Marks 3-Zet-Ernst Marks GmBh & Co. KG v. Presstek, Inc.

455 F.3d 7, 2006 U.S. App. LEXIS 17272, 2006 WL 1892255
CourtCourt of Appeals for the First Circuit
DecidedJuly 11, 2006
Docket05-2794
StatusPublished
Cited by43 cases

This text of 455 F.3d 7 (Marks 3-Zet-Ernst Marks GmBh & Co. KG v. Presstek, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marks 3-Zet-Ernst Marks GmBh & Co. KG v. Presstek, Inc., 455 F.3d 7, 2006 U.S. App. LEXIS 17272, 2006 WL 1892255 (1st Cir. 2006).

Opinions

LYNCH, Circuit Judge.

This case raises some unusual issues about actions seeking to compel international arbitration.

The plaintiff, Marks 3-ZeWErnst Marks GMBH (“Marks”), a German company, and the defendant, Presstek, Inc. (“Pres-stek”), a Delaware corporation with its principal place of business in New Hampshire, in 2000 entered into a commercial agreement, which included an arbitration clause.

The arbitration clause is governed by Chapter Two of the Federal Arbitration Act (FAA), 9 U.S.C. §§ 201-208, which implements the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38, reprinted following 9 U.S.C. § 201 (ratified by the United States on September 30, 1970). See Ledee v. Ceramiche Ragno, 684 F.2d 184, 186 (1st Cir.1982). Chapter One of the FAA, 9 U.S.C. §§ 1-16, applies to proceedings under Chapter Two, to the extent that there is no conflict. See 9 U.S.C. § 208.

The district court dismissed Marks’ petition to compel arbitration because it understood the relief Marks was seeking was unavailable on Marks’ pleadings. In its petition, Marks mentioned only a particular arbitral body, the Permanent Court of Arbitration (PCA) at The Hague in the Netherlands, and in a later pleading, it stated that “[t]he order sought from this court by Marks ... will address and resolve the PCA’s uncertainty” as to “whether it has the authority to act.” Based on these pleadings, Marks sought an order to compel arbitration of the dispute before the PCA, under a set of rules which the PCA had already stated were not the rules that would allow it to exercise jurisdiction over the arbitration, under the PCA’s own procedural guidelines. After dismissal of its case, Marks then attempted to change course, on a motion to the district court for reconsideration. The court denied the motion. We affirm the judgment of dismissal.

I.

The basic facts relevant to this appeal are undisputed. Presstek and Marks supply products for the printing industry. In December 2000, Presstek and Marks entered into a contract whereby Marks agreed to market Presstek’s products in parts of Europe. Under the contract, neither party was permitted to terminate the contract for three years, except under certain conditions.

Under Section 10(g) of the contract, the parties agreed to submit disputes to arbitration:

[9]*9Applicable Law and Jurisdiction. Any dispute ... between the Parties arising out of or relating to this Agreement which cannot be settled amicably shall be referred to and determined by arbitration in the Hague under the International Arbitration rules. The ruling by the arbitration court shall be final and binding and the Parties undertake to abide by and to carry out the award immediately and voluntarily. In the event that such award is not immediately abided by and carried out, the award of whatever nature may be enforced without review in any court of competent jurisdiction. The arbitration award shall determine which Party shall bear the expenses of the arbitration or the portion thereof which each Party shall bear.

On April 4, 2002, Presstek provided notice that it wished to terminate the contract. According to Marks, this termination constituted a breach of contract. Marks thereafter attempted to have Pres-stek agree to arbitrate the dispute, but to no avail. Marks first asked Presstek to arbitrate the dispute under the UNCI-TRAL Arbitration Rules1 on November 29, 2002. This request led to negotiations, which were ultimately unsuccessful.

Marks made a second request for arbitration to Presstek on March 27, 2003, but Presstek did not respond. The record does not contain either the November 2002 or March 2008 requests by Marks, and does not reveal whether Marks asked Presstek to arbitrate their dispute before a particular forum.

When Presstek did not respond, Marks did not go to court to seek to compel arbitration or alternatively to sue for breach of contract.

The arbitration clause was poorly drafted: First, the clause does not identify the specific arbitral body at The Hague that would adjudicate any dispute. Second, the contract language (“the International Arbitration rules”) suggests that a particular set of arbitration rules would govern the dispute; but, as it turns out, there are no rules called the “International Arbitration rules.”

A. Proceedings Before the PCA

After Presstek did not respond to its March 2003 arbitration request, Marks sent letters to the PCA, on June 4 and July 31, 2003, asking the PCA to designate an “Appointing Authority” that would initiate arbitration proceedings and appoint arbitrators. In its application, Marks asserted to the PCA that under the arbitration clause “[i]t is evident from the choice of The Hague as the forum for the arbitration that the ‘International Arbitration Rules’ referred to in the clause are those formulated by UNCITRAL, since these authorize the Secretary-General of the PCA based in The Hague to appoint members to the tribunal or to nominate a so-called Appointing Authority.”

On August 4, 2003, after receipt of Marks’ request, an Assistant Legal Counsel of the PCA sent a letter to Presstek, with a copy to Marks, informing Presstek of the arbitration request by Marks. The letter raised questions about the competence of the PCA to act as an arbitrator in the case:

Prior to acting ..., the Secretary-General [of the PCA] first satisfies himself, [10]*10on the basis of a prima facie screening of the documentation submitted by the parties, that he is competent to act. The Secretary-General’s competence may derive from the parties’ agreement to the application of the UNCITRAL Arbitration Rules, Articles 6 and 7 of which describe his role, or from any other agreement that calls for him to act.

The PCA letter noted that the language in the parties’ arbitration agreement referred only to “the International Arbitration rules” and “The Hague as the place of arbitration.” The PCA letter asked Pres-stek to provide its comments with respect to Marks’ application, after which the matter would be submitted to the Secretary-General of the PCA for consideration.

Presstek, in an August 14, 2003 letter to the PCA requesting an extension of time, noted that its basic position was that a clear agreement to apply UNCITRAL Arbitration Rules was required before the PCA could exercise jurisdiction over the arbitration, that there was no such clear agreement, and that the reference to “International Arbitration rules” in the parties’ contract was too vague on the point.

The PCA granted Presstek’s request for an extension, in a letter on August 18, 2003, and noted Presstek’s objection.

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Bluebook (online)
455 F.3d 7, 2006 U.S. App. LEXIS 17272, 2006 WL 1892255, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marks-3-zet-ernst-marks-gmbh-co-kg-v-presstek-inc-ca1-2006.