Although it is assumed that the binding nature of the memorandum is not relevant to the existence of an arbitration agreement, Standard Fruit has also explicitly questioned the very existence of the arbitration agreement. In particular, the compromise clause is merely a declaration of intent to try to agree on an arbitration mechanism in the future. Has the Standard Fruit Court responded to this argument? Consider the text of the clause. Keep in mind the subsequent statements of the parties to the clause. What is the most consistent approach to the likely intentions of the parties? In international affairs? Should the proposal for a compromise clause be regarded in itself or with pretension as a substantial amendment to the proposed treaty? Does the answer to the question depend on (i) the terms of the proposed compromise clause (i.e. a “neutral” clause different from a clause favourable to the proposing party); or (ii) what is or is expected in the relevant market? b) the applicability of arbitration agreements incorporated under the FAA. Even according to the FAA in the United States, it is well established that an agreement can effectively contain a compromise clause contained in another document. R.J. O`Brien – Assoc. Pipkin, 64 F.3d 257, 260 (7th cir. 1995) (“A contract … must not contain an explicit arbitration clause if it contains, by reference, a compromise clause in another document”; Gingiss Int`l, Inc.
v. Bormet, 58 F.3d 328, 331 (7th Cir. 1995) (“a sub-contract with a surety or guarantee may involve a duty of conciliation by referring to a compromise clause in a general contract”); Cont`l U.K. Ltd v. Anagel Confidence Compania Naviera, SA, 658 F.Supp. 809, 813 (S.D.N.Y. 1987) (if “party arbitration clause is explicitly included in a bill of lading, non-signatories … which are bound to this bill by general principles of contract or agency law”; State Trading Corp. of India v.
Grunstad Shipping Corp., 582 F.Supp. 1523 (S.D.N.Y. 1984) (charter compromise clause was included in the bill of lading). “All disputes arising from this agreement should be resolved through quality negotiations and settlement. If this method of solution is not feasible, the contentious issues will be decided in accordance with the Paris ICC arbitration regulation. In the event that, for whatever reason, the proceedings could not have decided on the issue, the victim`s courts will decide the dispute on a legal basis. W. Craig, W, Park – J. Paulsson, International Chamber of Commerce Arbitration .9.02 (3d ed. 2000). The memorandum, known as the “agreement in principle,” contained an arbitration provision and provided for the renegotiation and replacement of four operating contracts between SFC and the “relevant Nicaraguan national unit.” These include a detailed fruit purchase contract, a technical assistance contract, the transfer of SFC shares in production companies and the acquisition in Nicaragua of SFC`s assets in the country. The memorandum also defined the essential elements of the fruit purchase contract: a price clause (US$4.30 per box…), the duration of the contract (5 years …) and stated that it would cover all premium bananas produced by Nicaraguan producers….