General Electric Co. v. Deutz AG

In 1993 General Electric (plaintiff), a New York corporation with facilities in Pennsylvania, contracted with Motoren-Werke Mannheim AG (Motoren-Werke), a German corporation, to design high-horsepower diesel engines for trains. The contract contained an arbitration clause. Motoren-Werke’s parent company, Deutz AG (defendant), guaranteed the performance of the contract. In 1997 a dispute arose between the parties about the performance of the contract, and in 1998 General Electric sued Deutz in the United States District Court for the Western District of Pennsylvania for breach of contract, seeking damages resulting from Deutz’s failure to provide resources for Motoren-Werke to fulfill its contractual obligations. Deutz sought to dismiss the action for lack of personal jurisdiction and compel arbitration pursuant to the contract. Deutz also commenced arbitration proceedings before the International Arbitration Association in London. While the arbitration proceeding was pending, the district court determined that Deutz had sufficient contacts with the state of Pennsylvania to support personal jurisdiction, and a jury separately found that because Deutz was not a party to the Motoren-Werke contract, Deutz was not entitled to arbitration. Deutz then asked the England and Wales High Court of Justice (the English High Court) to enjoin the proceedings in the Western District of Pennsylvania while the arbitration proceeded in London. The English High Court refused to issue the injunction, deferring to the federal district court and indicating it would not disturb its ruling. Thereafter, the federal district court enjoined Deutz from seeking further relief in the English High Court. A few months later, the arbitration panel determined that it did not have jurisdiction over the dispute. Deutz appealed the district court’s orders.