Baxter International, Inc. v. Abbott Laboratories: Enforcement of Arbitration Awards in the Seventh Circuit – Re-Interpretation of the Supreme Court's Mitsubishi Case?

Abstract

In the Seventh Circuit case Baxter International, Inc. v. Abbott Laboratories, an arbitration tribunal's award was challenged on the grounds that it manifestly violated the Sherman Act. This argument would normally be expected to be dealt with in a public policy test, which serves as the standard of reviewability in most laws governing award enforcement proceedings. However, instead of examining whether or not the award was in fact violative of antitrust law and therefore incompatible with US public policy, the Circuit Court of Appeals deferred to the tribunal as a simple matter of prerogative. Taking it literally, this reasoning would seem surprising if not remote. The Court not only brushed aside serious concerns of antitrust law but also seemed to offer a re-interpretation of the Supreme Court's case law on arbitration. Nevertheless, despite the provokingly worded majority opinion, which other circuits will feel invited to consider in similar cases, the rather peculiar factual background of the Baxter case appears to be the true basis for the Court's ruling. Analysing the details of the litigants' relationship reveals that an issue of fundamental fairness was underlying the dispute, which serves well to reconcile Baxter with the Supreme Court's authority in Mitsubishi.