UPM-Kymmene Corp. v. Renmatix, Inc., C.A. No. 2017-0363 (Del. Ch. Oct. 6, 2017) [click for opinion]
In 2013, Plaintiff UPM-Kymmene Corporation ("UPM") entered into two agreements with Defendant Renmatix, Inc. ("Renmatix") to explore potential collaborations involving certain technology Renmatix had developed. The first agreement (the "Bi-Lateral Agreement") provided that all disputes would be arbitrated before the International Chamber of Commerce (the "ICC"). The second agreement (the "Tri-Lateral Agreement," as it included an additional signatory, BASF SE ("BASF")) provided that any dispute would be arbitrated before the American Arbitration Association ("AAA").
In 2017, Renmatix filed an arbitration against UPM before the AAA, pursuant to the arbitration agreement in the Tri-Lateral Agreement, asserting only claims under the Tri-Lateral Agreement. UPM then filed a suit before the Delaware Court of Chancery to prevent Renmatix from arbitrating its claims before the AAA or any forum other than the ICC, as provided for under the Bi-Lateral Agreement. Renmatix moved to dismiss the complaint for lack of subject matter jurisdiction based on the existence of an adequate remedy at law in the form of arbitration before the AAA. UPM cross-moved for summary judgement.
In deciding the motions, the Delaware court explained that courts typically decide the issue of arbitrability, unless there is clear and unmistakable evidence that the parties intended otherwise. Such an intent can be shown when parties agree to arbitrate under the rules of an institution that provides that arbitrators should decide the issue of arbitrability. Both the ICC and AAA rules so provide. However, this situation was anomalous. As the court explained, "[i]n the face of such dueling arbitration clauses, I cannot discern an intention, much less a clear and unmistakable intention, that the parties wished to have one arbitrator rather than the other determine where the claims" should be arbitrated. Thus, it fell to the court to decide the issue.
UPM contended that the Tri-Lateral Agreement was an agreement among three parties that did not create responsibilities that Renmatix could enforce against only UPM. According to UPM, Renmatix was trying to use AAA arbitration inappropriately to raise claims against UPM under the Bi-Lateral Agreement, which provided for arbitration before the ICC.
The court disagreed and held that Renmatix could in fact assert a claim against UPM alone under the Tri-Lateral Agreement. It relied on the following reasons: (i) the term "Parties" as used in the Tri-Lateral Agreement could refer to a single "Party," as per the "Definitions" in the agreement; (ii) the Tri-Lateral Agreement expressly envisaged scenarios where Remantix could have a long-standing contractual relationship only with UPM or BASF, but not both together; (iii) when the Tri-Lateral Agreement intended the mandatory participation of all three parties, it expressly stated so; and (iv) the Tri-Lateral Agreement determined obligations which would be illogical to construe as enforceable to all parties at the same time. The court thus held that the AAA arbitration was proper.