Tutti, SpA. was an Italian footwear manufacturer supplying, under various ongoing contracts, Genco International Corp. Genco International Corp. was an export-import firm incorporated in New York. On May 6, 2018, it entered into a contract with Arquipélago, S.A., which owned the largest supermarket chain operating in Portugal, to deliver footwear in their facilities in Lisbon. The contract contained an arbitration clause that read as follows: “All disputes or differences which may arise out of or in connection with the present Contract are to be settled, the jurisdiction of ordinary courts being excluded, by the Arbitration at the Centro de Arbitragem do Ateneu Comercial Português, following the Regulations of the said Arbitration.” To fulfil the contract, Genco’s director met with Tutti’s agent. On October 14, 2018, Genco International Corp. sent a letter to Tutti, SpA. summarizing the negotiations at the meeting and stating: “the conditions written in the contract attached govern our purchase from you.” The contract sent with that letter predicted the application of the arbitration provision from the agreement made with the Portuguese buyers to the relationship between Genco International Corp. and Tutti, SpA. On January 26, 2019, Genco International Corp. sent the first order for Tutti, SpA. to supply 25.000 boots to be resold to Arquipélago, S.A., and furnished a letter of credit in Tutti’s favor in the sum of € 250.000. On April 25, 2019, Tutti, SpA. sent Genco International Corp. a letter informing that it would not be bound by the arbitration provision included in the contract made between Genco International Corp. and Arquipélago, S.A. After the first 10.000 boots were delivered, Genco International Corp. refused to purchase the remaining 15.000 boots, claiming that some of the boots delivered were defective. Tutti, SpA., consequently, filed a complaint in a U.S. federal trial court on September 5, 2019, alleging breach of contract. Genco International Corp. asked the court to stop the proceedings while the matter was arbitrated in Portugal.

Q:Do you think Tutti, SpA. and Genco International Corp. were bound to the provision requiring arbitration of any contractual dispute in Portugal? Discuss your answer.

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