Use of “Related To” in an Arbitration Provision

Steven Sholk told me about a recent court order of the District Court for the Northern District of California in the litigation known as In re TFT-LCD (Flat Panel) Antitrust Litigation. (Go here for a PDF copy of the court order.)

In this litigation, Nokia filed suit against numerous U.S. and other defendants for violations of state and federal antitrust laws. One of the defendants, AU Optronics Corporation, moved to compel arbitration under a 2005 product purchase agreement between Nokia and Optronics that contained the following provision:

Any disputes related to this Agreement or its enforcement shall be resolved and settled by arbitration in the English language in London, England, in accordance with the Arbitration Rules of the ICC.

Nokia argued that its antitrust claims exist apart from the parties’ contract relationship and so aren’t governed by the arbitration provision in the product purchase agreement. The court disagreed, holding that as follows:

[T]he language “related to” must be read broadly, to encompass any matter that touches the contract relationship between the parties. This must include matters that, while not arising directly under the contractual relationship, are nevertheless related to it. Nokia’s antitrust claims, while existing outside of the parties’ contractual relationship, nevertheless relate to the parties’ relationship.

As always, the question is, What’s a contract drafter to make of this?

The conclusion I wouldn’t draw is that you should always include related to (or relating to) in your arbitration, governing-law, and dispute-resolution provisions. Sure, that would ensure that they’re broad, but it wouldn’t be clear how broad, and that uncertainty could result in unpleasant surprises down the road.

My preference would be to (1) use arising out of and (2) be specific as to what falls within the scope of the provision. This is something that I discuss in my article on shortcomings in the American Arbitration Association’s standard arbitration clause. (Go here for a PDF copy.)