Ledee v. Ceramiche Ragno

684 F.2d 184 (1982)

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Ledee v. Ceramiche Ragno

United States Court of Appeals for the First Circuit
684 F.2d 184 (1982)

Facts

In 1964, an Italian ceramics company, Ceramiche Ragno (defendant), entered a distributorship agreement with two Puerto Rican corporations and an individual citizen, including Ledee (Puerto Ricans) (plaintiffs). The agreement allowed the Puerto Ricans to sell Ceramiche Ragno’s ceramic tiles in the Antilles. The agreement contained Paragraph 9, an arbitration clause requiring parties to submit any dispute about the interpretation and application of the agreement to an arbiter selected by the president of the Tribunal of Modena, Italy. In March 1981, the Puerto Ricans brought a suit in the superior court of Puerto Rico, arguing Ceramiche Ragno had breached the 1964 agreement by unjustifiably terminating the distributorship. Ceramiche Ragno removed the case to the district court for Puerto Rico. The district court ordered arbitration under Paragraph 9 of the agreement, finding that Chapter 2 of the Federal Arbitration Act compelled arbitration between Ceramiche Ragno and the Puerto Ricans. The Puerto Ricans appealed to the First Circuit, arguing the district court could not compel arbitration under the Federal Arbitration Act. The Puerto Ricans specifically noted that under 9 U.S.C. § 201, a trial court cannot compel arbitration if an arbitration clause is null and void. The Puerto Ricans pointed to the Puerto Rican Dealers Act, arguing that the Dealers Act prohibits terminations of dealership contracts like the one with Ceramiche Ragno without just cause. The Puerto Ricans argued that the null-and-void clause in 9 U.S.C. § 201 demonstrates a legislative intent to incorporate the protections of the Dealers Act as a shield against arbitration under the New York Convention. The Puerto Ricans argued that the district court, therefore, erred by compelling arbitration given that the arbitration clause was unenforceable under Puerto Rican law.

Rule of Law

Issue

Holding and Reasoning (Coffin, C.J.)

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