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MARCHETTO v. DEKALB GENETICS CORP.

May 9, 1989

MARCO ANTONIO MARCHETTO and ISABELLA MARCHETTO, Plaintiffs,
v.
DEKALB GENETICS CORPORATION, DEKALB ENERGY COMPANY, DEKALB-PFIZER GENETICS, and PFIZER GENETICS INC., Defendants


Suzanne B. Conlon, United States District Judge.


The opinion of the court was delivered by: CONLON

SUZANNE B. CONLON, UNITED STATES DISTRICT JUDGE

 Plaintiffs Marco Antonio Marchetto and Isabella Marchetto ("the Marchettos") brought this action against defendants DeKalb Genetics Corporation ("DeKalb Genetics"), DeKalb Energy Company ("DeKalb Energy"), DeKalb-Pfizer Genetics and Pfizer Genetics Inc. ("Pfizer Genetics") (collectively, "the defendants") claiming they breached and tortiously interfered with a shareholder agreement. Jurisdiction is based on 28 U.S.C. § 1332. The defendants move to dismiss under Fed.R.Civ.P. 12(b)(1).

 FACTS

 The parties to this dispute are shareholders of DeKalb Italiana S.p.A. ("DeKalb Italiana"). Complaint para. 1. DeKalb Italiana is an Italian corporation engaged in the business of manufacturing and selling agricultural and vegetable products. Id. at para. 12. The company was formed in 1963 as a joint venture between DeKalb Agricultural Association, Inc. ("DeKalb Agricultural") and two Italian citizens, Antonio and Sergio Marchetto ("the Marchetto Group"). At the time of its incorporation, DeKalb Agricultural and the Marchetto Group each owned fifty percent of the outstanding common stock of DeKalb Italiana. Id. at para. 13. They also entered into a shareholder agreement that restricted a shareholder's ability to transfer shares without the consent of the remaining shareholders and without offering the other shareholders the opportunity to purchase the shares. Id. at para. 15. The agreement was later amended to provide for arbitration of any shareholder disputes by a panel of arbitrators in Rome, Italy. Marchetto Response, Ex. B.

 The Marchettos now claim that the transfers of DeKalb Italiana stock effected by the defendants violated the shareholder agreement. Count I of the complaint alleges a breach of the agreement. Count II alleges the defendants tortiously interfered with the agreement. The defendants move to dismiss on the basis of the arbitration clause. They claim this dispute should be resolved in Italy.

 DISCUSSION

 When considering a motion to dismiss, the court views the allegations of the complaint in the light most favorable to the plaintiff and accepts as true all well pleaded material facts. City of Milwaukee v. Saxbe, 546 F.2d 693, 704 (7th Cir. 1976); Bruss Co. v. Allnet Communications Services, Inc., 606 F. Supp. 401, 404 (N.D.Ill. 1985). The complaint will not be dismissed unless it is beyond doubt that no facts are alleged to support the claim. Id.

 The Federal Arbitration Act ("the Arbitration Act"), 9 U.S.C. § 1 et seq., governs the enforcement, interpretation and validity of arbitration clauses in commercial contracts. Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983); Snyder v. Smith, 736 F.2d 409, 417 (7th Cir. 1984); Zell v. Jacoby-Bender, Inc., 542 F.2d 34, 37 (7th Cir. 1976). The Arbitration Act provides that arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or equity for the revocation of any contract." 9 U.S.C. § 2. This language creates a presumption in favor of arbitration. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 625, 87 L. Ed. 2d 444, 105 S. Ct. 3346, 3353 (1985); Moses H. Cone Memorial Hospital, 460 U.S. at 24-25; Snyder, 736 F.2d at 417; In re Oil Spill by Amoco Cadiz, 659 F.2d 789, 795 (7th Cir. 1981). This means courts must vigorously enforce arbitration clauses in commercial contracts. Id. Any doubts regarding the validity of an arbitration clause must be resolved in favor of arbitration. Id.

 The federal policy favoring arbitration applies with special force in the area of international commerce. Mitsubishi Motors Corp., 473 U.S. at 629-31; Scherk v. Alberto-Culver Co., 417 U.S. 506, 516-17, 41 L. Ed. 2d 270, 94 S. Ct. 2449 (1974); In re Oil Spill by Amoco Cadiz, 659 F.2d at 795; Karlberg European Tanspa, Inc. v. JK-Josef Kratz Vertriebsgesellschaft, 618 F. Supp. 344, 347 (N.D.Ill. 1985). In 1970, the United States became a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the Convention"). 3 U.S.T. 2517, T.I.A.S. No. 6997 reprinted in 9 U.S.C. § 201 (1980 Supp.); Scherk, 417 U.S. at 520 n. 15. The Convention and its enabling legislation, 9 U.S.C. § 201 et seq., were designed to encourage the arbitration of international commercial disputes and to unify the standards by which agreements are enforced. Scherk, 417 U.S. at 520 n. 15. By acceding to the Convention, the United States joined other signatory nations in proclaiming a willingness to enforce arbitration clauses in international commercial agreements. Id. at 516 n. 10. Rhone Mediterranee Compagnia v. Achille Lauro, 712 F.2d 50, 53-54 (3d Cir. 1983).

 There is no dispute that these factors are present in this case. Italy is a signatory country. 9 U.S.C. § 201. The shareholder agreement unquestionably embodies a legal relationship. The arbitration clause was incorporated into this agreement through a written amendment. Moreover, the allegedly unlawful transfers of DeKalb Italiana stock have a reasonable relationship to Italy because they involve an Italian company and allegedly damaged an Italian shareholder group.

 The Marchettos ignore these factors. They argue that the arbitration clause is unenforceable under Article II (3) of the Convention. 9 ...


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