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BIOTRONIK MESS-UND THERAPIEGERAETE GMBH & CO. v. M

May 12, 1976

BIOTRONIK MESS-und THERAPIEGERAETE GmbH & CO., Petitioner,
v.
MEDFORD MEDICAL INSTRUMENT COMPANY, Respondent



The opinion of the court was delivered by: BROTMAN

 This is an action to enforce an arbitration award entered by the International Chamber of Commerce Court of Arbitration at Berne, Switzerland, on December 30, 1974. The petitioner, Biotronik Mess-und Therapiegeraete GmbH & Co., (hereafter "Biotronik") is a West German manufacturer of implantable cardiac pacemakers and accessories. The respondent, Medford Medical Instrument Co. (hereafter "Medford"), a New Jersey corporation with its principal place of business in Medford, New Jersey, served as Biotronik's American distributor from December 1969 until January 1972.

 The action arises under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, [1970] 3 U.S.T. 2517, T.I.A.S. No. 6997, *fn1" and 9 U.S.C. § 201. *fn2" The application to confirm the award is brought pursuant to 9 U.S.C. § 207, *fn3" and is before the court by motion. *fn4" Jurisdiction of the court is conferred by 9 U.S.C. § 203 *fn5" and 28 U.S.C. § 1331.

 Facts

 Medford's distributorship arrangement consisted of two written agreements. In the First Agreement, executed on December 20, 1969, Biotronik granted Medford the exclusive right to market its products in the United States until February 1, 1971. On January 16, 1971, the parties negotiated a second exclusive-distributorship agreement that was to run for a period of twelve months beginning February 1, 1971. In October of 1971, Biotronik exercised its right to terminate the Second Agreement at the end of one year. *fn6" Biotronik subsequently appointed another firm, Concept Inc., to be its new American distributor.

 Six months later, in June, 1972, a dispute arose over several shipments of products that Biotronik had made to Medford immediately prior to the termination of the Second Agreement. Biotronik demanded payment for four shipments of goods in the amount of $65,403.60. Medford did not deny its liability for the shipments, but by letter dated July 17, 1972 claimed to possess breach-of-contract claims arising out of alleged oral promises by Biotronik to renew Medford's distributorship, and other grounds. Medford proposed a mutual renunciation of claims, which Biotronik rejected. Opinion of the Arbitrators P 3, 4. *fn6"

 The Second Agreement contained the following provision for the resolution of such disputes:

 
13. In the event of any controversy or claim arising out of or related to any provision of this agreement, or the breach thereof, the parties shall attempt to reach an amicable settlement. If they fail to agree, the dispute shall be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris, France, by three arbitrators appointed in accordance with the laws then prevailing. The arbitration shall take place in Berne, Switzerland. German material law (Materielles Recht) and German law of procedure (Prozessrecht) must be applied. The award shall be final and binding and may be entered in any court having jurisdiction or application may be made to any court for judicial acceptance of the award or an order for enforcement, as the case may be.

 When the parties were unable to reach a settlement, Biotronik, on February 14, 1973, submitted the matter to arbitration pursuant to the above contractual provision. Medford apparently had notice of the pendency of the arbitration, since it submitted to the panel a copy of its July 17, 1972 letter which served as a denial of Biotronik's claims. Opinion of the Arbitrators P 5. In any event, Medford pointedly does not attack the adequacy of notice in this court. *fn7" Biotronik ultimately prevailed in the arbitration and was awarded the sum of $56,306.78 together with interest and costs. *fn8"

 Medford's opposition to the enforcement of the arbitration award is based on a document that it characterizes as the "Third Agreement." This agreement was purportedly executed on January 31, 1972, one day prior to the termination of Medford's distributorship. Written in the handwriting of Medford's president on a sheet of its stationery, the Third Agreement reads in its entirety:

 
Stating that a 5% Commission is to be paid to Medford Medical Instrument Co. on the total sales of Biotronik Pacemakers in the United States for the first year 1972 and a 3% Commission will be paid for the second year 1973. This is to Medford Medical for helping Concept get started in the U.S. market.

 According to Medford, this agreement entitled it to commissions on the total sales of Biotronik's pacemakers in the United States for two years after the termination of the distributorship. Medford further alleges that the parties agreed to credit the commissions against any outstanding sums owed by Medford to Biotronik. Medford maintains that it never owed Biotronik the amount awarded in the arbitration proceeding because the commissions, which were never paid, either offset or exceeded Biotronik's original claim.

 Background of the Convention

 In 1958, some twenty-six of the forty-five member nations adopted the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, 330 U.N.T.S. 38 (hereafter "the Convention"). The Convention superseded two earlier multilateral treaties adopted by the League of Nations, the Geneva Protocol on Arbitration Clauses, opened for signature September 24, 1923, 27 L.N.T.S. 157, and the Geneva ...


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