Bauhinia Corporation v. China National MacHinery & Equipment Import & Export Corp., Defendants

China National Machinery & Equipment Import and Export Corporation (CMEC) appeals an order of the district court compelling arbitration of a contract dispute between CMEC and Bauhinia Corp. Bauhinia sued CMEC for breach of contract and CMEC moved to compel arbitration before the China Council for the Promotion of International Trade (CCPIT) in Peking. The district court granted the motion to compel arbitration, but ordered arbitration before the American Arbitration Association (AAA).

FACTS

Bauhinia is a California Corporation founded by Mr. Abbies Tsang who fled the People’s Republic of China in 1974. CMEC is a Chinese state trading organization.

In 1981 and 1982 Bauhinia contracted to purchase nails from CMEC. The parties executed the contracts in California for delivery to Stockton, San Francisco and Los Angeles, California, and Seattle, Washington. CMEC failed to deliver the nails claiming that an edict from the People's Republic of China prevented performance.

After Bauhinia filed suit in district court, CMEC moved to compel arbitration invoking arbitration clauses in the contracts. The first contract, written in Chinese, provides “[i]n case quality problems occurs, the…