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Arabian Motors Group W.L.L. v. Ford Motor Company
2:16-cv-13655
E.D. Mich.
Apr 25, 2018
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Background

  • In 2005 Arabian Motors (foreign dealer) and Ford (U.S. manufacturer) entered a Resale Agreement containing an arbitration clause for disputes.
  • In 2016 Ford initiated arbitration under the agreement; Arabian Motors objected, arguing the Motor Vehicle Franchise Contract Arbitration Fairness Act (Fairness Act), 15 U.S.C. § 1226, bars compelled arbitration unless parties consent in writing after a dispute arises.
  • The arbitrator issued an Interim Award rejecting Arabian Motors’ Fairness Act argument and finding the Act does not apply to contracts between domestic manufacturers and foreign dealers; he asserted jurisdiction.
  • The parties proceeded and the arbitrator entered a Final Award in favor of Ford, incorporating the Interim Award.
  • Arabian Motors moved to vacate the Final Award under 9 U.S.C. § 10(a), claiming the arbitrator manifestly disregarded the law by applying the Fairness Act to bar arbitration and by exercising jurisdiction; the district court previously rejected the same Fairness Act argument in denial of preliminary relief.
  • The district court denied Arabian Motors’ motion to vacate, granted Ford’s motion to confirm the Final Award, and directed Ford to submit a proposed judgment; the court held the arbitrator did not manifestly disregard the law and reiterated its earlier conclusion that the Fairness Act does not apply to this contract.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether the Fairness Act bars arbitration of this dispute Fairness Act requires post-dispute written consent; Arabian Motors did not consent, so arbitration cannot be compelled Fairness Act does not apply to contracts between domestic manufacturers and foreign dealers; arbitration clause remains enforceable Court and arbitrator: Fairness Act does not apply here; arbitration permissibly compelled
Whether the arbitrator had jurisdiction to decide the dispute Arbitrator lacked jurisdiction if Fairness Act applies and Arabian Motors did not consent post-dispute Arbitrator had jurisdiction because Fairness Act inapplicable and arbitration clause governs Court: Arbitrator had jurisdiction; rejection of jurisdictional challenge affirmed
Whether the Final Award should be vacated for "manifest disregard of the law" Arbitrator manifested disregard by wrongly applying (or misapplying) the Fairness Act and ignoring jurisdictional limits Arbitrator properly interpreted law; no manifest disregard; Section 10 controls vacatur standards Court: No manifest disregard; denial of vacatur and confirmation of award
Standard for vacatur — applicability of "manifest disregard" Arabian Motors relies on manifest-disregard standard to attack award Ford contends only statutory §10 grounds apply (Hall Street suggests §10 exclusive) Court did not resolve whether manifest-disregard is independent; found Arabian Motors fails even under that standard

Key Cases Cited

  • Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576 (2008) (addressing the exclusivity of statutory vacatur grounds under the FAA)
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Case Details

Case Name: Arabian Motors Group W.L.L. v. Ford Motor Company
Court Name: District Court, E.D. Michigan
Date Published: Apr 25, 2018
Docket Number: 2:16-cv-13655
Court Abbreviation: E.D. Mich.