1 The arbitration clause relating to the transfer of one of Scherk’s business entities, similar to the clauses covering the other two, reads in its entirety as follows:

“The parties agree that if any controversy or claim shall arise out of the agreement or the breach thereof and either party shall request that the matter shall be settled by arbitration, the matter shall be settled exclusively by arbitration in accordance with the rules then obtaining of the International Chamber of Commerce, Paris, France, by a single arbitrator, if the parties shall agree upon one, or by one arbitrator appointed by each party and a third arbitrator appointed by the other arbitrators. In case of any failure of a party to make an appointment referred to above within four weeks after notice of the controversy, such appointment shall be made by said Chamber. All arbitration proceedings shall be held in Paris, France, and each party agrees to comply in all respects with any award made in any such proceeding and to the entry of a judgment in any jurisdiction upon any award rendered in such proceeding. The laws of the State of Illinois, U. S. A. shall apply to and govern this agreement, its interpretation and performance.”

2 Scherk had taken steps to initiate arbitration in Paris in early 1971. He did not, however, file a formal request for arbitration with the International Chamber of Commerce until November 9, 1971, almost five months after the filing of Alberto-Culver’s complaint in the Illinois federal court.

3 The memorandum opinion of the District Court is unreported.

4 English courts traditionally considered irrevocable arbitration agreements as “ousting” the courts of jurisdiction, and refused to enforce such agreements for this reason. This view was adopted by American courts as part of the common law up to the time of the adoption of the Arbitration Act. Sec H. R. Rep. No. 96, 68th Cong., 1st Sess., 1, 2 (1924); Sturges & Murphy, Some Confusing Matters Relating to Arbitration under the United States Arbitration Act, 17 Law & Contemp. Prob. 580.

5 Section 2 of the Arbitration Act renders “valid, irrevocable, and enforceable” written arbitration provisions “in any maritime transaction or a contract evidencing a transaction involving commerce…,” as those terms are defined in § 1. In Bernhardt v. Polygraphic Co., 350 U. S. 198, this Court held that the stay provisions of § 3 apply only to the two kinds of contracts specified in §§ 1 and 2. Since the transaction in this case constituted “commerce… with foreign nations,” 9 U. S. C. § 1, the Act clearly covers this agreement.

6 The arbitration agreement involved in Wilko was contained in a standard form margin contract. But see the dissenting opinion of Mr. Justice Frankfurter, 346 U. S., at 439, 440, concluding that the record did not show that “the plaintiff [Wilko] in opening an account had no choice but to accept the arbitration stipulation….” The petitioner here would limit the decision in Wilko to situations where the parties exhibit a disparity of bargàining power, and contends that, since the negotiations leading to the present contract took place over a number of years and involved the participation on both sides of knowledgeable and sophisticated business and legal experts, the Wilko decision should not apply. See also the dissenting opinion of Judge Stevens of the Court of Appeals in this case, 484 F. 2d, at 615. Because of our disposition of this case on other grounds, we need not consider this contention.

7 Section 14 of the Securities Act of 1933, 15 U. S. C. §77n, provides as follows:

“Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this subchapter or of the rules and regulations of the Commission shall be void.”

Section 29 (a) of the Securities Exchange Act of 1934, 15 U. S. C. § 78cc (a), provides:

“Any condition, stipulation or provision binding any person to waive compliance with any povision of this chapter or of any rule or regulation thereunder, or of any rule of an exchange required thereby shall be void.”

While the two sections are not identical, tlie Variations in their wording seem irrelevant to the issue presented in this case.

8 We do not reach, or imply any opinion as to the question whether the acquisition of Scherk’s businesses was a security transaction within the meaning of § 10 (b) and Rule 10b–5 of the Securities Exchange Act of 1934. Although this important question was considered by the District Court and the Court of Appeals, and although the dissenting opinion, post, seems to consider it controlling, the petitioner did not assign the adverse ruling on the question as error and it was not briefed or argued in this Court.

9 Together with its motion for a stay pending arbitration, Scherk moved that the complaint be dismissed because the federal securities laws do not apply to this international transaction, cf. Leasco Data Processing Equipment Corp. v. Maxwell, 468 F. 2d 1326 (CA2 1972). Since only the order granting the injunction was appealed, this contention was not considered by the Court of Appeals and is not before this Court.

10 See Quigley, Accession by the United States to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 70 Yale L. J. 1049, 1051 (1961). For example, while the arbitration agreement involved here provided that the controversies arising out of the agreement be resolved under “[t]he laws of the State of Illinois,” supra, n. 1, a determination of the existence and extent of fraud concerning the trademarks would necessarily involve an understanding of foreign law on that subject.

11 The dissenting opinion argues that our conclusion that Wilko is inapplicable to the situation presented in this case will vitiate the force of that decision because parties to transactions with many more direct contacts with this country than in the present case will nonetheless be able to invoke the “talisman” of having an “international contract,” Post, at S. Coneededly, situations may arise where the contacts with foreign countries are so insignificant or attenuated that the holding in Wilko would meaningfully apply. Judicial response to such situations can and should await future litigation in concrete cases. This case, however, provides no basis for a judgment that only United States laws .and United States courts should determine this controversy in the face of a solemn agreement between the parties that such controversies be resolved elsewhere. The only contacte between the United States and the transaction involved here is the fact that Alberto-Culver is an American corporation and the occurrence of some—but by no means the greater part—of the pre-contract negotiations in this country. To determine that “American standards of fairness,” post, at 8, must nonetheless govern the controversy demeans the standards of justice elsewhere in the world, and unnecessarily exalts the primacy of United States law over the laws of other countries.

12 The dissenting opinion raises the specter that our holding today will leave American investors at the mercy of multinational corporations with “vast operations around the world….” Post, at 12. Our decision, of course, has no bearing on the scope of the substantive provisions of the federal securities laws for the simple reason that the question is not presented in this case. See n. 8, supra.

13 Under some circumstances, the designation of arbitration in a certain place might also be viewed as implicitly selecting the law of that place to apply to that transaction. In this case, however, “[t]he laws of the State of Illinois” were explicitly made applicable by the arbitration agreement. See n. 1, supra.

14 In The Bremen we noted that forum-selection clauses “should be given full effect” when “a freely negotiated private international agreement [is] unaffected by fraud….” 407 U. S. 1, 12–13. This qualification does not mean that any time a dispute arising out of a transaction is based upon an allegation of fraud, as in this case, the clause is unenforceable. Rather, it means that an arbitration or forum-selection clause in a contract is not enforceable if the inclusion of that clause in the contract was the product of fraud or coercion. Compare Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U. S. 395.

Although we do not decide the question, presumably the type of fraud alleged here could be raised, under Art. V of the Convention on the Recognition and Enforcement, of Foreign Arbitral Awards, see n. 12, infra, in challenging the enforcement of whatever arbitral award is produced through arbitration. Article V (2) (b) of the Convention provides that a country may refuse recognition and enforcement of an award if “recognition or enforcement of the award would be contrary to the public policy of that country.”

15 Our conclusion today is confirmed by international developments and domestic legislation in the area of commercial arbitration subsequent to the Wilko decision. On June 10, 1958, a special conference of the United Nations Economic and Social Council adopted the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. In 1970 the United States acceded to the treaty, [1970] 3 U. S. T. 2517, T. I. A. S. No. 6997, and Congress passed Chapter 2 of the United States Arbitration Act, 9 U. S. C. §§ 201 ff., in order to implement the Convention. Section 1 of the new chapter provides unequivocally that the Convention “shall be enforced in United States courts in accordance with this chapter.”

The goal of the Convention, and the principal purpose underlying American adoption and implementation of it, was to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, S. Exec. E. 90th Cong., 2d Sess. (1968) ; Quigley, Accession by the United States to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 70 Yale L. J. 1049 (1961). Article II (1) of the. Convention provides:

“Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.”

In their discussion of this Article, the delegates to the Convention voiced frequent concern that courts of signatory countries in which an agreement to arbitrate is sought to be enforced should not be permitted to decline enforcement of such agreements on the basis of parochial views of their desirability or in a manner that would diminish the mutually binding nature of the agreements. See Haight, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Summary Analysis of Record of United Nations Conference 24–28 (1958).

Without reaching the issue of whether the Convention, apart from the considerations expressed in this opinion, would require of its own force that the agreement to arbitrate be enforced in the present case, we think that this country’s adoption and ratification of the Convention and the passage of Chapter 2 of the United States Arbitration Act provide strongly persuasive evidence of congressional policy consistent with the decision we reach today.

1 Section 29 (b) reads: “Every contract made in violation of any provision of this chapter or of any rule or regulation thereunder, and every contract (including any contract for listing a security on an exchange) heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any relationship or practice in violation of, any provision of this chapter or any rule or regulation thereunder, shall be void (1) as regards the rights of any person who, in violation of any such provision, rule, or regulation, shall have made or engaged in the performance of any such contract, and (2) as regards the rights of any person who, not being a party to such contract, shall have acquired any right thereunder with actual knowledge of the facts by reason of which the making or performance of such contract was in violation of any such provision, rule or regulation…” 15 U. S. C. § 7Scc (b).

2 See Institutional Investor Study Report of the SEC, H. R. Doc. No. 92–64 (1971), particularly Vol. 4.

3 Id., p. XVI, p. 879 et seq.

4 Id., p. XIX, p. 215 et seq.

5 The Convention also permits that arbitral awards not be recognized and enforced when a court in the country where enforcement is sought finds that “the recognition and enforcement of the award would be contrary to the public policy of that country.” Article V (2) (b). [1970] 3 U. S. T. 2520, T. I. A. S. No. 6997. It abo provides that recognition of an award may be refused when the arbitration agreement “is not valid under the law to which the parties have subjected it,” in this case the laws of Illinois. See n. 10, infra. Article V(1)(a). Ibid.

6 Requirements promulgated under the 1934 Act require revelation to security holders of corporate action which may affect them. Extensive annual reports must be filed with the SEC including, inter alia, financial figures, changes in the conduct of business, the acquisition or disposition of assets, increases or decreases in out-standing securities, and even the importance to the business of trade-marks held. See 17 CFR §§240.13a–1, 249.310; 3 CCH Fed. Sec. L R.ep. |31,101 et seq. (Form 10-K). The Commission has proposed that corporations furnish a copy of annual reports filed with the SEC to any security holder who is solicited for a proxy and requests the report. 39 Fed. Reg. 3836. Current reports must be filed with the SEC by an issuer of securities when substantial events occur, as when the rights evidenced by any class of securities are materially altered by the issuance of another class of securities or when an issuer has acquired a significant amount of assets other than in the ordinary course of business. See 17 CFR §§ 240.13a-ll, 249.308 ; 3 CCH Fed. Sec. L. Rep. 131,001 et seq. (Form 8-K).

The SEC, recognizing that the Fonn 10–K reports filed annually with the Commission might be excessively abstruse for security holders, see 39 Fed. Reg. 3835, has proposed that the annual reports distributed to security holders in connection with annual meetings and solicitation of proxies provide substantially greater amounts of meaningful information than required presently. These annual reports would include a description of the business of the issuer, a summary of operations, explanation of changes in revenues and expenses, information on the liquidity position and the working capital requirements of the issuer, and identification of management and performance on the market of the issuer’s securities. See 39 Fed. Heg. 3834-3838.

7 The Court concedes, ante, at 10 n. 11, that there may be situations where foreign contacts were “so insignificant or attenuated” that Wilko would apply and an American court would not enforce an arbitration agreement in an international contract. The recognition that “international”‘ contracts may in fact involve significant direct contacts with this country is realistic and salutary. But the Court by its concession undermines somewhat its reliance on its admonition—itself supported only by speculation—that “[a] contractual provision specifying in advance the forum in which disputes shall be litigated… is… an almost indispensible precondition to achievement of the orderliness and predictability essential to any international business transaction.” Uncertainty and a “dicey atmosphere,” supposedly destructive of international contracts, may persist for many contracts. The parties to an international contract may not in fact be bound by a “solemn agreement” to arbitrate, for an American court could find, at a much later date, sufficient contacts with this country to require the application of Wilko.

8 The District Court for the Northern District of Illinois noted allegations that Scherk had failed to state a material fact the omissioin of which would have been misleading, see 17 CFR § 240.10b–5 (2), during crucial negotiations in Melrose Park, Illinois, and that communications between Alberto and Scherk’s attorney concerning the validity and value of the trademarks occurred within the territorial jurisdiction of the United States. Finally, the District Court noted that the full economic impact of the alleged fraud occurred within the United States.

9 See, e.g., Leasco Data Processing Equip. Corp. v. Maxwell, 468 F. 2d 1326, 1334–1339 (CA2 1972) ; Travis v. Anthes Imperial Ltd., 473 F. 2d 515, 523–528 (CA8 1973) ; SEC v. United Financial Group, Inc., 474 F. 2d 354 (CA9 1973) ; Schoenbaum v. Firstbrook, 405 F. 2d 200 (CA2 1968) ; Roth v. Fund of Funds. 279 F. Supp. 935, aff’d, 405 F. 2d 421 (CA2 1968).

10 A summary of the conference proceedings which led to the adoption of the United Nations Convention was prepared by G. W. Haight, who served as a member of the International Chamber of Commerce delegation to the conference. G. Haight, Convention on the Recognition and Enforcement of Foreign Arbitral Awards : Sumary Analysis of Record of United Nations Conference, May/June 1958 (195S).

When Art. II (3) was being discussed, the Israeli delegate pointed out that while a court could, under the draft Convention as it then stood, refuse enforcement of an award which was incompatible with public policy, “ ‘the court had to refer parties to arbitration whether or not such reference was lawful or incompatible with public policy.’ ” Id., at 27. The German delegate observed that this difficulty arose from the omission in Art. II (3) “‘of any words which would relate the arbitral agreement to an arbitral award capable of enforcement under the convention.’”. Ibid.

Haight continues:

“When the German proposal was put to a vote, it failed to obtain a two-thirds majority (13 to 9) and the Article was thus adopted without any words linking agreements to the awards enforceable under the Convention. Nor was this omission corrected in the Report of the Drafting Committee (L.61), although the obligation, to refer parties to arbitration teas (and still is) qualified by the clause ‘unless it finds that the agreement is null and void, inoperative cr incapable of being performed.’

“As the applicable law is not indicated, courts may under this wording be allowed some latitude; they may find an agreement incapable of performance if it offends the law or the public policy of the forum. Apart from this limited opening, the Conference appeared unwilling to qualify the broad undertaking not only to recognize but also to give effect to arbitral agreements.” Id., at 28 (emphasis added).

Whatever “concern” the delegates had that signatories to the Convention “not be permitted to decline enforcement of such agreements on the basis of parochial views of their desirability,” ante, at 13–14 n. 15, it would seem that they contemplated that a. court may decline to enforce an agreement which offends its law or public policy.

The Court also attempts to treat this case as only a minor variation of The Bremen v. Zapata Off-Shore Co., 407 U. S. 1. In that case, however, the Court, per BURGER, C. J., explicitly stated that: “A contractual choice-of-forum clause should be held unenforceable if the enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.” Id., at 15.

That is inescapably the case here, as § 29 of the Securities Exchange Act and Wilko v. Swan make clear. Neither § 29, nor the Convention on international arbitration, nor The Bremen justifies abandonment of a national public policy that securities claims be heard by a judicial forum simply because some international elements are involved in a contract.

11 The agreements in this case provided that the “laws of the State of Illinois” are applicable. Even if the arbitration court should read this clause to require application of Rule 10b–5’s standards, Alberto’s victory would be Pyrrhic. The arbitral court may improperly interpret the substantive protections of the Rule, and if it does its error will not be reviewable as would the error of a federal court. And the ability of Alberto to prosecute its claim would be eviscerated by lack of discovery. These are the policy considerations which underlay Wilko and which apply to the instant caso as well.

12 See Knickerbocker, Oligopolistic Reaction and Multinational Enterprise (Haw. Univ. 1973) ; J. Vaupel & J. Curhan, The World’s Multinational Enterprises (Harvard Univ. 1973). See generally Senate Committee 011 Finance, 93d Cong., 1st Sess., Implications of Multinational Firms for World Trade and Investment and for U. S. Trade and Labor (Comm. Print 1973) ; Morgan, Controlling the Multinationals, Wash. Post, Nov. 17, 1973, at A15; Diebold, Precarious Path of the Multinationals, Wall Street J., Aug. 17, 1973, at. 6, col. 4.