Polytek Engineering Company, Limited v. Jacobson Companies

Polytek Engineering Co., Ltd. (Polytek) (plaintiff) negotiated with Jacobson, Inc. (Jacobson) (defendant) to purchase rubber-recycling equipment. Polytek was simultaneously in negotiations for the sale of the equipment to Hebei Import & Export Corp. (Hebei), to occur after the equipment was purchased from Jacobson. Polytek and Jacobson waited to enter an agreement until the contract between Polytek and Hebei was finalized. In February 1993, Jacobson sent a message to Polytek stating that it expected the Hebei contract to be attached to the purchase order that Polytek was to send to Jacobson for the equipment purchase. In May 1993, Polytek sent a purchase order to Jacobson with the Hebei contract attached. The purchase order incorporated the terms of the Hebei contract, and the Hebei contract contained an arbitration clause setting the forum in the Chinese International Economic and Trade Arbitration Commission (CIETAC). After receiving the purchase order, Jacobson refused to agree to a provision in the Hebei contract requiring a letter of credit be issued to Polytek, but Jacobson agreed to different letter-of-credit terms. The equipment was delivered to Hebei, but Hebei sued Polytek, claiming the equipment did not meet the agreed-upon specifications. Hebei was awarded damages from Polytek. Polytek then sought recovery against Jacobson for breaching the Hebei contract incorporated in the purchase order. Polytek was granted an award in an arbitration action by the CIETAC. Polytek then sued in the United States District Court for the District of Minnesota to have the Chinese arbitration award confirmed under the Federal Arbitration Act. Jacobson claimed that it never agreed to arbitrate disputes with Polytek.