Terra, a German company, had a contract with Unitrans, an American company, for

Question

Terra, a German company, had a contract with Unitrans, an American company, for some business in Lithuania. The contract stated that in event of a dispute, the parties would go to the Vilnius Court of Commercial Arbitration in Lithuania. When a dispute arose, Terra sued Unitrans in federal court in the United States. Would the court take the case because the arbitration was to occur in a country other than Germany or the United States? [Terra Holding GmbHv. Unitrans International, F. Supp. 3d, E.D. Va. (2015)]

Explanation / Answer

The court has the jurisdiction to try the case in US. However, there is the arbitration clause which particularly states about jurisdiction for resolution of dispute. Therefore the Vilnius Court of Commercial Arbitration in Lithuania will first determine whether it can try the case or not by going through the agreement. If it decides to hear the matter, Dispute would be decided in Vilnius court. However if it sees no merit in agreement for trying out case in its court the US court could well go on to resolve the issue.

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