Encyclopaedia Universalis, S.A. v. Encyclopaedia Britannica, Inc.

Encyclopaedia Universalis, S.A. (EUSA) (plaintiff) and Encyclopaedia Britannica, Inc. (EB) (defendant) entered a license agreement that incorporated aspects of a two-party agreement. Under the two-party agreement, disputes would be referred to a board of arbitrators composed of one arbitrator selected by each party. If a disagreement arose between the party-appointed arbitrators, they would choose a third arbitrator together. If the two arbitrators failed to agree on a third arbitrator, the president of a designated court would make the appointment from a designated list. The license agreement applied these provisions to EB and EUSA, designated the president of the Tribunal de Commerce of Luxembourg (the president) as the appointing authority in case of disagreement, and stated that a third arbitrator must be selected from a list maintained by the British Chamber of Commerce. By 1999 the British Chamber of Commerce no longer kept such a list. In 1995 a royalty dispute between EB and EUSA was referred to arbitration. EUSA appointed Raymond Danzinger as its selected arbitrator, and EB appointed Robert Layton. In 1998 communications between Danzinger and Layton showed disagreement about which arbitration rules should govern. In 1999 Danzinger informed the president that he and Layton could not agree on a third arbitrator and asked the president to make an appointment. Danzinger stated that because the British Chamber of Commerce no longer maintained a list of arbitrators, the court should appoint any appropriate arbitrator. The president appointed Nicolas Decker. Layton opposed Decker’s appointment, asserting that a necessary step under the two-party agreement (and, therefore, the licensing agreement) was skipped because he and Danzinger never discussed the selection of a third arbitrator. Layton and EB refused to participate in any part of the arbitration process. A board of arbitrators consisting of Danzinger and Decker issued an award in 2002 in favor of EUSA. EUSA filed to enforce the award under the New York Convention in federal district court. EB asserted that the award was not enforceable under the New York Convention, because the board of arbitrators was improperly constituted.