Sharp Corporation v. Hisense USA Corporation
Civil Action No. 2017-1648
D.D.C.Nov 13, 2017Background
- Sharp (Japanese) and Hisense (Chinese) entered a 2015 trademark‑licensing agreement requiring Singapore arbitration for disputes; SIAC emergency-arbitration rules were incorporated.
- Sharp terminated the TLA in April 2017, alleging quality and regulatory noncompliance by Hisense; Hisense sought emergency relief from SIAC to reinstate the TLA.
- An SIAC emergency arbitrator issued an interim award ordering Sharp to continue performance and barring Sharp from disparaging or approaching Hisense’s business associates or regulators about arbitrable matters (the challenged “gag” provision).
- Sharp filed in D.D.C. seeking a declaratory judgment that the emergency award (the gag provision) is unenforceable in the U.S. as contrary to U.S. public policy (First Amendment and right to petition) and sought a preliminary injunction.
- Hisense moved to dismiss for lack of subject‑matter and personal jurisdiction and argued the award does not violate public policy; court found federal subject‑matter jurisdiction but dismissed for lack of personal jurisdiction and failure to state a public‑policy First Amendment claim; also declined declaratory relief as discretionary given pending SIAC proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject‑matter jurisdiction over declaratory action attacking enforceability of foreign arbitration interim award | Sharp: Court may declare award unenforceable in U.S.; Declaratory Judgment Act plus Convention jurisdiction support suit | Hisense: Convention limits secondary courts; suit functionally seeks vacatur and is untimely | Court: Federal question jurisdiction exists (secondary‑jurisdiction enforcement context and FAA); Sharp seeks only non‑enforceability in U.S., not worldwide vacatur, so SMJ exists |
| Personal jurisdiction over Hisense in D.C. | Sharp: Hisense sells TVs in D.C. and files with FCC here, creating nexus to the dispute (communications to FCC and consumers) | Hisense: Contacts with D.C. are insufficiently related to challenge to foreign arbitration award; government filings don’t create jurisdiction | Court: Specific jurisdiction not established—the nexus is too attenuated; government‑contacts/fraud exception inapplicable; general jurisdiction absent |
| Whether SIAC emergency award violates U.S. public policy (First Amendment/right to petition) such that enforcement can be refused under New York Convention Article V | Sharp: The gag order is a prior restraint and bars petitioning regulators, so enforcement in U.S. would contravene core First Amendment public policy | Hisense: No state action; First Amendment is a restraint on government, not private arbitration; public‑policy defense is narrow | Court: No state action (judicial enforcement of private arbitration does not create constitutional state action); First Amendment public‑policy defense fails; public‑policy exception narrowly construed |
| Whether court should exercise discretion under Declaratory Judgment Act to decide case now | Sharp: Needs immediate U.S. declaration to prevent enforcement actions | Hisense: SIAC set‑aside/vacatur process is pending; prudence favors staying or dismissing | Court: Declines to exercise discretion to grant declaratory relief given ongoing SIAC proceedings; dismissal appropriate |
Key Cases Cited
- TermoRio S.A. v. Electranta S.P., 487 F.3d 928 (D.C. Cir. 2007) (describing primary vs. secondary jurisdiction under New York Convention and narrow scope of set‑aside power in secondary courts)
- Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274 (5th Cir. 2004) (secondary‑jurisdiction courts may only refuse enforcement under Convention defenses)
- Daimler AG v. Bauman, 134 S. Ct. 746 (U.S. 2014) (limits on general jurisdiction; corporation is ‘‘at home’’ only in limited forums)
- Shelley v. Kraemer, 334 U.S. 1 (U.S. 1948) (judicial enforcement can constitute state action but scope confined to race‑discrimination context)
- MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (U.S. 2007) (Declaratory Judgment Act leaves courts discretion whether to hear declaratory suits)
- Wilton v. Seven Falls Co., 515 U.S. 277 (U.S. 1995) (Declaratory Judgment Act authorizes but does not compel declaratory relief; courts have broad discretion)
- Davis v. Prudential Sec., Inc., 59 F.3d 1186 (11th Cir. 1995) (confirmation or enforcement of private arbitration award is not state action for constitutional purposes)
- Columbia Broadcasting Sys., Inc. v. Democratic Nat’l Comm., 412 U.S. 94 (U.S. 1973) (First Amendment restricts governmental action, not private conduct)