Originally from Dispute Resolution Journal

INTERNATIONAL-DISTRIBUTORSHIP AGREEMENT- ARBITRATION CLAUSE-BINDING ARBITRATION-MOTION TO CONFIRM AWARD-FEDERAL ARBITRATION ACTUNITED NATIONS CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

An arbitration clause which provides that disputes "shall be finally settled by arbitration" is sufficient to give a court power to enforce an arbitration award. Daihatsu Motor Co. Inc. entered into a distributorship agreement with Terrain Vehicles lnc. Under the terms of the agreement, which contained an arbitration provision, Terrain was to distribute in a 15-state region certain off-road vehicles manufactured by Daihatsu. Terrain later filed suit against Daihatsu alleging violations of various state motor vehicle franchise acts and the Racketeer Influenced and Corrupt Organizations Act. The matter was submitted to arbitration and the panel issued an award dismissing Terrain's claims. Daihatsu moved to confirm the award under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Terrain opposed on the ground that the distributorship agreement did not provide for confirmation.

The court considered the requirements for a court to enforce an arbitral award under Chapter 1 of the Federal Arbitration Act and Chapter 2, which contains legislation implementing the Convention. The court noted that the grounds for refusing to recognize or enforce an award in Article V of the Convention did not apply in this case. It found, however, that section 9 of Chapter 1 contained a limitation not expressed in section 207 of Chapter 2. The section 9 limitation provides that "[ilf the parties in their agreement have agreed that a judgment of the court shall be entered on the award made pursuant to the arbitration . . . any party . . . may apply to the court .. . for an order confirming the award." The court found that the limitation was "not contrary to any provision of Chapter 2" because section 9 "can be satisfied even if the contract contains no express language authorizing the entry of judgment."