Principal (Italy) v. Distributor (Belgium)

A Belgian distributor (defendant) contracted with an Italian principal (plaintiff) to sell products in a certain area. The contract contained an arbitration clause stating that arbitration would be conducted according to the rules of the International Chamber of Commerce (ICC) in Paris by an arbitrator appointed pursuant to the ICC rules. The contract also stated that Italian law would govern the substance of the arbitration and that, in the event one of the parties wanted to terminate the contract, three months’ notice to the other party was sufficient. Several years after entering the contract, the principal notified the distributor that it intended to terminate the contract in three months’ time. The distributor resisted the termination, arguing that the principal did not follow mandatory provisions of Belgian law, such as the requirement that 36 months’ notice be provided for the termination of a distributorship contract. The distributor filed an action against the principal in a Belgian court. The principal refused to participate, arguing that the matter must be arbitrated and that the Belgian court had no jurisdiction over the dispute. While the Belgian court case was pending, the principal filed a request to arbitrate with the ICC. The distributor asserted to the ICC that although the parties selected Italian law to apply, the dispute was also subject to the mandatory Belgian legal provisions.