United States District Court, D. Delaware
to Rule 65 of the Federal Rules of Civil Procedure, Defendant
CH Bus Sales, LLC ("CH Bus") has moved to enjoin an
arbitration with Plaintiff Temsa Ulasim Araclari Sanyi Ve
Ticaret A.S. ("Temsa") currently proceeding in New
York before the American Arbitration Association
("AAA"). (D.I. 4). For the reasons set forth below,
a decision on this motion is stayed until after the
arbitrator decides the motion CH Bus simultaneously filed
with the arbitrator to dismiss the arbitration for lack of
jurisdiction. (See D.I. 17 at 2; Id. at Ex.
manufactures motorcoaches sold worldwide. (D.I. 15 at 3). On
February 2, 2010, Temsa and CH Bus entered into a
Distribution Agreement, by which CH Bus became an exclusive
distributor of motorcoaches manufactured by Temsa. (D.I. 1-1
at ¶ 6). Under the Distribution Agreement, CH Bus was
required to remit payment for the motorcoaches to Temsa
within ninety days of the bill of lading. (D.I. 15-1 at
§ 4.5). The Distribution Agreement also required the
parties to submit all disputes arising under the Distribution
Agreement to arbitration before the AAA applying the
AAA's Commercial Arbitration Rules. (D.I. 15-1 at
§17.3). Specifically, the Distribution Agreement states
in relevant part:
The parties will attempt in good faith to resolve amicably
all disputes and claims arising under this Agreement. If the
parties cannot amicably settle their differences, the parties
shall submit all unresolved differences to arbitration.
Arbitration will be held in New York, New York, in accordance
with the then prevailing Commercial Arbitration Rules of the
American Arbitration Association.
parties later entered into side-letter agreements, amendments
to the Distribution Agreement, and a Security Agreement.
(See D.I. 15-2; D.I. 15-3; D.I. 15-5; D.I. 15-6).
The amendments to the Distribution Agreement did not affect
the arbitration provision. (See D.I. 15-3). The
side-letter agreements governed the sale of a specific set of
motorcoaches identified therein and further provided that all
disputes "arising from or related to" the
side-letter agreements shall be resolved by the courts
located in the State of Delaware. (D.I. 15-2; D.I. 15-5). The
Security Agreement granted Temsa a security interest in every
motorcoach Temsa sold to CH Bus in order to secure CH
Bus's obligation under the Distribution Agreement to pay
the full purchase price for each motorcoach. (D.I. 15-6,
Recitals). Like the side-letter agreements, the Security
Agreement provided that any disputes "arising from or
related to" the Security Agreement shall be resolved by
the courts located in the State of Delaware. (Id. at
between the execution of the Distribution Agreement and now,
the parties' business relationship soured. On March 22,
2018, Temsa filed a demand for arbitration against CH Bus
with the AAA. (D.I. 15-8). The arbitration demand sets forth
seven counts: (1) breach of the Distribution Agreement, (2)
breach of the implied covenant of good faith and fair
dealing, (3) unjust enrichment, (4) promissory estoppel, (5)
conversion, (6) accounting, and (7) declaratory judgment.
(Id. at ¶¶ 65-91). Separately, on April 9,
2018, Temsa commenced an action in the Delaware Court of
Chancery to secure its rights in the collateral in accordance
with the parties' Security Agreement. (D.I. 1-1, Ex. A).
That action was removed to this court. The complaint in this
court sets forth three counts: (1) declaratory judgment; (2)
specific performance; and (3) imposition of a constructive
trust. (D.I. 1-1, Ex. A at ¶¶ 15-40).
not the arbitrator, decide questions of arbitrability unless
there is "clear and unmistakable evidence" that the
parties intended otherwise. AT&T Tech., Inc. v.
Commc'ns Workers of Am., 475 U.S. 643, 650 (1986);
Opalinski v. Robert Half Int'l. Inc., 761 F.3d
326, 335 (3d Cir. 2014); James & Jackson, LLC v.
Willie Gary, LLC, 906 A.2d 76, 78 (Del. 2006).
"Virtually every circuit to have considered the issue
has determined that incorporation of the AAA arbitration
rules constitutes clear and unmistakable evidence that the
parties agreed to arbitrate arbitrability."
Chesapeake Appalachia, LLC v. Scout Petroleum, LLC,
809 F.3d 746, 763 (3d Cir. 2016) (internal punctuation
omitted) (quoting Oracle Am., Inc. v. Myriad Grp.
A.G., 724 F.3d 1069, 1074 (9th Cir. 2013)); Willie
Gary, 906 A.2d at 78 (adopting the majority view that
"where the arbitration clause provides that the
arbitration will be conducted in accordance with the rules of
the American Arbitration Association (AAA), that statement
constitutes clear and unmistakable evidence of the
parties' intent to have an arbitrator determine
the parties provided clear and unmistakable evidence that
arbitrability is to be determined by the arbitration panel,
and not the court, because the parties incorporated the AAA
rules into the arbitration provision of the Distribution
Agreement, and the Distribution Agreement serves as the basis
of Temsa's claims in the arbitration. (See D.I.
15-1 at §17.3). CH Bus argues that the arbitration
provision in the Distribution Agreement has been superseded
by-and conflicts with-amendments to the Distribution
Agreement and the wholly separate Security Agreement. This
assertion does not seem entirely accurate. First, the
amendments to the Distribution Agreement made no changes to
the arbitration provision. (See D.I. 15-3). Second,
the side-letter agreements and the Security Agreement have
conflicting dispute resolution provisions-because they
identify Delaware courts as the forum to resolve any
disputes-but it is not clear at this stage of the proceedings
that those agreements superseded the Distribution Agreement.
Third, Temsa's arbitration demand does discuss the March
17, 2017 side-letter agreement and the Security Agreement,
but its claims in the arbitration demand appear to rest
primarily on the Distribution Agreement. The discussion in
the demand of the side-letter agreement and the Security
Agreement is an entanglement that gives the court pause, but
not enough to overcome the clear and unmistakable evidence
that the parties intended for the arbitrator, and not the
court, to decide in the first instance issues related to
foregoing reasons, CH Bus' Motion to Enjoin the
Arbitration (D.I. 4) is stayed until after the arbitrator
decides the motion CH Bus simultaneously filed with the
arbitrator to dismiss the arbitration for lack of
jurisdiction. An appropriate order will be entered.