

1. Whether the contract’s Venice arbitration clause was valid and enforceable under the Federal Arbitration Act and the New York Convention and, if so, whether the court had to refer the signatory parties’ dispute to arbitration.
2. Whether claims against Filippi, a non-signatory employee, had to be dismissed or otherwise halted in light of the arbitration clause governing the signatory parties’ dispute.
3. Whether asserted hardship, the nonjudicial nature of the named arbitral body, or unequal bargaining power rendered the arbitration clause unenforceable.

## Decision

- The court enforced the arbitration clause as to Prix and required the parties’ contract dispute to be resolved through arbitration in Venice.
- The court dismissed the claims against Prix in favor of arbitration.
- The court declined to compel arbitration of the claims against Filippi because he was not a party to the contract, but stayed the action against him pending completion of the Prix–Tennessee Imports arbitration.
- The court addressed the proposed amendment to add another defendant in a manner consistent with preserving arbitration as the primary forum for disputes grounded in the distributorship agreement.

## Legal Principles

- Written agreements to arbitrate international commercial disputes seated abroad are generally enforceable under the FAA and the New York Convention, subject only to narrow defenses.
- An arbitration clause covering disputes “related to” an agreement is construed broadly; doubts about scope are resolved in favor of arbitration.
- The fact that arbitration proceeds before a nonjudicial tribunal does not undermine an arbitration clause; arbitration, by design, is a nonjudicial method of dispute resolution.
- Expense or inconvenience of litigating (or arbitrating) abroad ordinarily does not render an international arbitration agreement “null and void” or incapable of performance under the New York Convention.
- General allegations of unequal bargaining power, without a showing of fraud, duress, or coercion directed to the arbitration agreement, are insufficient to invalidate an arbitration clause in a commercial setting.
- When a non-signatory is not bound by the arbitration agreement, a court may stay related claims against the non-signatory to avoid inconsistent results and to prevent interference with the arbitration of the core contract dispute.

## Conclusion

The court enforced an international arbitration clause requiring arbitration in Venice, dismissing the contract claims against the signatory foreign corporation and staying closely related tort claims against a non-signatory employee while arbitration proceeded.


Tennessee Imports, Inc. v. Filippi, 745 F. Supp. 1314 (M.D. Tenn. 1990)