Apollo Computer, Inc. v. Berg

In Apollo Computer, Inc. v. Berg, 886 F.2d 469 (1st Cir.1989), the First Circuit decided a case virtually indistinguishable from this one. The court considered whether Apollo, a signatory to an arbitration agreement with another company called Dico, could be compelled to arbitrate by Dico's trustees in bankruptcy, who were non-signatories to the agreement. The agreement between Apollo and Dico contained a non-assignment clause. Rejecting the argument that Apollo could not be compelled to arbitrate because there was no agreement between it and the defendants, the court held: The relevant agreement here is the one between Apollo and Dico. The defendants claim that Dico's right to compel arbitration under that agreement has been assigned to them.... Whether the right to compel arbitration ... was validly assigned to the defendants and whether it can be enforced by them against Apollo are issues relating to the continued existence and validity of the agreement. Id. at 473. In Apollo, the court recognized that the question of arbitrability would ordinarily be subject to judicial determination rather than arbitration. Id. (citing Am. Safety Equip. Corp. v. J.P. Maguire & Co., 391 F.2d 821, 828-29 (2d Cir.1968)). However, because Apollo, "agreed to be bound" by provisions that "clearly and unmistakably allow the arbitrator to determine her own jurisdiction" over an agreement to arbitrate "whose continued existence and validity is being questioned," it is the province of the arbitrator to "decide whether a valid arbitration agreement exists." Id. In Apollo Computer v. Berg, 886 F.2d 469 (1st Cir.1989), the parties had consented to International Chamber of Commerce rules, which stipulate that challenges to the "validity of the arbitration agreement" shall be decided by an arbitrator. Apollo said: These provisions clearly and unmistakably allow the arbitrator to determine her own jurisdiction when, as here, there exists a prima facie agreement to arbitrate whose continued existence and validity is being questioned. The arbitrator should decide whether a valid arbitration agreement exists....(Id. at 473-74.)