Scherk, a German citizen, and Alberto-Culver, a US company, entered into a contract for the transfer of the ownership of Scherk's enterprises to Alberto-Culver, along with all rights held by these enterprises to trademarks in cosmetic goods. The contract contained an arbitration agreement which provided for International Chamber of Commerce (“ICC”) arbitration in Paris. Alberto-Culver commenced an action for damages and other relief in Federal District Court in Illinois. In response, Scherk, filed a motion inter alia to stay the action pending arbitration in Paris pursuant to the agreement of the parties. The District Court granted a preliminary order enjoining Scherk from proceeding with arbitration. The United States Court of Appeals for the Seventh Circuit affirmed. Scherk filed a petition for a writ of certiorari before the United States Supreme Court.
The Supreme Court reversed the decision of the Court of Appeals, found that the arbitration agreement was enforceable and remanded the case to lower courts. In so holding, the Court found that the United States’ adoption and ratification of the NYC and its Article II(1) NYC provide strong evidence of congressional policy to enforce international arbitration agreements. It further held that the agreement of the parties to arbitrate any dispute arising out of their international commercial transaction was to be respected and enforced by the federal courts in accordance with the explicit provisions of the Federal Arbitration Act.
Source: http://www.newyorkconvention1958.org/index.php?lvl=notice_display&id=654
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