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