Filanto, S.P.A. v. Chilewich International Corp.

789 F. Supp. 1229 (1992)

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Nature of the Case

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Facts

Chilewich’s (D) agent signed a contract with Raznoexport to supply footwear. Section 10 of this Russian Contract required Arbitration at the USSR Chamber of Commerce and Industry, Moscow, in accordance with the Regulations of the said Arbitration. P is an Italian corporation engaged in the manufacture and sale of footwear. D visited P's factories to negotiate a purchase to fulfill the Russian Contract. P made an agreement to sell boots to D. The boots were to be sent to Moscow. This would satisfy an agreement between D and a Russian company. The contract between P-D was consummated by a memorandum agreement sent from D regarding two shipments of boots. The agreement stated that the Russian contract terms would govern the contract between P-D. D signed the Memorandum Agreement, and sent it to P. P did not sign or return the document. D then opened a Letter of Credit in P's favor in the sum of $2,595,600.00. The memo agreement incorporated the Russian Contract in its terms and conditions. Months later P had signed the Memorandum Agreement but appended a covering letter, purporting to exclude all but three sections of the Russian Contract. D took the position it would not open the second Letter of Credit unless it received from P a signed copy of the contract without any exclusions. D asked P for acceptance of all the Russian Contract terms. D bought and paid for 60,000 pairs of boots in January 1991, but never purchased the 90,000 pairs of boots that comprise the balance of D's original order. D's failure to do so that forms the basis of this lawsuit, commenced by P. After the filing, P sent a letter acknowledging a section of the Russian Contract, which P had earlier purported to exclude in a dispute by D that some of the boots were defective. D contends that such a dispute was to be arbitrated in Moscow as per the Russian contract which was alleged to be incorporated between P-D. P moved to enjoin arbitration in Moscow or to instead hold arbitration proceedings in New York.