Judgment: 2017-01-27 · Court archive

High Court stays SteriMed dispute pending arbitration in North Carolina

The court found that the September 2014 reseller agreement was valid and contained an arbitration clause. It held that the separate arbitration clause in a terminated manufacturing agreement did not survive termination.

High Court · [2017] IEHC 35

Who, what, where, when and why

Who
  • SteriMed Technologies International Limited
  • SteriMed Technologies Limited (Plaintiff)
  • Schivo Precision Limited
  • Seamus Kilgannon
  • Schivo Group Limited (Defendant)
  • Dwight Morgan
What

The court found that the September 2014 reseller agreement was valid and contained an arbitration clause. It held that the separate arbitration clause in a terminated manufacturing agreement did not survive termination.

Where

Places mentioned in the report

  • Charlotte
  • Charlotte, North Carolina
When

Judgment:

Why

Reasons reported in the judgment

The court applied full judicial scrutiny to whether an arbitration agreement existed. It held that the defendants had established that the relevant agreements contained arbitration clauses, and that the plaintiffs had not shown that those clauses were null and void. On the affidavit evidence then before it, the court concluded that the 1 September reseller agreement and a continuous supply agreement dated 8 September 2014 had in fact been signed in March 2015, after a later reseller agreement dated 30 September 2014. The judge said disputed facts could not be finally determined on affidavit evidence.

The High Court has stayed proceedings brought by SteriMed Technologies International Limited and SteriMed Technologies Limited against Schivo Precision Limited, Seamus Kilgannon and Schivo Group Limited, pending arbitration in Charlotte, North Carolina.

The plaintiffs’ case alleges infringement of copyright and design rights in a medical waste disposal system associated with the “STERIMED” trademark. They sought an injunction and other relief, including an account of profits and damages. The court did not decide those infringement claims in this judgment. It considered the defendants’ application to stay the proceedings in favour of arbitration.

The dispute over the stay centred on agreements between the parties and whether arbitration clauses in them remained effective. The plaintiffs argued that a reseller agreement dated 1 September 2014, and a related rider, were a sham and nullity. They also alleged that Dwight Morgan, who signed for the first plaintiff, lacked authority and had acted against the company’s interests. Those allegations were not finally determined.

The court applied full judicial scrutiny to whether an arbitration agreement existed. It held that the defendants had established that the relevant agreements contained arbitration clauses, and that the plaintiffs had not shown that those clauses were null and void. On the affidavit evidence then before it, the court concluded that the 1 September reseller agreement and a continuous supply agreement dated 8 September 2014 had in fact been signed in March 2015, after a later reseller agreement dated 30 September 2014. The judge said disputed facts could not be finally determined on affidavit evidence.

The court found that Morgan had ostensible authority to sign the agreements. It left for a later date the question of whether he had breached duties to the company or acted fraudulently. It held that the 1 September agreement was valid and that its clause 11(h) required relevant disputes to be arbitrated in Charlotte under the International Arbitration Rules of the International Centre for Dispute Resolution, with North Carolina law governing that agreement.

The earlier manufacturing service and supply agreement had been terminated in June 2015, although intellectual property and confidentiality obligations survived. The court held that its separate arbitration clause did not survive termination. It considered that disputes about those continuing obligations were covered by the reseller agreement’s arbitration clause.

The order was to stay the court proceedings pending the outcome of arbitration in Charlotte. The judgment did not resolve the underlying infringement claims or make findings on the plaintiffs’ allegations of breach of duty or fraud.

Read the original court judgment

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