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3. Eco Swiss
3.1. Introduction
Eco Swiss v. Benetton International is a judgment of the European
Court of Justice from 1999. It was not the first judgment of the ECJ
on international arbitration, but it is widely considered the
foundational one.
3.2. Facts
Benetton licensed a Hong Kong company Eco Swiss to manufacture
watches and clocks bearing the words “Benetton by Bulova” which
Eco Swiss and Bulova could then sell. The agreement prohibited
Eco Swiss from selling watches and clocks in Italy, and it prohibited
Bulova from selling in any of the other then EC Member States.
Classic market sharing, and the agreement was not covered by a
block exemption, and had not even been notified to the European
Commission under Regulation 17, for an individual exemption or a
negative clearance. So it was easy to see (it sufficed to look at the
wording of the agreement alone) that at least parts of the
agreement were in violation of EC competition law, and therefore
automatically void.
The agreement was subject to Dutch law and arbitration in the
Netherlands under the rules of the Netherlands Institute of
Arbitrators.
During the entirety of the arbitration proceeding, neither party
took the EC competition law point, and the tribunal did not raise it
of its own motion. There was a partial final award finding Benetton
liable for the early termination of the licence agreement. Over two
years later there was a final arbitral award ordering Benetton to
pay millions of dollars in damages.
Dutch law required requests for the annulment of arbitration
awards to be filed within three months of the lodging of the award
at the court. Benetton was out of time for the partial final award
but in time for the final arbitral award.
Benetton sought the annulment of both awards before the Dutch
courts.
3.3. Clear ramifications of Eco Swiss
3.3.1. EU recognises the importance of international arbitration
The ECJ recognises the importance of international arbitration, and
the importance of finality in international arbitration:

“Next, it is in the interests of efficient arbitration proceedings that
review of arbitration awards should be limited in scope and that
annulment of or refusal to recognise an award should be possible
only in exceptional circumstances.” (Para. 35)
This recognition is important since the significance of Member
State goals in their procedural choices will prove to be an element
in the equivalency analysis.
3.3.2. EU legal order makes certain demands on Member States
regarding the review of arbitral awards
3.3.2.1. The principle of equivalency 3.3.2.1.1. Application of the
principle
Wherever an application for annulment on the basis of a violation
of public policy is available in Member State law, an application for
annulment on the basis of a violation of EC competition law must
be available.
EC competition law is so important to the EU legal order that it
needs to be compared with the most important policies in Member
State “domestic” law, and how they are treated under Member
State civil procedure law.
3.3.2.1.2. Autonomy of EU notion of equivalence
The EU legal order has a test for what is public policy which is
autonomous from that of the Member States. Under Dutch law (at
the time), a necessary condition for public-policy status was that no
procedural barrier could prevent a court from applying the
mandatory norm. See para. 24. Under this test, EU competition law
is not public policy, since in Van Schijndel the ECJ held that
Member State procedural law, in those circumstances requiring EC
competition law to have been raised at first instance, was not
contrary to EU law.
3.3.2.1.3. Failure to raise the plea before the arbitral tribunal is no
preclusion against raising the plea before the first EU Member State
court
It does not matter if the plea was not raised before the arbitration
tribunal. Arbitration tribunals cannot make preliminary references
under Art. 267 TFEU. There has to be a possibility for an EU
Member State court to make a preliminary reference. So parties
must be able to raise EC competition law points in challenges to
arbitration awards on the basis of their incompatibility with EU law.

3.3.2.1.4. Three month limit for challenging arbitral awards is no
violation of EU law
A period of three months within which an arbitration award must
be challenged or it becomes res judicata is a valid limitation on the
application of EU competition law.
Not versus the principle of effectiveness
Regarding other Member States’ laws, not too short This rule
serves real purpose – legal certainty
3.4. Inferential ramifications of Eco Swiss
3.4.1. Member State law restrictions on arbitrators’ raising EU
competition law of their own motion are contrary to EU law
Member State arbitration law may not contain restrictions in
principle on arbitrators raising points of EU competition law of
their own motion.
The Hoge Raad was of the opinion that an arbitrator’s raising EC
competition law of its own motion would be a violation of the
arbitrator’s terms of reference and a ground to set aside the
arbitration award:
Article 1065 of the Dutch Code of Civil Procedure provided that:
1. Annulment may be ordered only on one or more of the following
grounds: [...]
(c) the arbitration tribunal has failed to comply with its terms of
reference; [...]
“Moreover, since it is not disputed that the question whether the
licensing agreement might be void under Article 85 of the Treaty
[now Art. 101 TFEU] was not raised in the course of the arbitration
proceedings, the Hoge Raad considers that the arbitrators would
have gone beyond the ambit of the dispute if they had inquired into
and ruled on that question. In such a case, their award would have
been open to annulment pursuant to Article 1065(1)(c) of the Code
of Civil Procedure, because they would have failed to comply with
their terms of reference. [...]” (Para. 26)
This conclusion follows from i) the ECJ’s concern about finality of
arbitration awards, and ii) the ECJ’s conclusion that there must be
public policy review of awards for their conformity with EC
competition law at the annulment stage. See para. 38 where the
ECJ refers to the intra and ultra petitio grounds for refusal to
enforce under the NY Convention.

3.4.2. Arbitrability of EU competition law
EU law has no objection in principle to the arbitrability of EC
competition law Saw concern to protect efficiency of international
arbitration
Willingness to limit Member State courts to public policy review of
treatment of EC competition law by arbitral tribunals.
3.4.3. The EU will generally accept the level of Member State public
policy review of arbitration awards
The EU legal order will not require anything more of EU Member
States in their review of EC competition law in arbitration awards
than their ordinary public policy review.
But this is not certain since (in particular) really loose review may
imperil the effect of EC competition law. Eco Swiss says nothing
directly about the requirements of effectiveness on this point.
AG in subsequent case of Van der Weerd says that the comment on
preliminary references is based on principle of effectiveness. But
the court says in Van der Weerd that it is not.

MITSUBISHI MOTORS CORP. VS. SOLER 
CHRYSLER­PLYMOUTH, INC.

Mitsubishi Motors Corp. vs. Soler ChryslerPlymouth, Inc.
FACTS IN BRIEF:
A Japanese corporation and Chrysler International entered
into a Joint Venture (called Mitsubishi Motors) for the
distribution of cars through the Respondent’s dealers
outside the continental US. Owing to a fall in the market
for cars, the Respondent sought permission to transship
the cars to the US and Latin America- which was denied.
Petitioner brought an action in a US District Court seeking
an order compelling the parties to arbitration in pursuance
of the sales agreement. Respondent alleged that the

dispute involved antitrust claims (division of markets
resulting in restraint of trade), which are not arbitrable.
HELD:
District Court: referred to arbitration.
Court of Appeals: Reversed the part relating to
arbitration of the antitrust claims. Upheld the remaining
order.
SUPREME COURT:
Majority DecisionThe Majority in this case concluded that concerns of
international comity, respect for the capacities of foreign
and transnational tribunals, and sensitivity to the need of
the international commercial system for predictability in
the resolution of disputes require that the parties’
agreement be enforced, even assuming that a contrary
result would be forthcoming in a domestic context. The
mere appearance of an antitrust dispute does not alone
warrant invalidation of the selected forum on the
assumption that the arbitration clause is tainted.
The majority also opined that there is no reason to assume
at the outset of the dispute that international arbitration
will not provide an adequate mechanism. To be sure, the
international arbitral tribunal owes no prior allegiance to
the legal norms of particular states; hence, it has no direct
obligation to vindicate their statutory dictates. The
tribunal, however, is bound to effectuate the intentions of
the parties. Where the parties have agreed that the
arbitral body is to decide a defined set of claims which
includes, as in these cases, those arising from the
application of American antitrust law, the tribunal
therefore should be bound to decide that dispute in accord
with the national law giving rise to the claim. Having
permitted the arbitration to go forward, the national courts
of the United States will thus have the opportunity at the
award-enforcement stage to ensure that the legitimate
interest in the enforcement of the antitrust laws has been
addressed.
Dissenting OpinionThe dissenting opinion was that the Court is holding rests
almost exclusively on the federal policy favoring
arbitration of commercial disputes and vague notions of

international comity.
As per the dissenting opinion(1) a fair construction of the language in the arbitration
clause in the parties’ contract does not encompass a claim
that auto manufacturers entered into a conspiracy in
violation of the antitrust laws;
(2) an arbitration clause should not normally be construed
to cover a statutory remedy that it does not expressly
identify;
(3) Congress did not intend 2 of the Federal Arbitration Act
to apply to antitrust claims; and
(4) Congress did not intend the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards to
apply to disputes that are not covered by the Federal
Arbitration Act.
It was also opined that antitrust violations can affect
hundreds of thousands – perhaps millions – of people and
inflict staggering economic damage. . . . and it could not
be believed that Congress intended such claims to be
resolved elsewhere than in the courts. Arbitration awards
are only subject to review for manifest disregard of the law
and the rudimentary procedures which make arbitration so
desirable in the context of a private disputes.

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