TV manufacturing giant Sharp filed a lawsuit in federal court Tuesday alleging a foreign arbitrator’s gag order against it violates the company’s First Amendment rights.
Sharp, represented by Venable partner Randy Miller, asked the court for a preliminary injunction against an order issued by the Singapore International Arbitration Centre in a proceeding with Chinese manufacturing company Hisense and its U.S. subsidiary. Hisense is fighting to keep its licensing agreement with Sharp, and the order forbids Sharp from “making public statements or press releases” about the arbitration or dispute between the companies.
The complaint in the U.S. District Court for the District of Columbia said such an order clearly restricts Sharp’s ability to do business in the United States, and limits its ability to communicate with regulatory agencies such as the Federal Communications Commission.
“Arbitration orders must be respected unless they violate public policy, and here the gag order violates the First Amendment and threatens our free market,” Miller said.
The lawsuit includes a copy of communications Sharp wishes to make to the FCC, though the document has been filed under seal. Sharp asked the court to hold a hearing on the complaint within 21 days.
According to the request for a preliminary injunction, the May 9 gag order was made by a single arbitrator, appointed solely to address a request by Hisense for emergency relief. The lawsuit said that arbitrator “is no longer involved with the arbitration that is otherwise being conducted by a separate three-arbitrator panel.” The order places no restrictions on Hisense. The arbitration proceedings began in April, according to the complaint.
The lawsuit notes that Taiwanese company Foxconn is a major investor in Sharp. Last month, Foxconn, which manufactures iPhones and other popular gadgets, announced a tentative agreement to open a plant in Wisconsin, a deal touted by President Donald Trump. The lawsuit said the arbitration gag order is “so broad” that Sharp fears it cannot communicate with retailers or the press about the announcement.
Sharp is a Japanese corporation, and its U.S. subsidiary, Sharp Electronics Corp., is also a plaintiff in the lawsuit. Hisense did not yet return a request for comment.
Miller acknowledged that simply filing the lawsuit does indeed make the arbitration public, possibly in violation of the order, but he said that “an arbitrator could never immunize his own order from judicial review.” Under the New York Convention, incorporated into the Federal Arbitration Act, recognition and enforcement of arbitral awards can be refused if a court finds the enforcement would “be contrary to the public policy of that country.”
Miller said the order is clearly against U.S. policy as it violates Sharp’s First Amendment.
“Any order that says ‘don’t talk to anyone ever’ is the kind of order that screams out for review by a person wearing a black robe,” Miller said.
The lawsuit asks the court to declare the order unenforceable and rule that it does not preclude the company from communicating with consumers, retailers, trade groups, the media and others.