Milos Sovak, M.D. Biophysica, Inc. v. Chugai Pharmaceutical Co., a Corporation of the Empire of Japan Cook Imaging Corporation, an Indiana Corporation

We must decide whether federal or state law governs the right to compel arbitration when the underlying agreement contains only a general state choice-of-law clause.

I

In 1986, Milos Sovak, while chairman of the board of Cook Imaging Corporation (“Cook”), co-invented an x-ray enhancing drug called “Ioxilan.” Sovak promptly assigned his patent rights to Ioxilan in the United States and Japan to Cook.

In 1987, Sovak, on behalf of Cook, contracted with Chugai Pharmaceutical Company (“Chugai”) for assistance in obtaining approval from the Japanese Ministry of Health and Welfare (the “Ministry”) for the sale of Ioxilan in Japan. Under the Ioxilan contract, Chugai agreed to perform clinical trials in Japan and to file an application for final approval with the Ministry. Upon final approval, Chugai had the option of becoming Cook’s exclusive licensee to sell Ioxilan in Japan in exchange for the payment of royalties. Chugai also had the option of terminating the contract at any time upon sixty days written notice.

In 1991, Sovak stepped down as chairman of Cook. Sovak and Cook entered into a Stock Redemption Agreement under which Cook agreed to pay Sovak thirty-three percent…