CONTROL SCREENING LLC v. TECHNOLOGICAL APPLICATION AND PRODUCTION COMPANY (TECAPRO), HCMC-VIETNAM, Appellant.
No. 11-2896.
United States Court of Appeals, Third Circuit.
July 26, 2012.
687 F.3d 163
Argued May 7, 2012.
Donald P. Jacobs (Argued), Budd Larner, Short Hills, NJ, for Appellee.
Before: SLOVITER, ROTH, Circuit Judges, and POLLAK, District Judge.*
OPINION OF THE COURT
SLOVITER, Circuit Judge.
This dispute involves New Jersey-based Control Screening, LLC and Vietnam-
I.
Control Screening manufactures and sells X-ray and metal detection devices for use in public facilities around the world. Tecapro is a private, state-owned company that was formed by the Vietnamese government for the purpose of introducing advancеd technologies into the Vietnamese market.
In April 2010, Tecapro entered into a contract with Control Screening for the purchase of twenty-eight customized AutoClear X-ray machines with a total purchase price of $1,021,156. Each party now alleges that the other party has breached its obligations under the contract. The contract provides that:
In the event all disputes are not resolved, the disрutes shall be settled at International Arbitration Center of European countries for claim in the suing party‘s country under the rule of the Center. Decision of arbitration shall be final and binding [sic] both parties.
App. at 51. Tecapro initiated arbitration proceedings in Belgium under the Belgian Judicial Code in November 2010. In December 2010, Control Screening notified Tecapro of its intention to commence arbitration proсeedings in New Jersey.
In January 2011, Control Screening filed its petition to compel arbitration in the United States District Court for the District of New Jersey. The petition requested that the District Court compel arbitration of all disputed issues in New Jersey, appoint an arbitrator named by Control Screening, designate arbitration rules chosen by Control Screening, enjoin Tecapro from proceeding with arbitration in Belgium, and award attorney‘s fees and costs to Control Screening. Tecapro opposed the petition, arguing that the contract provided for arbitration in Europe and that, in any event, the District Court lacked personal jurisdiction over it.
The District Court determined that it had subject matter jurisdiction under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention“), Sept. 30, 1970, 21 U.S.T. 2517, and that it had personal jurisdiction over Tecapro because, inter alia, the company had “sufficient contacts with New Jersey that relate to and arise out of the 2010 contract.” App. at 6 n. 7.
The Court concluded that “the only reasonable interpretation of the arbitration clause is that Tecapro could have sought to arbitrate in Vietnam and Control Screening in New Jersey. The latter is what happened in this case and therefore the arbitration shall proceed in New Jersey.” App. at 6 n. 8. The District Court therefore granted Control Screening‘s request to compel arbitration. Tecapro appeals.
II.
Section 16(a)(3) of the Federal Arbitration Act (“FAA“),
We review a district court‘s decision with respect to personal jurisdiction de novo but review factual findings made in the course of determining personal jurisdiction for clear error. See Telcordia Tech Inc. v. Telkom SA Ltd., 458 F.3d 172, 176 (3d Cir.2006). We review questions concerning the applicability and scope of an arbitration agreement de novo. See Kaneff v. Del. Title Loans, Inc., 587 F.3d 616, 620 (3d Cir.2009).
“A district court decides a motion to compel arbitration under the same standard it applies to a motion for summary judgment.” Id. “The party opposing arbitration is given the benefit of all reasonable doubts and inferences that may arise.” Id. (internal quotation marks and citation omitted).
III.
Tecapro argues that the District Court erred by: (1) improperly exercising personal jurisdiction over it; (2) failing to consider Tecapro‘s facts and evidence; (3) placing the burden of proof on Tecapro rather than Control Screening; (4) refusing to hold an evidentiary hearing; and (5) finding that the parties had agreed to arbitrate in New Jersey rather than in Europe.
A. Personal Jurisdiction
Under New Jersey‘s analog to a long-arm statute,
Personal jurisdiction may be either general or specific.1 “Specific jurisdiction is established when a non-resident defendant has ‘purposefully directed’ his activities at a resident of the fоrum and the injury arises from or is related to those activities.” Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir.2001) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). In a contract case, such as this one, Control Screening must establish that Tecapro‘s contacts with the forum were instrumental in either the formation or the breach of the contract. Gen. Elec. Co., 270 F.3d at 150.
The relationship between Tecapro and Control Screening began in 2006 when Tecapro submitted a purchase order to Control Screening. Vu Khac Tien, then Vicе Director of Tecapro, wrote to Control Screening President and CEO Brad Conway “that this will be the first purchase of many....” App. at 303. Vu Khac Tien continued: Tecapro had “devoted six months of effort and expense to promoting Control Screening and AutoClear scanners ... helping to establish your products in our markets.” Id. Vu Khac Tien also noted that Tecapro had sent one of its em-
Only a few months later, Tecapro submitted a second purchase order to Control Screening. Then, in August 2007, Vu Khac Tien informed Control Screening that Tecapro intended to make yet another purchase. Tecapro alsо ordered individual scanner parts and upgrades from Control Screening in New Jersey on multiple occasions. The relationship between Tecapro and Control Screening flourished until Tecapro, at its request, became the exclusive distributor of Control Screening products in Vietnam in 2009.
In April 2010, Tecapro and Control Screening entered into the contract at issue here. The contract was signed by Conway in New Jersey. Tecapro‘s application for an irrevocable letter of credit in connection with the April 2010 contract named as payment beneficiary “Control Screening LLC, 2 Gardner Road Fairfield, New Jersey.” App. at 335. Additionally, several of the X-ray scanner components were shipped from Control Screening‘s products department in New Jersey. Finally, Vu Khac Tien sent at least eleven emails rеgarding the April 2010 contract to Conway or Control Screening Vice President Ken Voigtland, both of whose offices were located in New Jersey.2
Tecapro relies on this court‘s decision in Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Products Co., 75 F.3d 147 (3d Cir.1996), to argue that “specific jurisdiction cannot be asserted over a commercial buyer that has only tangential contact with
the seller in the seller‘s state.” Appellant‘s Br. at 18. In Vetrotex, however, the only contаcts between the defendant and the forum state were “some telephone calls and letters.” Id. at 152. Furthermore, the court in Vetrotex did not consider the parties’ prior dealings in its specific jurisdiction analysis because thirteen months had passed between the termination of the parties’ previous business relationship and the beginning of the new relationship at issue in that case, and because that previous relationship had been expressly tеrminated. Id. at 153.
Here, by contrast, Tecapro‘s contacts with New Jersey were not limited to communications such as “emails, fax and skype,” App. at 6 n. 7, but included the manufacture and assembly of major scanner components as well as the design of scanner software, all in New Jersey. See App. at 317. Additionally, the April 2010 contract marked the continuation of an uninterrupted four year business relationship between Tecapro and Control Screening, culminating in Tecapro becoming the exclusive distributor of Control Screening products in Vietnam. “It is these factors-prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing-that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.” Burger King Corp., 471 U.S. at 479.
Therе is ample evidence in this record that Tecapro purposefully directed its activities at New Jersey, and that virtually all of those activities arose from or related to the contract between the par-
B. Arbitration Forum
The parties agree that their contract dispute should be arbitrated but do not agree on where arbitration should take place. The arbitration clause at issue provides in relevant part that “disputes shall be settled at International Arbitration Center of European countries for claim in the suing party‘s country under the rule of the Center.” Apр. at 51. The “International Arbitration Center of European countries” does not exist. The central question in this case, therefore, is how to interpret this clause in order to determine the appropriate arbitration forum.
In 1958, the United Nations Economic and Social Council adopted the New York Convention. In 1970, the United States acceded to the treaty, and Congress passed Chapter 2 of the FAA,
Section 201 of the FAA provides that the Convention shall be enforced in United States courts. See
The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.
Art. II(3).
“[A]n agreement to arbitrate is ‘null and void’ only (1) when it is subject to an internationally recognized defense such as duress, mistake, fraud, or waiver, or (2) when it contravenes fundamental policies of the forum state.” Rhone Mediterranee Compagnia Francese di Assicurazioni E Riassicurazioni v. Lauro, 712 F.2d 50, 53 (3d Cir.1983) (citation omitted)
In this case, the parties mistakenly provided that disputes were to be settled at “International Arbitration Center of European countries,” which is non-existent. “At” is a preposition defined, in part, as “presence or occurrence in a particular place.” See Webster‘s Third New International Dictionary Unabridged 136 (1993). Thus, the parties agreed to arbitrate in a particular place-namely the “International Arbitration Center of European countries” that does not exist; a result that could have come about only through mistake.5
Since the parties mistakenly designated an arbitration forum that does not exist, the forum selection provision of the arbitration agreement is “null and void” under Article II(3). See Rosgoscirc v. Circus Show Corp., No. 92-Civ.-8498, 1993 WL 277333, at *4 (S.D.N.Y. July 16, 1993) (invalidating an arbitration forum selection provision as “null and void” under Article II(3) of the New York Convention where the parties agreed to arbitrate at “the International Arbitration in the Hague (the Netherlands),” a non-existent entity). Even though the forum selection portion of the arbitration clause is “null and void,” there is sufficient indication elsewhere in the contract of the parties’ intent to arbitrate, meaning that the parties’ agreement to arbitrate remains in force. See, e.g., Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 890 (6th Cir.2002) (“The validity of the arbitration agreement, thеrefore, turns on whether the agreement to arbitrate all disputes was separate and severable from the [invalid] forum selection clause.“). Section 11.0 of the contract is entitled “ARBITRATION.” App. at 50. The second sentence of Section 11.2 of the contract states that: “Decision of arbitration shall be final and binding [sic] both parties.” App. at 51. Finally, Section 11.3 of the contract provides that the losing party shall bear “[a]ll expenses in connection with the arbitration.” Id. Furthermore, both parties have expressed a willingness to arbitrate their dispute notwithstanding the uncertain meaning of the forum selection provision. Thus, we find that the invalid forum selection provision is severable from the rest of the arbitration agreement.
Because the forum selection provision is “null and void,” the otherwise valid arbitration agreement is treated аs if it does not select a forum. Under Section 206 of the FAA, a district court is empow-
Thus, when an arbitration agreement lacks a term specifying location, a district court may compel arbitration only within its district. See Jain v. de Mere, 51 F.3d 686, 690-91 (7th Cir.1995) (holding that a district court has the power to compel arbitration in the district where suit was brought where the international agreement failed to specify an arbitration forum); see also Bauhinia Corp. v. China Nat‘l Mach. & Equip. Imp. & Exp. Corp., 819 F.2d 247, 249-50 (9th Cir.1987) (same). Because the District Court here compelled arbitration within its own district (even though it based its deci-
sion on other grounds), this court will affirm the District Court‘s Order. See Nicini v. Morra, 212 F.3d 798, 805 (3d Cir.2000) (“We may affirm the District Court on any grounds supported by the record.“).
IV.
Accordingly, we will affirm the judgment of the District Court сompelling arbitration to proceed in New Jersey.
Sharon BURNETTE; Pamela K. Burroughs; Frank Carter, Jr.; Edward Conquest; Donald W. Hoffman; Monty King, formerly known as Imond Monty Hicks; Larry Macon; Marvin McClain; Benjamin Purdue, Jr.; Henry Stump; Barbara Tabor, Suing on behalf of themselves and all others similarly situated, Plaintiffs-Appellants,
v.
Helen F. FAHEY, In her capacity as Chair of the Virginia Parole Board; Carol Ann Sievers, In her capacity as Vice-Chair of the Virginia Parole