PRM Energy Systems, Inc. v.

Primenergy
United States Court of Appeals,
Eighth Circiut,
592 F.3d 830 (2010).
MELLOY, BEAM, and GRUENDER, Circuit Judges.
Plaintiff Appellant: PRM Energy Systems, Inc., an Arkansas Corporation,
Plaintiff: Energy Process Technologies, Inc.,
Defendant: Primenergy, L.L.C., an Oklahoma Limited Liability Company
Defendant Appellee: Kobe Steel, Ltd.,

I. What is Arbitration?
- Alternative resolution instead of litigation
- Require the third partys presence: Arbitrator.
- The right to make decision belongs to arbitrator.
- Power is strict and flexible
- Arbitration Clause: The agreement in a contract states that any disputes
arising under the contract would be resolved through arbitration rather
than court system.
II. Background and Analysis
1. Background
- PRM sued Primenergy for fraud and theft trade secrets
- PRM sued Kobe for using their own techno in Japan without permission
- The Trial Court declared that PRM had to take all the complaints to arbitration.
- Problem:
+ Is PRM correct when appealed?
+ Why or Why not?
2. Analysis
When Kobe Steel moved to compel arbitration of PRMs claims pursuant to arbitration
provisions in the 1999 Agreements, and the district court1 granted Kobe Steels motion, PRM
is absolutely correct that Kobe Steel, as a non-signatory to the 1999 Agreements, should not
be permitted to enforce the arbitration provisions from those Agreements.
- There are five interlocking contracts relevant to the disputes between PRM and
Primenergy: General Agreement, the Territorial License Agreement, the
Confidentiality Agreement, the Consulting Agreement, and the Option To Expand
Territory. As a group, the contracts are referred to as "the 1999 Agreements."
- The General Agreement contains an Arbitration Clause providing that "[a]ll disputes
under the General Agreement that cannot be resolved by the parties shall be decided
by arbitration." Each of the other four contracts contains a provision which makes it a
part of the General Agreement, and thus subject to the Arbitration Clause of the
General Agreement.
Pursuant to the Arbitration Clause, various disputes sounding in contract between
PRM and Primenergy were submitted to arbitration.
- The arbitration clause tangentially at issue here purports to cover "all disputes arising
under" a technology licensing agreement between PRM and Primenergy.
- PRM asserts only a garden variety tort claim against Kobe Steel that does not directly
touch either the subject matter or the geographic reach of the PRM/Primenergy
contract itself.
according to PRM, the tortious activities of Kobe Steel deal with transactions beyond
the scope, and purposefully outside of, the licensing authority granted Primenergy. To
be sure, it is axiomatic that in order for Kobe Steel to have engaged in the alleged
misconduct it must have had knowledge of the 1999 Agreements but that is the extent
of the allegations' involvement with those agreements.
- The PRM/Primenergy agreements do not mention Kobe Steel and perform no
function whatsoever relating to the supposed Kobe Steel/Primenergy "exclusive
collaboration" agreement. And, Kobe Steel was never a participant in the
PRM/Primenergy deal.
Thus, the concerted misconduct requirements of Donaldson, the case that mainly drives the
court's analysis in this appeal, are almost totally absent. Accordingly, as in Donaldson, this
litigation, too, lacks sufficient allegations of pre-arranged collusive behavior, and Kobe
Steel's arbitration demand should be rejected.
III. Precedent
DONALDSON COMPANY INC v. BURROUGHS DIESEL INC
Plaintiff: DONALDSON COMPANY, INC
Defendant: BURROUGHS DIESEL, INC.
The players in this lawsuit are:
Western Star Truck Sales Inc is a manufacturer and distributor of trucks.
Burroughs Diesel Inc is a dealer of Western Star.
Donaldson Company Inc supplied portions of the truck's air intake system.
1.The truck engines failed, and in November 2001 the consumers sued Donaldson,
Western Star, and Burroughs.
2.Burroughs cross-claimed against Donaldson & Western Star.
3.Western Star moved to compel arbitration against Burroughs.
4.Donaldson found out about the arbitration, and said that the cross-claim of
Burroughs must be arbitrated.
5.The district court granted Donaldson's motion to compel arbitration.
6.On July 20 2009 the 8th Circuit reversed the district court.
7.On September 16, 2009 the 8th Circuit vacated the July decision and substituted
a new decision reaching substantially the same result.
IV. Vietnam International Arbitration
DISPUTES ON THE TRANSFER OF OBLIGATIONS
PURCHASE CONTRACT IN RICE
The parties:
Plaintiff: Seller Vietnam
Defendants: Hong Kong Buyers
The problem is mentioned:

transfer obligations

Summary of case:
Defendant (Hong Kong company) signed a
contract to purchase the plaintiff (the Vietnamese company) 5000MT 5% broken white rice
for $ 340USD / MT, payable within 25 days after sellers receive notice L / C. Defendant
entrusted to plaintiff hired cargo ship.
A Macao by the defendant company had
replaced defendant appointed open L / C at commercial banks Macao for Plaintiff s benefit.
After receiving notification L / C, plaintiff charterers and August 20, 1995 has delivered
completely 5000 MT of rice with valued $ 1.7 million.
Goods were unloaded and storage ports, but
part of the goods have been wet and damaged hatches. Macao buyer does not accept the
voucher to take delivery on the grounds that the documents are not valid.
defendant informed third party would accept
the vouchers though invalid prepayment for Plaintiff $ 1,200,000 for delivery of documents
and complaints go insurance company indemnity. If the company Macao claim insurance
money will be paid to the plaintiff, if the insured sum actually paid less than $ 500,000, the
Macao company will negotiate with the plaintiff to settle.
Plaintiff disagreed and said that the defendant
shall be responsible for the payment of money notes and interest. Defendants argue that
commissioned the entire company Macao and no longer responsible for paying
The ruling of the arbitrator:
The arbitral tribunal decided that in this case
the defendant is not released from the obligation to pay the price under the Contract.
the third person (company Macao) pays
instead of the defendant only be regarded as the normal authorization and not pay like that
obligation be seen between the three parties. Under the provisions of the authorization, the
authorization shall remain directly responsible for acts of authorized persons. Therefore, in
this case, defendant must be liable to pay the company's Macau.
The company has been shaken Defendant pay
Plaintiff $ 1.2 million of the total $ 1.7 million for goods. Thus, the defendant must bear the
responsibility for not paying $ 500,000 for Plaintiff.
The third proposed prepaid $ 1.2 million, the
remaining $ 500,000 will be paid when the insurance company requires compensation.
Plaintiff agrees to advance $ 1.2 million and the remaining $ 500,000 must be paid within ten
days from the date of payment of $ 1.2 million. Defendants knew this but had no idea. Thus,
between the plaintiff and defendant (as well as third party) has not agreed payment terms $
500,000. Moreover, in these times requires Defendants pay Plaintiff $ 500,000 raised no
payment terms, payment methods, not specified account. Since then, the arbitral tribunal
determines there is not enough legal grounds to arrest defendant to pay interest on $ 500,000.