1. MMI v. IMS 黄昳、练欣怡、李诗源、吴茵茵、 陈倩雯、李艳华

2. 黄昳 Facts

3. (1993) Plaintiff Defendant MMI (U.S.) entered an licensing agreement granted exclusive IMS (Italy) sales right for Mammography units (1996) The equipment was seized by the Food and Drug Administration ("FDA") because of noncompliance with the GMP (MMI declared the contract avoided (IMS denied responsibility and because of nonconformity of The. alleged IMS's breach was not goods) "fundamental.“ under the CISG ) The parties entered into arbitration and an award of $357,000 was given to MMI (1999) IMS refused to perform the arbitral award,MMI sued to enforce the award

4. Legal issues 练欣怡

5. General legal issue Whether the arbitrators exceed their powers? Whether the arbitration decision was overruled? Whether the arbitration decision was violations of public policy? Whether the arbitration decision based on a manifest disregard of the law? Specific legal issue

6. 李诗源、吴茵茵、陈倩雯 Reasoning

7. 李诗源 Reasoning 1 The FAA ( 美国联邦仲裁法 the United States Arbitration Act enacted in 1925) states: a) In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration (1) Where the award was procured by corruption, fraud, or undue means. (2) Where there was evident partiality or corruption in the arbitrators, or either of them. (3) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.

8. (4) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. (5) Where an award is vacated and the time within which the agreement required the award to be made has not expired the court may, in its discretion, direct a rehearing by the arbitrators. Relevant cases: W.R.Grace & Co. v. Local Union (1983) Wilko v. Swan (1953) 490 U.S. 477, 109 S. Ct. 1917, 104 L. Ed. 2d 526 (1989). The arbitrators “exceed their powers” includes: 1.Violations of public policy 2. Awards based on a manifest disregard of the law

9. IMS generally contends: 1.The arbitrators ’ decision violates public policy of the international global market. 2.The arbitrators exhibited “ manifest disregard of international sales law. ” Specifically contends: 1.The arbitrators misapplied the CISG 2.The arbitrators refused to follow a German Supreme Court case interpreting the CISG.

10. 吴茵茵 Reasoning 2 The arbitrators made their decision regard of law

11. 1.Nonconformity CISG article 35(2): # except where the parties have agreed otherwise # ordinary purpose # particular purpose made known to the seller (no) *

12. 2. Avoid Fundamental breach (Article 49) Substantially deprived (Article 25) Expectation of MMI

13. IMS’s objection on the application of the CISG: Argument 1: No “fundamental” breach ↓ No avoidance (Legal basis: the CISG Article 49) 陈倩雯 Reasoning 3

14. IMS’s objection on the application of the CISG: Argument 2: CISG did not require IMS to furnish MMI with equipment that complied with the United States GMP regulations (the Goods Manufacturing Practices for Medical Device Regulations). Supporting evidence: German Supreme Court Case over CISG

15. German Supreme Court’s holdings: 1. General rule A seller is generally not obligated to supply goods that conform to public laws and regulations enforced at the buyer’s place of business. *An opposite inference from CISG Art. 35 *CISG seems to be silent on the obligation at issue

16. German Supreme Court’s holdings: 2. Exceptions accompanied with the general rule: a.If the public laws and regulations of the buyer’s state are identical to those enforced in the seller’s state; b.If the buyer informed the seller about those regulations; or c.If due to “special circumstances,” such as the existence of a seller’s branch office in the buyer’s state, the seller knew or should have known about the regulations at issue.

17. The third circumstance should be applied in this case. Reason: IMS entered into the 1993 agreement ( the exclusive licensing agreement signed in 1993 in this case) IMS was, or should have been, aware of the GMP regulations ( the third circumstance) ↓ the general rule did not apply to this case The arbitrators’ view :

18. 李诗源 Reasoning 4 The court ’ s opinion: Concerning IMS ’ argument at the beginning, it is clear that the arbitrators carefully considered that decision and found that this case fit the exception and not the general rule drawn from the German case. It seems that the judge is in favor of the arbitrators ’ opinion. Comprehensively speaking: The arbitrators ’ decision was neither contrary to public policy nor in manifest disregard of international sales law.

19. Decision 练欣怡

20. The application for order conforming arbitral award is granted. The defendant was in fundamental breach of the contract. The arbitration panel did not exceed its authority.

21. Comment 李艳华

22. Part one: The court treated in the German decision as precedent. Part two: The American courts changed its attitude towards the arbitration.

23. Part 1:The court treated the German decision as precedent. It treated the CISG as a kind of international common law. This is the first time occurred in the U.S. and one of the few times that it has occurred in Convention jurisprudence. Proceeding in this manner is part of Article 7's directive

24. Part 1:The court treated the German decision as precedent. If the arbitrator's holding stands for the proposition that the German interpretation of Article 35 was binding, then this is going a bit too far. It would be a better analysis if one is to look at the text of Article 35, and then consider it according to the general principles of the Convention and the German court's interpretation of the Article.

25. Part 2 : The America courts changed its attitude towards the arbitration. At the very beginning, the federal court was hostile to the arbitration. The federal court stated in the case (Moses v. Mitsubishi), “it’s a federal policy to prefer the arbitration.”

26. Part 2 : The America courts changed its attitude towards the arbitration. With a sharp increase in the number of cases, the courts change their attitudes towards arbitration. The enormous pressure decreased the efficiency of a case settlement, which asked for more attention towards the arbitration and mediation.

27. The Federal Arbitration Act http://www.chamber.se/arbitration /shared_files/laws/arbitract_us_c ont.html