MITSUBISHI MOTORS CORPORATION, PETITIONER V. SOLER CHRYSLER-PLYMOUTH,INC. SOLER CHRYSLER-PLYMOUTH, INC., CROSS-PETITIONER V. MITSUBISHI MOTORS CORPORATION No. 83-1569 & No. 83-1733 In the Supreme Court of the United States October Term, 1984 On Writ of Certiorari to the United States Court of Appeals for the First Circuit Brief for the United States as Amicus Curiae Supporting Respondent in No. 83-1569 TABLE OF CONTENTS Interest of the United States Statement Introduction and summary of argument Argument: The federal antitrust claim in this case should not have been referred to foreign arbitration A. Congress intended that federal antitrust claims would not be subject to arbitration B. The fact that Soler's federal antitrust counterclaim arose in connection with an international commercial transaction does not render it subject to arbitration 1. Arbitration of a federal antitrust claim that arises in connection with an international commercial transaction is no more appropriate than arbitration of a domestic claim 2. While the Convention on the Recognition and Enforcement of Foreign Arbitral Awards generally mandates enforcement of international agreements to arbitrate, it does not require United States courts to compel arbitration of federal antitrust claims Conclusion QUESTION PRESENTED Whether the district court erred in referring the federal antitrust counterclaim in this case to foreign arbitration pursuant to the terms of the parties' contract. /*/ INTEREST OF THE UNITED STATES The United States has primary responsibility for enforcement of the federal antitrust laws. However, private treble damages suits constitute a significant supplement to the government's antitrust enforcement efforts. The United States therefore has an interest in assuring that parties to a private contract do not employ general arbitration clauses in a manner that would improperly interfere with the role Congress has assigned to private actions in the antitrust enforcement scheme. The United States also is concerned with matters that affect our nation's foreign relations and, specifically, with proper interpretation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 38 (entered into force for the United States December 29, 1970). STATEMENT 1. Soler Chrysler-Plymouth, Inc. (Soler) is a Puerto Rican corporation with its principal place of business in Puerto Rico. Mitsubishi Motors Corporation (Mitsubishi) is a Japanese corporation that was formed in 1970 as part of a joint venture between Chrysler International, S.A. (CISA) and Mitsubishi Heavy Industries, Inc. (Pet. App. A5-A6). /1/ In 1979 Soler and CISA entered into a Distributor Agreement, which gave Soler the right to sell vehicles manufactured for CISA by Mitsubishi (Pet. App. B1-B2). At the same time, Soler, CISA and Mitsubishi executed a Sales Procedure Agreement, with regard to Soler's ordering of the Mitsubishi-manufactured vehicles (id. at B2). That agreement provided that it "is made in, and will be governed by and construed in all respects according to the laws of the Swiss Confederation as if entirely performed therein" (J.A. 56). It also provided for arbitration in Japan of contract disputes arising under specified portions of the agreement (id. at 52-53). /2/ Some two years later, during a slump in the new car market, Soler was unable to meet its minimum sales commitments in its assigned territory. Soler therefore attempted to transship vehicles to other areas, including Central and South America and the continental United States. Mitsubishi and CISA refused to permit transshipment, and Mitsubishi eventually withheld shipment of close to 1,000 vehicles ordered by Soler. In February 1982, Soler disclaimed responsibility for the vehicles stored in Japan. Pet. App. A6. 2. In March 1982, Mitsubishi brought suit against Soler in the United States District Court for the District of Puerto Rico, seeking an order compelling arbitration in Japan of alleged breaches of the Sales Procedure Agreement; /3/ Mitsubishi also filed a request for arbitration with the Japan Commercial Arbitration Association. Pet. App. A6-A7. Soler denied the allegations of the complaint and counterclaimed against Mitsubishi and CISA, alleging violations of, inter alia, the Sherman Act, 15 U.S.C. 1 et seq.; /4/ the federal Automobile Dealers' Day in Court Act, 15 U.S.C. 1221 et seq.; the Puerto Rico Dealers Act; and the Puerto Rican antitrust statute. J.A. 76-103. Mitsubishi then asked the district court to compel arbitration of Soler's counterclaims and to stay pending arbitration proceedings on any counterclaim the court determined to be nonarbitrable (id. at 113-114). The district court ordered Mitsubishi and Soler to arbitrate Soler's federal antitrust counterclaim, as well as several other claims raised by the parties. Pet. App. B1-B13. /5/ The district court recognized that antitrust claims are not arbitrable in a domestic context (id. at B9-B10). It concluded, however, that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and its implementing legislation, 9 U.S.C. 201 et seq., required an order compelling arbitration of Soler's federal antitrust counterclaim (Pet. App. B5-B9). 3. The court of appeals affirmed in part and reversed in part (Pet. App. A1-A29). It held, inter alia, that Soler's federal antitrust counterclaim was not arbitrable. /6/ The court agreed with all other federal courts of appeals that had considered the issue that the Federal Arbitration Act, 9 U.S.C. 1 et seq., does not mandate arbitration of antitrust claims arising in domestic disputes because arbitration could pose unacceptable dangers to private enforcement of the antitrust laws (Pet. App. A15-A16). The court believed that foreign countries would be unlikely to regard United States insistence on judicial determination of antitrust disputes as parochial, in view of the known importance of United States antitrust laws and the existence of similar statutes or policies in several European nations (id. at A16-A18). On the other hand, if courts could be ousted of jurisdiction over antitrust disputes simply because a foreign entity was included as a party to an arbitration agreement, antitrust enforcement would be seriously hampered (id. at A18). The court concluded that the doctrine precluding arbitration of antitrust claims would apply at least to an agreement governing the sale and distribution of products in the United States (ibid.). The court of appeals concluded that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards did not foreclose such a holding because an agreement to arbitrate antitrust issues would not concern a "subject matter capable of settlement by arbitration," as required by Article II(1) of the Convention. Pet. App. A18-A23. /7/ The court of appeals also held that this Court's decision in Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974), did not require referral of Soler's antitrust counterclaim to arbitration. Pet. App. A23-A28. The court of appeals left to the district court the decision "whether both arbitrable and nonarbitrable matters should proceed on their own course or whether one set of problems should await resolution of the other" (id. at A28-A29). /8/ INTRODUCTION AND SUMMARY OF ARGUMENT United States law generally requires federal courts to be hospitable to arbitration, which has proved to be an effective mechanism for resolution of many types of disputes. Where international agreements are involved, the interests of international commerce may require enforcement of an agreement to arbitrate even when a matter would be nonarbitrable in a domestic context; moreover, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which the United States has acceded, contemplates that courts will enforce agreements to arbitrate in most cases. On the other hand, the United States antitrust laws embody a policy of preserving competition that is of great significance to our national interests. In establishing the antitrust enforcement scheme, Congress has assigned a crucial role to private plaintiffs, who are entitled to recover treble damages in federal court. While we recognize that exceptions to arbitrability are quite limited, particularly with respect to an agreement to arbitrate in connection with an international commercial transaction, we believe that the special public enforcement role Congress has assigned to private antitrust claims requires that such claims be regarded as nonarbitrable in both the domestic and international contexts. A. 1. Every court of appeals that has considered the question has held that federal antitrust claims are not arbitrable. There is strong support for that uniform view of congressional intent. The antitrust laws embody a highly significant national policy. Congress has assigned private suits a key role in the public enforcement scheme by providing that a private plaintiff may recover treble damages in federal court. In view of that special role, it is most unlikely that Congress would have intended that parties to a contract could avoid judicial resolution by diverting private antitrust claims to arbitration. The role that private antitrust actions play in vindicating important public interests in the preservation of competition renders them inappropriate for determination by arbitration. Such claims often involve firms that possess substantial market power, and the agreement to arbitrate itself may reflect an exercise of that market power by the stronger party. Arbitrators normally are drawn from the business community the antitrust laws are intended to regulate; in addition, they are likely to be less qualified than Article III judges to deal with the complex issues that arise in antitrust cases and more inclined to substitute general notions of fairness between the parties for careful economic analysis and interpretation of statutory policy. Finally, although they may be useful in the resolution of many types of commercial disputes, arbitral procedures -- including limitations on discovery, the absence of a written opinion in some cases, and the limited scope of judicial review -- are not adequate to effectuate antitrust enforcement policies. Of course, even though an antitrust claim is nonarbitrable, a court may order arbitration of contract claims to proceed, thereby serving both the policy of antitrust enforcement and the policy in favor of arbitration. 2. The Federal Arbitration Act, 9 U.S.C. 1 et seq., does not render antitrust claims arbitrable. Although that Act was intended generally to authorize judicial enforcement of agreements to arbitrate and to make federal courts more hospitable to arbitration, nothing in its text or legislative history is sufficient to overcome the strong indications that Congress did not intend private antitrust claims to be arbitrable. B. The fact that Soler's federal antitrust counterclaim arose in connection with an international commercial transaction does not render it subject to arbitration. 1. In some cases the fact that a dispute arises in the context of an international commercial transaction may make it more appropriate to enforce an agreement to arbitrate than if the dispute had arisen in a domestic context. That is not the case with federal antitrust claims. So long as there is a sufficient effect on United States commerce to bring a dispute within the coverage of the antitrust laws, private suits serve the same functions as in a domestic context, by supplementing governmental enforcement resources, punishing violators, deterring future violations, and publicizing anticompetitive conduct. Foreign arbitrators are even less likely than domestic arbitrators to be familiar with United States antitrust laws, and arbitral procedures, and limitations on judicial review interfere with antitrust enforcement interests at least as much in foreign arbitration as in domestic arbitration. To the extent parties may contract out of antitrust liability altogether by means of an agreement to arbitrate combined with a choice of law clause, arbitration clearly undermines antitrust enforcement interests, particularly in a case like this one, in which a substantial effect on United States commerce is alleged. Arbitration of antitrust claims is not required by this Court's decision in Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974), which involved an alleged securities law violation and an international agreement to resolve disputes through foreign arbitration. In this case, unlike in Scherk, there was no uncertainty concerning the applicable law; it should have been clear to the parties that the Sherman Act would apply to alleged anticompetitive restraints on the sale of vehicles shipped into Puerto Rico. Moreover, the concern of the United States with affording a federal judicial forum for private treble damages actions under the antitrust laws is not the sort of parochialism the Court disapproved in Scherk. 2. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards does not require arbitration of federal antitrust claims. Although the Convention contemplates that Contracting States will enforce agreements to arbitrate in most cases, it expressly permits them to make limited exceptions for cases in which arbitration would frustrate particularly important national policies. In view of the special importance Congress has assigned to private suits in the antitrust enforcement scheme, such suits come within the limited class of matters that are properly regarded as nonarbitrable under the Convention. ARGUMENT THE FEDERAL ANTITRUST CLAIM IN THIS CASE SHOULD NOT HAVE BEEN REFERRED TO FOREIGN ARBITRATION A. Congress Intended That Federal Antitrust Claims Would Not Be Subject To Arbitration 1. The rule that federal antitrust claims are not arbitrable is well established, at least in the domestic context. /9/ Every court of appeals that has considered the question has held that such claims are nonarbitrable. /10/ Indeed, in the court of appeals Mitsubishi did not even contest the proposition that federal antitrust claims are not subject to arbitration in a domestic context. /11/ There is strong support for this uniform holding of the courts of appeals. At the time it enacted the Sherman Act in 1890, Congress could not have intended that private treble damages actions would be subject to arbitration. At that time both federal and state courts were unsympathetic to enforcement of arbitration agreements. See Scherk v. Alberto-Culver Co., 417 U.S. 506, 510-511 & n.4 (1974); Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109, 120-123 (1924). Congress undoubtedly understood that, at least in the absence of express statutory authorization, arbitration agreements involving the right to sue under the antitrust laws would be unenforceable. More fundamentally, the longstanding and exceptional importance that Congress has attributed to suits by private parties in the antitrust enforcement scheme makes it most unlikely that it would have intended such claims to be arbitrable. The Sherman Act is "a comprehensive charter of economic liberty" that is "as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms." United States v. Topco Associates, Inc., 405 U.S. 596, 610 (1972); Northern Pacific Ry. v. United States, 356 U.S. 1, 4 (1958). The Sherman Act makes the Attorney General primarily responsible for enforcement (15 U.S.C. 4). However, Congress knew that the federal government would have only limited resources with which to pursue antitrust violations. In order to encourage vigorous enforcement, Congress expressly authorized private parties injured by antitrust violations to sue in federal courts, without regard to the amount in controversy; and it permitted private plaintiffs to recover treble damages and costs, including attorneys fees. 15 U.S.C. 15; Sherman Act Section 7, 26 Stat. 210 (1890). This treble damages provision does more than simply compensate injured parties. Treble damages constitute a special incentive to the enlistment of private parties -- who are in the best position to be aware of violations -- as "private attorneys general." See, e.g., Hawaii v. Standard Oil Co., 405 U.S. 251, 262 (1972); Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 130-131 (1969); Pitofsky, Arbitration and Antitrust Enforcement, 44 N.Y.U. L. Rev. 1072, 1073-1074 (1969). Treble damages also serve as a particularly effective means of punishing those who have violated the antitrust laws and thus of deterring potential violators. See 21 Cong. Rec. 3146-3147, 3150, 4091 (1890); Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 138-139 (1968); Lawlor v. National Screen Service, 349 U.S. 322, 329 (1955); Lyons v. Westinghouse Electric Corp., 222 F.2d 184, 189 (2d Cir.), cert. denied, 350 U.S. 825 (1955) (L. Hand, J.). Indeed, in the case of corporations, which cannot be imprisoned, treble damages are a far more effective deterrent to criminal activity than are fines. In enacting the treble damages provision, Congress could hardly have intended that private parties would have the option of relinquishing the right to bring such public judicial actions in favor of private arbitration. /12/ At the time the Sherman Act was passed, the treble damages provision was an extraordinary and unprecedented measure. It remains remarkable today. While Congress has granted private rights to sue for damages under many statutes, very few authorize the award of treble damages. /13/ In sum, Congress intended private actions under the antitrust laws to serve to vindicate important public interests in the preservation of competition, rather than merely to resolve disputes between the parties to the lawsuit. Cf. Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400 (1968). It is for this reason that they constitute a special class of claims not subject to arbitration. See American Safety Equipment Corp., 391 F.2d at 826. It is this important public interest ingredient of antitrust claims that renders them inappropriate for determination by arbitration. /14/ While arbitration can be an effective and efficient way of resolving a wide variety of claims, it presents numerous difficulties in the area of antitrust. Antitrust claims often involve firms that singly or by agreement possess monopoly power; indeed, the core purpose of the antitrust laws is to prevent the anticompetitive use of such power. Standard Oil Co. v. United States, 221 U.S. 1, 58-62 (1911). It would be detrimental to the public interest to permit contracts imposed through the exercise of such economic power to determine the forum for settlement of antitrust disputes. See American Safety Equipment Corp., 391 F.2d at 827. A monopolist or cartel member could use its market power to obtain from a customer an open-ended surrender of its rights to seek redress in court. Even when arbitration clauses are not technically contracts of adhesion, there is likely to be a significant disparity in economic power between the parties, which makes it more likely that the weaker parties will relinquish their rights. In addition, arbitrators frequently are chosen from the business community that is regulated by the antitrust laws. See American Safety Equipment Corp., 391 F.2d at 827. While such arbitrators may in fact be entirely fair, the public perception of such arrangements tends to undermine confidence in the even-handed administration of the antitrust laws. And, as Judge Posner has noted, many arbitrators are not even lawyers. University Life Insurance Co. v. Unimarc Ltd., 699 F.2d at 851. Such arbitrators may be unable to handle the complex legal issues often involved in antitrust claims. See Pitofsky, supra, 44 N.Y.U. L. Rev. at 1078. Arbitrators may be inclined to substitute general notions of fairness between the parties for careful economic and legal analysis. See Loevinger, Antitrust Issues As Subjects of Arbitration, 44 N.Y.U. L. Rev. 1085, 1090-1091 (1969). Furthermore, in some cases, limitations on fact gathering may prevent plaintiffs from pursuing antitrust claims effectively in an arbitral proceeding. See Loevinger, supra, 44 N.Y.U. L. Rev. at 1090-1091; Pitofsky, 44 N.Y.U. L. Rev. supra, at 1080. Preparation of a written opinion is generally optional; indeed, arbitrators may be encouraged to avoid written opinions. See, e.g., United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 598 (1960); Wilko v. Swan, 346 U.S. 427, 436 (1953); Domke on Commercial Arbitration Section 29:06 (G. Wilner rev. ed. 1984); Pitofsky, supra, 44 N.Y.U. L. Rev. at 1076-1077. Even the results of an arbitration may be kept confidential, so that neither the federal government nor other injured parties will be alerted to the existence of possible violations. An arbitral award generally may not be set aside, even for errors of law, unless it is clearly arbitrary. See 9 U.S.C. 10, 207; Wilko v. Swan, 346 U.S. at 436-437; Domke on Commercial Arbitration, supra, at ch. 34. While the absence of arbitral opinions and the substantial inability of courts to review arbitral decisions may be entirely acceptable in the resolution of other types of commercial disputes, they create an unacceptable risk of incorrect and irremediable decisions on competition issues that Congress has designated as unusually important to the public interest in competitive functioning of the economy. /15/ Finally, there is a substantial question whether arbitrators may award punitive damages (see id. Section 33.03), which may make arbitration particularly attractive to potential antitrust defendants. If an arbitrator may award only actual damages for an antitrust violation, arbitration will eliminate a significant deterrent to anticompetitive behavior. /16/ This is not to suggest that insubstantial antitrust counterclaims should be allowed to delay arbitration of clearly arbitrable contract claims. To the contrary, a district court has ample discretion to order that arbitration of contract claims proceed prior to, or in tandem with, litigation of the antitrust claims. /17/ The decision whether to allow arbitration to proceed normally will be based at least in part on the likelihood of success on the merits of the antitrust claims. /18/ In the present case, for example, the district court on remand sent most of the claims to arbitration prior to hearing the antitrust claims, apparently based on a determination that the latter were of doubtful merit. See Mitsubishi Br. 11. In our view, this approach, involving a "quick look" at the validity of antitrust claims, is entirely appropriate. To the extent arbitration of nonantitrust claims is permitted to proceed, both the policy in favor of arbitration and the policy in favor of antitrust enforcement are served. 2. The considerations we have described, indicating that Congress viewed arbitration of antitrust claims as inconsistent with the public interest in effective enforcement of the antitrust laws, similarly lead to the conclusion that Congress did not intend to make antitrust claims arbitrable in 1925 when it passed the Federal Arbitration Act, 9 U.S.C. 1 et seq. Although that Act broadly provides that arbitration agreements in a "contract evidencing a transaction involving commerce" are enforceable in the federal courts (9 U.S.C. 2), nothing in its text or legislative history shows that Congress meant for private antitrust claims to be arbitrable. /19/ The Federal Arbitration Act is a general statute that was designed to give federal courts the power and duty to enforce a wide range of arbitration agreements and to make the courts more hospitable to the process of arbitration. S. Rep. 536, 68th Cong., 1st Sess. 2-3 (1924); H.R. Rep. 96, 68th Cong., 1st Sess. 1 (1924); Scherk v. Alberto-Culver Co., 417 U.S. at 510-511. As this Court has noted, the Arbitration Act reflects "a national policy favoring arbitration." Southland Corp. v. Keating, No. 82-500 (Jan. 23, 1984), slip op. 7. /20/ But there is no indication that in passing the Act Congress intended to render every conceivable type of commercial claim arbitrable, regardless of any competing policies under other federal statutes. As we have explained, private antitrust actions differ from most other types of commercial claims, because of the role such actions play in a public enforcement scheme. While arbitration of most types of commercial claims would not interfere significantly with any public interest, subjecting federal antitrust claims to arbitration would undermine seriously Congress's purposes to effectuate the strong public interest in competition. In these circumstances, we believe that if Congress had wished to alter the prevailing rule, /21/ it would have provided expressly for that result. Compare, e.g., 35 U.S.C. 294 (authorizing agreements to arbitrate disputes concerning patent validity or infringement). Nothing in the language of the Federal Arbitration Act or in the brief and generally worded legislative history of that Act makes such an express change. /22/ B. The Fact That Soler's Federal Antitrust Counterclaim Arose In Connection With An International Commercial Transaction Does Not Render It Subject To Arbitration 1. Arbitration Of A Federal Antitrust Claim That Arises In Connection With An International Commercial Transaction Is No More Appropriate Than Arbitration Of A Domestic Claim a. In some cases the fact that a dispute arises in the context of an international commercial transaction may make it more appropriate to enforce an agreement to arbitrate that dispute. For example, in Scherk v. Alberto-Culver Co., supra, in which a United States company had initiated a securities law action against a German individual, this Court concluded that it was appropriate to compel arbitration pursuant to the terms of an international contractual agreement, despite its prior holding in Wilko v. Swan, supra, that securities claims were not arbitrable in the context of a domestic dispute. In the case of a federal antitrust claim, however, the presence of an international commercial transaction does not make arbitration more appropriate than in the domestic context. The concern that arbitration would undermine the special role of the private treble damages remedy Congress provided as part of the antitrust enforcement scheme applies with at least equal force in the context of international disputes. In drafting the private treble damages provision, Congress drew no distinction between domestic antitrust claims and those that would arise in connection with international transactions. See 15 U.S.C. 15. If an international transaction that involves an unreasonable restraint of trade has sufficient effect on United States commerce to come within the prohibition of the federal antitrust laws, /23/ private antitrust suits attacking that restraint will serve the same public interest functions as a similar suit in a domestic context -- i.e., they will supplement governmental enforcement resources, punish violators, deter future violations, and bring to light anticompetitive conduct that otherwise might remain undiscovered. The fact that a dispute arises in an international context does not make it more or less likely to involve parties with unequal bargaining power. The problems for antitrust enforcement created by arbitral procedures are at least as significant in cases of international arbitration as in domestic arbitration. For example, the Japanese arbitrators who would decide the claims in this case lack the power of compulsory process (see J.A. 218-219); thus, they may never obtain access to crucial witnesses or documents. Compare 9 U.S.C. 7 (district court may compel attendance of witnesses before arbitrators). Nor do Japanese arbitrators have the power to take testimony under oath (J.A. 219). Japanese arbitral proceedings are closed to the public (id. at 220); and the arbitrators are not required to provide reasons for their award if the parties so agree (id. at 221). Thus, a United States court may have no basis on which to review the adequacy of the arbitrators' assessment of the facts or their application of the law. /24/ While such procedures may be well suited to determination of many types of commercial claims, they are clearly inconsistent with the public interest in effective private enforcement of the antitrust laws. Moreover, foreign arbitrators are even less likely than domestic arbitrators to be familiar with the United States antitrust laws, including judicial interpretations of those laws (see page 13, supra). Although arbitrators involved in major international arbitrations may be distinguished jurists (see ICC Am. Br. 15-17), it is nonetheless quite unlikely that most foreign arbitrators -- particularly those chosen to deal with ordinary commercial contract disputes -- will be as familiar with United States antitrust laws as an Article III judge. /25/ While many of these arbitrators will be quite capable in many respects, they may come from countries that have no antitrust laws at all, or that have antitrust laws that are markedly different from United States laws. In many cases, foreign law is more hospitable to conduct that our law condemns, and in some instances it may be hostile to conduct our law permits. See 1 J. Atwood & K. Brewster, Antitrust and American Business Abroad Section 4.02 (1981). It is even possible that an arbitrator acting pursuant to an arbitration clause in an international agreement would not apply United States antitrust law at all because of the parties' choice of forum or choice of substantive law under the agreement. Indeed, amicus ICC acknowledges this possibility (Br. 24-25). /26/ In such a case, the parties would have succeeded in contracting out of liability under the United States antitrust laws, a result that clearly would not be permitted in a domestic context. See, generally, Thomas v. Matthiessen, 232 U.S. 221, 234 (1914); 15 S. Williston, A Treatise on the Law of Contracts Section 1750A (3d ed. 1972). /27/ Such a result would be particularly troubling in a case like this one, in which the transactions at issue directly affect United States commerce. Here one of the contracting parties (Soler) is a United States company; the articles that were the subject of the contract were sold and delivered in the United States; and the alleged anticompetitive effects occurred in the United States. /28/ Thus, although this dispute arose in the context of an international commercial transaction, the United States' interest in effective enforcement of the antitrust laws is very strong. /29/ We think the conclusion is inescapable that compelling arbitration of Soler's federal antitrust counterclaim by Japanese arbitrators, who may choose not to apply United States antitrust laws, would be inconsistent with Congress's intent regarding the role private actions were to play in the antitrust enforcement scheme. b. Nor does this Court's decision in Scherk v. Alberto-Culver Co., supra, support arbitration in this case. In Scherk, the Court considered a clause requiring foreign arbitration /30/ contained in a contract between a United States company and a German citizen for the sale of several European businesses and trademarks. The lower courts had refused to stay the United States company's action for damages for violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), based on that Act's prohibition on agreements to waive compliance with any of its provisions, 15 U.S.C. 78cc(a). Although this Court had held in Wilko v. Swan, supra, that claims under the Securities Act of 1933 are nonarbitrable in a domestic context, it declined to apply the Wilko rule to the "truly international agreement" before it in Scherk (417 U.S. at 515). The Court noted first that, unlike in Wilko, where there was no doubt that United States law applied to the dispute, in Scherk it was unclear what substantive law would apply in the absence of the arbitration provision. The Court viewed the choice-of-law and choice-of-forum provisions of the agreement to arbitrate as "an almost indispensable precondition to * * * the orderliness and predictability essential to any international business transaction." 417 U.S. at 516. Second, the Court believed that a "parochial" refusal by courts of one country to enforce an international arbitration agreement would "invite unseemly and mutually destructive jockeying by the parties to secure tactical litigation advantages." Id. at 516-517. Finally, any advantage in choice of courts and venue the securities laws might give a plaintiff in a domestic dispute could well be "chimerical" in the context of an international contract, since a foreign party might obtain a foreign court order nullifying the advantage. Id. at 517-518. The concerns that underlay the Court's decision in Scherk lack force in the context of this case. /31/ Since the agreement between Soler and Mitsubishi dealt with the sale of vehicles shipped into Puerto Rico, it should have been clear that the Sherman Act would apply to alleged anticompetitive restraints in connection with the agreement. /32/ See Pet. App. A25. Moreover, the concern of the United States with ensuring that private antitrust claims are heard in federal courts is not the sort of parochialism the Court disapproved in Scherk. As we next explain, the Convention on the Recognition and Enforcement of Foreign Arbitral Awards recognizes that certain subjects may be considered so essential to national interests that Contracting States will insist that they be nonarbitrable, even in an international context; and we show that, in view of the special role Congress has assigned to private actions in the antitrust enforcement scheme, /33/ such actions are properly regarded as falling within that limited exception to arbitrability under the Convention. In these circumstances, Scherk should not be read to require foreign arbitration of federal antitrust claims. /34/ 2. While The Convention On The Recognition And Enforcement Of Foreign Arbitral Awards Generally Mandates Enforcement Of International Agreements To Arbitrate, It Does Not Require United States Courts To Compel Arbitration Of Federal Antitrust Claims In 1985, a conference sponsored by the United Nations adopted the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The Convention provides that the Contracting States shall recognize and enforce agreements to arbitrate certain international disputes and the awards that result from such arbitration. /35/ While the Convention contemplates that Contracting States generally will be hospitable to international arbitration agreements, by its own terms it does not require enforcement of arbitration for all claims. The Convention expressly anticipates that a Contracting State may determine a subject to be nonarbitrable in certain limited circumstances. In our view, federal antitrust claims fall within that narrow class of nonarbitrable matters. a. We stress at the outset our belief that under the Convention Contracting States must, with limited exceptions, enforce agreements to arbitrate international disputes. As this Court has noted, the purposes of the Convention were to encourage the recognition and enforcement of arbitration agreements in international contracts and to establish uniform standards in connection therewith. Scherk v. Alberto-Culver Co., 417 U.S. at 517 n.10. We fully support these purposes, which are of considerable importance to United States businesses engaged in international commerce. The assumption underlying the Convention is that most claims arising out of international agreements will be amenable to arbitration and that the agreement of the parties to arbitrate such claims should be honored by the Contracting States. /36/ United States courts should avoid restrictive interpretations that would undermine the generally proarbitration purposes of the Convention and the United States' accession to it. /37/ However, as the court of appeals recognized (Pet. App. A18-A23), the Convention by its own terms does not require arbitration of every claim that might fall within the scope of an international arbitration agreement. Three provisions of the Convention -- Articles II, III, and V -- express the general objective of encouraging arbitration, but permit certain limited exceptions, including an exception for nonarbitrable subject matter. Article II of the Convention concerns recognition of agreements to arbitrate and judicial referral of parties to arbitration. Article II(1) requires Contracting States to "recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship * * *." However, this obligation is not unconditional; Article II(1) defines the agreements that must be recognized as those "concerning a subject matter capable of settlement by arbitration." Article II(3) requires a court to refer a controversy to arbitration, at the request of one of the parties, if the parties have agreed to arbitrate. But the agreement the court is to enforce must be one "within the meaning of this article." Such agreements are those that, in accordance with Article II(1), concern "a subject matter capable of settlement by arbitration." /38/ Other provisions of the Convention govern recognition and enforcement of foreign arbitral awards. Article III states the general principle that foreign arbitral awards will be recognized and enforced by all Contracting States. However, Article V lists several grounds on which a court may decline to enforce an award. In particular, Article V(2)(a) allows a court to refuse enforcement of an award if it finds that the "subject matter of the difference is not capable of settlement by arbitration" under the law of the country where enforcement is sought; and under Article V(2)(b) a court may refuse enforcement if the "recognition or enforcement of the award would be contrary to the public policy" of the country where enforcement is sought. /39/ b. The legislative history of the United States' accession to the Convention confirms that the Convention permits courts to decline to enforce an agreement to arbitrate if arbitration of the subject matter would frustrate particularly important national policies. When the President presented the Convention to the Senate, it was accompanied by a memorandum from the Department of State analyzing the articles of the Convention. The memorandum assured the Senate that accession would not preclude United States courts from declining to refer to arbitration certain matters the United States viewed as nonarbitrable: The requirement (of Article II(1)) that the agreement apply to a matter capable of settlement by arbitration is necessary in order to take proper account of laws in force in many countries which prohibit the submission of certain questions to arbitration. S. Exec. Doc. E, 90th Cong., 2d Sess. 19 (1968). /40/ As an example, the memorandum noted that "(i)n some States of the United States * * * disputes affecting the title to real property are not arbitrable" (ibid.). In discussing Article V(2), the memorandum noted that both the nonarbitrability provision and the public policy exception "would give the courts to which application is made considerable latitude in refusing enforcement." S. Exec. Doc. E, supra, at 21. The memorandum further expressed the view that the exceptions to enforcement of awards provided in Article V(2) also would apply to the Article II(3) provision for enforcement of agreements to arbitrate. S. Exec. Doc. E, supra, at 19. The Senate's consent to accession should be viewed in light of the State Department interpretation that was before it at the time. /41/ As this Court has noted, such interpretations are entitled to great weight in interpreting a treaty. Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176, 184-185 (1982); Kolovrat v. Oregon, 366 U.S. 187, 194-195 (1961). It is therefore appropriate to conclude that the Senate, in consenting to accession, understood that the Convention would not require United States courts to enforce arbitration agreements in a limited class of matters as to which arbitration would interfere with fundamental policies of the United States. c. Although the Convention clearly contemplates the existence of certain subject matters as to which courts may decline to require arbitration, it does not specify what matters are within that category. In light of the general purpose of the Convention to encourage the recognition and enforcement of foreign arbitral awards, we believe the category of subject matter determined to be nonarbitrable should be quite limited. /42/ In our view, Contracting States should identify "certain categories of claims (as) non-arbitrable" only when there is a "special national interest vested in their (judicial) resolution" (Parsons & Whittemore Overseas Co. v. Societe Generale de l'Industrie du Papier (RAKTA), 508 F.2d 969, 975 (2d Cir. 1974) (emphasis in original)) such that enforcement of agreements to arbitrate such claims would necessarily frustrate a national policy of fundamental importance. /43/ We believe that federal antitrust claims fall within this narrow exception to arbitrability under the Convention. /44/ We base our conclusion on the significant public interest role that private antitrust suits play in the enforcement scheme of a statute that is central to our nation's economic policy and the importance of having such claims adjudicated in federal court. See pages 9-14, supra. Requiring referral of federal antitrust claims to arbitration, conducted by foreign arbitrators pursuant to privately selected law, would frustrate a national policy of fundamental importance. This Court in Scherk v. Alberto-Culver Co., 417 U.S. at 516-517, expressed concern that refusal by United States courts to enforce an international arbitration agreement might lead to retaliatory steps by other countries. However, the 68 nations that have adopted the Convention have done so in the knowledge that there are certain matters that other Contracting States may determine to be nonarbitrable on the ground that arbitration of those matters would frustrate fundamental national policies. Indeed, several Contracting States already have identified particular matters that they decline to refer to arbitration. See note 43, supra. The Contracting States know that the Convention will not work effectively unless all signatories show mutual respect for other nations' infrequent, but important, judgments concerning nonarbitrability. As the court of appeals noted (Pet. App. A17), the world community is well aware of the importance the United States attaches to its antitrust laws. /45/ The United States' determination that federal antitrust claims are nonarbitrable under the Convention therefore is not likely to result in either surprise or recrimination on the part of other signatories to the Convention. CONCLUSION Insofar as it holds that Soler's federal antitrust counterclaim should not be referred to arbitration, the judgment of the court of appeals should be affirmed. Respectfully submitted. REX E. LEE Solicitor General J. PAUL MCGRATH Assistant Attorney General LAWRENCE G. WALLACE Deputy Solicitor General CAROLYN F. CORWIN Assistant to the Solicitor General ROBERT B. NICHOLSON MARION L. JETTON Attorneys JANUARY 1985 /*/ The United States will not address the questions raised by the cross-petition, No. 83-1733, involving the arbitrability of claims under the federal Automobile Dealers' Day in Court Act, 15 U.S.C. 1221 et seq., the Puerto Rico Dealers Act, and the Puerto Rican antitrust laws. /1/ CISA, a Swiss corporation, is a wholly-owned subsidiary of Chrysler Corporation (Pet. App. A6). "Pet. App." refers to the appendix to the petition in No. 83-1569. /2/ Paragraph VI of the Sales Procedure Agreement provided (J.A. 52-53): All disputes, controversies or differences which may arise between (Mitsubishi) and (Soler) out of or in relation to Articles I-B through V of this Agreement or for the breach thereof, shall be finally settled by arbitration in Japan in accordance with the rules and regulations of the Japan Commercial Arbitration Association. /3/ The alleged breaches of contract included nonpayment for stored vehicles, nonpayment of contractual storage penalties, damage to Mitsubishi's warranties and goodwill, and failure to obtain financing as required by the Sales Procedure Agreement. Pet. App. A6, B2. /4/ Soler contended that Mitsubishi and CISA had unlawfully attempted to replace Soler with a Mitsubishi subsidiary and had allocated territories in a manner that unreasonably restricted the areas in which Soler could sell vehicles. Soler requested $10 million in damages in connection with its federal antitrust counterclaim. J.A. 91-96. /5/ The district court also ordered arbitration of Mitsubishi's contract claims and Soler's Dealers' Day In Court and Puerto Rican law counterclaims against Mitsubishi. CISA did not request arbitration of the counterclaims Soler filed against it. Thus, those counterclaims (including the federal antitrust counterclaim against CISA) were to follow their normal course in the district court. Pet. App. B11-B12. /6/ Following oral argument, the court of appeals invited the United States to submit a brief amicus curiae addressing the arbitrability of Soler's antitrust counterclaim under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The brief filed by the United States in response to that request took the position that the antitrust counterclaim was not arbitrable. /7/ The text of the Convention is reprinted at Pet. App. F1-F7. It appears also in the note following 9 U.S.C.A. 201. /8/ The court of appeals affirmed the district court's judgment as to all other issues raised by the appeal. See Pet. App. A29. Thus, Soler's counterclaims based on the federal Dealers' Day in Court Act and the Puerto Rican Dealers Act and antitrust statute were to be referred to arbitration. While the petition and cross-petition were pending, the district court on remand determined that Soler's federal antitrust counterclaim did not "permeate" the litigation. It therefore stayed litigation of that counterclaim and ordered that the arbitration proceed. See J.A. 6. /9/ Soler suggests in its cross-petition in No. 83-1733 that its agreement to arbitrate did not extend to antitrust claims. We assume for purposes of this brief that the courts below were correct in concluding (see Pet. App. A11-A13, B7) that Soler's federal antitrust counterclaim fell within the scope of its agreement to arbitrate disputes arising out of the Sales Procedure Agreement. /10/ Lake Communications, Inc. v. ICC Corp., 738 F.2d 1473, 1477-1480 (9th Cir. 1984); University Life Insurance Co. v. Unimarc Ltd., 699 F.2d 846, 850-851 (7th Cir. 1983) (Posner, J.); Applied Digital Technology, Inc. v. Continental Casualty Co., 576 F.2d 116, 117 (7th Cir. 1978); N.V. Mattschappij Voor Industriele Waarden v. A.O. Smith Corp., 532 F.2d 874, 876 (2d Cir. 1976); Varo v. Comprehensive Designers, Inc., 504 F.2d 1103, 1104 (9th Cir. 1974); Cobb v. Lewis, 488 F.2d 41, 47 (5th Cir. 1974); Helfenbein v. International Industries, Inc., 438 F.2d 1068, 1070 (8th Cir.), cert. denied, 404 U.S. 872 (1971); Power Replacements, Inc. v. Air Preheater Co., 426 F.2d 980, 983-984 (9th Cir. 1970); A. & E. Plastik Pak Co. v. Monsanto Co., 396 F.2d 710, 715-716 (9th Cir. 1968); American Safety Equipment Corp. v. J.P. Maguire & Co., 391 F.2d 821, 825-828 (2d Cir. 1968). See also Fanchon & Marco, Inc. v. Paramount Pictures, 107 F. Supp. 532, 548 (S.D.N.Y. 1952), rev'd on other grounds, 202 F.2d 731 (2d Cir. 1953). Cf. Silvercup Bakers, Inc. v. Fink Baking Corp., 273 F. Supp. 159, 162-163 (S.D.N.Y. 1967). This Court recognized essentially the same principle in United States v. Paramount Pictures, Inc., 334 U.S. 131, 176 (1948). The Court held that the district court had the power to establish an arbitration system for consenting movie distributors and exhibitors to settle certain licensing disputes, but it emphasized that such a system "would be merely an auxiliary enforcement procedure, barring no one from the use of other remedies the law affords for violations * * * of the Sherman Act" (ibid.). Cf. Paramount Famous Lasky Corp. v. United States, 282 U.S. 30 (1930). /11/ Mitsubishi contended only that the uniform rule stated by the courts of appeals should not be applied to international business transactions. See Mitsubishi C.A. Br. at 29-30. /12/ Indeed, Congress was so concerned with keeping treble damages suits in the federal courts that it rejected an effort to amend the proposed legislation to authorize similar suits in state courts. Senator Hoar, the floor manager of the bill, successfully argued that Congress should not (and indeed could not) allow state courts to hear private treble damages actions because such actions had "penal" and "punitive" characteristics and thus were proper for resolution only by federal judges. 21 Cong. Rec. 3146-3147, 3150 (1890). See also Blumenstock Bros. Advertising Agency v. Curtis Publishing Co., 252 U.S. 436, 440 (1920); Lyons v. Westinghouse Electric Corp., 222 F.2d at 189. /13/ Our research reveals only three other statutes that authorize private treble damages actions: 15 U.S.C. 72 (antidumping); Section 901(a) of the Organized Crime Control Act of 1970, 18 U.S.C. 1964; and 46 U.S.C. 1227 (discriminatory agreements among common carriers by water). The treble damages provisions of the antitrust laws are distinguishable from statutes under which triers of fact in their discretion may award punitive damages. See, e.g., 18 U.S.C. 2520; 15 U.S.C. 298(c). Under the antitrust laws, once a plaintiff has proved liability and actual damages, there is no automatic trebling of those damages. /14/ The public interest nature of an antitrust claim is not lessened by the fact that it involves a vertical rather than horizontal restraint (see Mitsubishi Br. 22 n.11). In either class of claims, the antitrust laws protect competition, not particular individuals. Anticompetitive vertical arrangements are illegal precisely because of their broader effect on the economy. See, e.g., Monsanto Co. v. Spray-Rite Service Corp., No. 82-914 (Mar. 20, 1984), slip op. 7 (legality of vertical conduct to be judged primarily by "market impact"). /15/ See Pitofsky, supra, 44 N.Y.U. L. Rev. at 1077 (noting significant decisions of this Court in private antitrust suits that could have been diverted into arbitration); Loevinger, supra, 44 N.Y.U. L. Rev. at 1091-1093 (discussing antitrust decisions of this Court that probably would have been decided differently by arbitrators). /16/ Mitsubishi notes (Br. 25) that an agreement to arbitrate a pre-existing antitrust dispute is not regarded as contrary to the public interest. See Cobb v. Lewis, 488 F.2d at 47-48; Coenen v. R.W. Pressprich & Co., 453 F.2d 1209, 1215 (2d Cir.), cert. denied, 406 U.S. 949 (1972). The rationale for allowing arbitration in such circumstances is that the parties to an antitrust dispute are always free to settle, and arbitration is an acceptable form of settlement agreement. Ibid. This case, in contrast, involves a sweeping, pre-dispute arbitration agreement, entered into before the alleged anticompetitive activities had taken place, and before the parties had any opportunity to evaluate the strength of their legal positions. /17/ See, e.g., Pet. App. A28-A29; Sam Reisfeld & Son Import Co. v. S.A. Eteco, 530 F.2d 679, 681 (5th Cir. 1976); A. & E. Plastik Pak Co. v. Monsanto Co., 396 F.2d at 716. /18/ See Pet. App. A28-A29; University Life Insurance Co. v. Unimarc Ltd., 699 F.2d at 851-853; Applied Digital Technology, Inc. v. Continental Casualty Co., 576 F.2d at 118; N.V. Maatschappij Voor Industriele Waarden v. A.O. Smith Corp., 532 F.2d at 876; Coenen v. R.W. Pressprich & Co., 453 F.2d at 1215-1216. /19/ Any suggestion that the only exceptions to the coverage of the Federal Arbitration Act are those expressly mentioned in the text of the Act or in other statutes is foreclosed by Wilko v. Swan, supra, in which this Court held that the federal arbitration statute must yield to the provisions for district court enforcement in the Securities Act of 1933, 15 U.S.C. 77a et seq., despite the fact that the latter statute does not expressly mention either arbitration or the arbitration statute. /20/ Mitsubishi quotes at some length from this Court's opinion in Southland Corp. v. Keating. However, that case does not concern the arbitrability of federal antitrust claims; rather, it holds that the Federal Arbitration Act preempts contrary state law. The Court expressly distinguished the latter question from the question whether Congress itself intended an exception to the federal arbitration statute. See slip op. 13 n.11. /21/ We have not found any case prior to 1925 that addresses the arbitrability of private antitrust claims; however, we also have not discovered any case in which such a claim was arbitrated in the period between 1890 and 1925 -- presumably because there was a clear understanding during that period that Congress had not permitted such arbitration. /22/ Indeed, Section 2 of the Arbitration Act provides that an agreement to arbitrate shall be enforceable "save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. 2. In 1925, as now, a bargain contrary to public policy would be invalid and therefore revocable. See Pope Mfg. Co. v. Gormully, 144 U.S. 224, 234-237 (1892); 6A A. Corbin, Corbin on Contracts Section 1375 (1962); 2 Restatement of the Law of Contracts Sections 512, 598 (1932). At the time, it was settled that some matters were not arbitrable for public policy reasons. For example, a complaining party's participation in a criminal action clearly was not subject to arbitration. See, e.g., Wise v. Johnson, 14 Ala. App. 396, 69 So. 986 (1915); Partridge v. Hood, 120 Mass. 403, 405 (1876); Mevay v. Edmiston, 1 Rawle 457 (Pa. 1829). In view of the punitive and deterrent functions of private antitrust actions (see pages 10-11, supra) and the criminal nature of Sherman Act violations, a private antitrust plaintiff is not unlike a complainant in a criminal case. /23/ Transactions that arise in an international setting may nevertheless be subject to the United States antitrust laws. The nationality of the parties is one of several factors that federal courts may weigh in deciding whether to assert subject matter jurisdiction over such claims, but it is not in itself a dispositive criterion. See Mannington Mills, Inc. v. Congoleum Corp., 595 F.2d 1287, 1297 (3d Cir. 1979); Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597, 614 (9th Cir. 1976). /24/ Amicus ICC suggests (Br. 27) that the competitive concerns of the United States can be addressed adequately when a party seeks enforcement of an arbitral award. But unless the arbitral proceedings have resulted in a complete record and statement of the reasons for the award, a federal court would be required to engage in de novo consideration of the antitrust claim. That may or may not be possible, depending on how broad an interpretation is placed on the "public policy" exception contained in Article V(2)(b) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. See page 26, infra. Moreover, rather than having two forums decide the antitrust issue on two separate records, it would be far more efficient for a court to refer the nonantitrust issues to arbitration, where possible, and to retain jurisdiction of the antitrust claim. In cases in which the antitrust issue is asserted as a counterclaim, it may even be unnecessary to consider the antitrust issue once the initial dispute is settled. Cf. pages 14-15, supra. /25/ Mitsubishi (Br. 25) and amicus ICC (Br. 17) suggest that foreign arbitrators are more qualified to decide antitrust disputes than American juries. However, unlike foreign arbitrators, American juries receive detailed legal instructions from a court familiar with United States antitrust law. /26/ The contract in this case states that Swiss law will govern the agreement, as if the contract was entirely performed in Switzerland (J.A. 56). In an informal discussion with an official of the Swiss Embassy before we filed our amicus submission with the court of appeals, we were advised that, in that official's view, a Swiss court would be unlikely to apply United States antitrust laws to an agreement "entirely performed" in Switzerland. There is obviously no basis for assurances that a Japanese arbitrator would conclude otherwise. /27/ It is not clear that such a contract would be permissible if the foreign forum were a court, rather than an arbitral tribunal. This Court has stated that "(a) contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought." The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972). See also id. at 17. /28/ For purposes of the Sherman Act, Puerto Rico is treated as a state of the United States, not a territory. See Cordova & Simonpietri Insurance Agency Inc. v. Chase Manhattan Bank, 649 F.2d 36, 38-44 (1st Cir. 1981). /29/ Obviously it remains for Soler to prove its allegations. We take no position on the merits of the federal antitrust counterclaim. /30/ The arbitration clause in Scherk provided that arbitration would take place in France, but that the substantive law of Illinois would apply. 417 U.S. at 508. /31/ The third concern mentioned by the Court in Scherk, courts and venue under the securities laws, is not relevant in the case of the antitrust laws. /32/ See United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 558 (1944) (Congress intended the antitrust laws to extend to the utmost extent of its power to regulate interstate and foreign commerce). The potential application of the Sherman Act became even clearer once Soler alleged that Mitsubishi and CISA had allocated markets and prohibited Soler from selling automobiles to dealers in the continental United States. See, e.g., Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d at 608-615; Foreign Trade Antitrust Improvements Act of 1982, Pub. L. No. 97-290, Sections 401 et seq., 96 Stat. 1246-1247. In contrast to the agreement involved here, the contract in Scherk had only a minimal relationship to the United States. See 417 U.S. at 515 ("the subject matter of the contract concerned the sale of business enterprises * * * primarily situated in European countries, whose activities were largely, if not entirely, directed to European markets"). /33/ Although the securities laws that were at issue in Scherk are of substantial importance, the court of appeals correctly noted (Pet. App. A26) that they differ from the antitrust laws in significant respects. The securities laws were enacted in large part to protect individual investors (see United States v. Naftalin, 441 U.S. 768, 774-777 (1979); Wilko v. Swan, 346 U.S. at 431), while the antitrust laws exist to protect competition itself. Moreover, Congress has provided that private antitrust plaintiffs may recover treble damages, but has provided only for recovery of actual damages by securities plaintiffs. Thus, in the antitrust enforcement scheme private suits play a central role in vindicating the public interest. See Lake Communications, Inc. v. ICC Corp., 738 F.2d at 1478 n.3. /34/ Although the Court in Scherk referred to the Convention as providing general confirmation for its holding there, it did not specifically consider the scope of exceptions to arbitrability established by the Convention. See 417 U.S. at 520-521 n.15. /35/ The United States did not sign the Convention at the time it was adopted by the United Nations conference. However, support for the Convention grew in the United States, and in 1968 the President transmitted the Convention to the Senate for its advice and consent. In 1970, the Senate consented to United States accession to the Convention. Pursuant to Article I(3) of the Convention, Congress specified that only arbitration agreements and awards arising out of commercial legal relationships would fall under the Convention. 9 U.S.C. 202. The primary reasons the United States did not originally sign the Convention were a perceived "conflict with * * * domestic laws," traditional common law hostility to arbitration and lack of support in the business community. S. Exec. Rep. 10, 90th Cong., 2d Sess. 1, 4 (1968). In his 1968 letter of transmittal to the Senate, the President stated that experience under the Convention had established that it contributed in many ways to the promotion of international trade and investment. The President also reported substantial support for United States accession among members of the business community concerned with international trade and in the legal community. S. Exec. Doc. E, 90th Cong., 2d Sess. 1 (1968). /36/ Mitsubishi and its amici correctly point out that, at least in recent years, arbitration of a wide variety of complex international disputes has become a familiar practice that increasingly has gained general acceptance in the international community. /37/ See Rhone Mediterranee Compagnia v. Lauro, 712 F.2d 50, 53-54 (3d Cir. 1983); Ledee v. Ceramiche Ragno, 684 F.2d 184, 187 (1st Cir. 1982); I.T.A.D. Associates, Inc. v. Podar Bros., 636 F.2d 75, 77 (4th Cir. 1981); Parsons & Whittemore Overseas Co. v. Societe Generale de l'Industrie du Papier (RAKTA), 508 F.2d 969, 973-974 (2d Cir. 1974). /38/ Even when a dispute concerns arbitrable subject matter, Article II(3) allows a court to refuse to refer parties to arbitration if it "finds that the said agreement is null and void, inoperative or incapable of being performed." The court of appeals noted (Pet. App. A19-A20 & n.9) that these latter restrictions on referral appear to look not to the subject matter of the arbitration, but to the fundamentals of procedural fairness and feasibility. Accord, Rhone Mediterranee Compagnia v. Lauro, 712 F.2d at 53-54; Ledee v. Ceramiche Ragno, 684 F.2d at 187; I.T.A.D. Associates, Inc. v. Podar Bros., 636 F.2d at 77. But see G. Haight, Convention on the Recognition and Enforcement of Foreign Arbitral Awards 27-28 (1958) (Haight) ("incapable of being performed" may be meant to include subject matter arbitrability). /39/ These limitations on enforcement of arbitral awards strongly suggest that Article II is properly read similarly to limit the requirement of referral to arbitration in the first place. The terms of Articles II and V are not identical, and there is no express linkage between the two, perhaps because initial drafts of the Convention dealt only with recognition of arbitral awards, while the provisions on recognition of arbitration agreements were added at a later stage. Some delegates expressed concern that lack of a specific provision in Article II relating the arbitration agreement to an arbitral award capable of enforcement might lead to disputes concerning nonarbitrable subject matter. See Haight 27-28. This perceived deficiency was never corrected. Haight suggests, however, that the courts may, e.g., link Articles II(3) and V(2)(b) by "find(ing) an agreement incapable of performance if it offends the law or the public policy of the forum." Haight 28. Some delegates argued that it was unnecessary to include both subparagraphs 2(a) and (b) of Article V, since nonarbitrability (Article V(2)(a)) was encompassed within the public policy exception of Article V(2)(b). See Haight 66-71. In the end, the delegates retained both grounds. The negotiating history reflects very little discussion about the sorts of subjects that might be considered nonarbitrable or awards that might be contrary to the public policy of a given country. See ibid. Cf., e.g., Waterside Ocean Navigation Co. v. International Navigation Ltd., 737 F.2d 150, 152 (2d Cir. 1984) (public policy defense of Article V limited to violations of "most basic notions of morality and justice"). /40/ There is no basis for Mitsubishi's suggestion (Br. 41) that the reference in the State Department memorandum to "laws in force" should be read to include only the text of statutes and not the judicial interpretation of those texts. /41/ The Senate report and the floor debate on the Convention are very abbreviated and shed no light on the issue now before the Court. See S. Exec. Rep. 10, supra; 114 Cong. Rec. 10487-10488, 29350-29353, 29605 (1968). /42/ Claims that are nonarbitrable in a domestic context would not automatically be nonarbitrable under the Convention. This Court's decision in Scherk makes that clear, even apart from the requirements of the Convention. /43/ For examples of matters that courts of other nations have held nonarbitrable, and therefore outside the scope of the Convention, see Audi-NSU Auto Union A.G. v. S.A. Adelin Petit & Cie (Cour de Cassation, Belgium, 1979), in 5 Y.B. Commercial Arbitration 257 (1980) (Belgian law precludes arbitration of disputes arising under a Belgian statute concerning unilateral termination of exclusive distributorships); Compagnia Generale Construzioni v. Piersanti (Corte di Cassazione, Italy, 1979), in 6 Y.B. Commercial Arbitration 229 (1981) (Italian law precludes arbitration of labor disputes). /44/ See Lake Communications, Inc. v. ICC Corp., 738 F.2d at 1479 n.5 (Convention does not require referral of antitrust claims to arbitration); Parsons & Whittemore Overseas Co. v. Societe Generale, 508 F.2d at 974, 975 (suggesting that under Article V(2)(a) of the Convention, a court sitting in the United States might be expected to decline to enforce an award involving arbitration of an antitrust claim); Societe Nationale pour la Recherche v. General Tire & Rubber Co., 430 F. Supp. 1332, 1334 (S.D.N.Y. 1977). See also A. van den Berg, The New York Arbitration Convention of 1958, at 369 (1981) (noting that classic examples of nonarbitrable subject matters include antitrust). Cf. La Societe Nationale pour la Recherche v. Shaheen Natural Resources Co., 585 F. Supp. 57, 63 (S.D.N.Y. 1983), aff'd, 733 F.2d 260 (2d Cir. 1984) (rejecting public policy defense based on antitrust considerations on the facts before the court). /45/ Similarly, the Federal Republic of Germany, which is also a signatory to the Convention, considers its antitrust rule to be part of the ordre public and explicitly prohibits a predispute agreement to arbitrate certain classes of antitrust claims that precludes alternative recourse to the courts. See Section 91(1) of the Act Against Restraints of Competition, reprinted in 1 Organisation for Economic Co-operation and Development, Guide to Legislation on Restrictive Business Practices (1980).