Alberto-Culver Co., a Delaware corporation with its principal office in Illinois, manufactured toiletries and hair products in the United States and abroad. In February 1969, Alberto-Culver signed a contract in Austria to purchase three businesses of Fritz Scherk (a German citizen) that were organized under German and Liechtenstein law, as well as the trademarks to related cosmetics. In the contract, Scherk warranted that he had the sole and unencumbered ownership of these trademarks. The contract also contained a clause that provided that "any controversy or claim [that] shall arise out of this agreement or the breach thereof would be referred to arbitration before the International Chamber of Commerce in Paris, France, and that the laws of Illinois shall govern." One year after the closing, Alberto-Culver discovered that others had claims to Scherk's trademarks. Alberto-Culver tried to rescind the contract; Scherk refused, and Alberto-Culver filed suit in federal court in Illinois claiming that the misrepresentations violated the Securities and Exchange Act, Sec. 10(b), and SEC rule 10b-5. Scherk moved to dismiss or to stay the action pending arbitration. In the U.S. District Court, the motion to dismiss was denied and arbitration was enjoined. The U.S. Court of Appeals affirmed. The U.S. Supreme Court granted certiorari.
1. What were the Court's reasons for upholding the arbitration provision?
2. What needs of international businesses were served by the Court's holding? How were these needs addressed?
3. What factors would Alberto-Culver need to have shown in order to have overturned the arbitration provision?