The Volokh Conspiracy

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"Should a Federal Court Stand Idly by When a Foreign Arbitral Commission Issues an Order Restricting the Speech of a Private Party?"

"Actually, yes."


An interesting D.C. federal district court decision from last Fall that I just ran across, in Sharp Corp. v. Hisense USA Corp. The facts:

[T]wo Asian television manufacturers, Sharp and Hisense, entered into a 2015 licensing agreement under which Hisense would make and market televisions bearing Sharp's name. In 2017, alleging that Hisense had violated various regulatory standards and failed to maintain the quality of its television sets, Sharp terminated the agreement. A week later, under a provision of the licensing agreement providing that all disputes would be arbitrated by the Singapore International Arbitration Center, Hisense filed an arbitration action there. Among other relief, Hisense sought an emergency order requiring that Sharp abide by the agreement while the full arbitration was pending and enjoining it from making disruptive or disparaging statements about Hisense or the licensing dispute. In May 2017, an emergency arbitrator in Singapore issued an interim award granting that injunctive request.

The short version of the court's free speech analysis:

[T]his action boils down to a dispute over a private agreement — precisely the type of controversy that courts have held is not subject to the First Amendment. "Arbitration is a private self-help remedy," and "[w]hen arbitrators issue awards, they do so pursuant to the disputants' contract — in fact the award is a supplemental contract." The emergency award in this case is the result of a private agreement between two willing, sophisticated parties. In entering into the arbitration agreement, Sharp subjected itself to the full range of restrictions articulated under the SIAC rules, which were expressly incorporated into the licensing agreement.

I'm not sure this would be exactly right in a case where the court actually enforces an arbitral order; I think there would be state action restricting speech, but likely constitutionally permissible state action because the parties had contractually waived their speech rights, see Cohen v. Cowles Media Co. (1991) (a case involving a damages award, but with logic that I think would also apply to injunctions, see, e.g., Perricone v. Perricone (Conn. 2009)). But the court's bottom-line result seems right to me; and I liked the court's opening lines (quoted in the title and the subtitle of this post).