Conflict of Laws – Contracts – Enforcement of Foreign Contract Though Contrary to State
Plaintiff, a citizen of Texas, obtained from the defendant an insurance policy which was written and delivered in Texas. The defendant agreed to pay for any damages to plaintiff’s truck caused by fire, but stipulated that any dispute over the amount of the loss should he determined by arbitration proceedings in accordance with the terms of the contract. The truck was damaged by fire in Arkansas and a dispute arose over the amount of the loss. Plaintiff refused to submit the question to arbitration and brought this suit in the Federal District Court for Arkansas. Defendant argued that the action was premature since compliance with the arbitration provision was a condition precedent to court action. Plaintiff did not deny that the law of the place of making generally determines the validity of contract provisions, or that the arbitration provision would have been valid in Texas, but contended that since the public policy of Arkansas, as declared by statute, opposed arbitration in insurance actions, the clause was unenforceable. Held, action dismissed. Since it did not appear that the Arkansas court would have denied effect to an arbitration provision which is valid in the state where the contract was made and delivered, the federal court sitting in that state must enforce the provision. This rendered the action premature. Miller v. American Ins. Co. of Newark, (D. C. Ark. 1954) 124 F. Supp. 160.