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ABN made a loan to Diesel Inc. (Diesel), a party to a technology licensing agreement with Krupp, which under the terms of the loan was to be assigned to ABN as collateral. Diesel signed a general assignment of its assets to ABN but, although an assignment agreement to which Krupp would be party was prepared, it was never signed. After the loan was made, ABN alleged that the principal owner of Diesel and Krupp had conspired to deceive it and sued Krupp for conspiracy and fraud. In its statement of defence and counterclaim, Krupp, based on an arbitration clause contained in the licensing agreement, sought to stay the proceedings and to have the matter referred to arbitration in Switzerland.

The court held that ABN was not bound to arbitrate because it was not a party to the arbitration clause contained in the licensing agreement between Krupp and Diesel and the assignment of Diesel's assets to ABN did not make it a party to that agreement. It was held that, under article 8 MAL, a party to an arbitration agreement did not include a person claiming through or under a party, as ABN was doing in the present case.

The court further held that Krupp's request for a stay was either no request at all in the meaning of article 8 MAL or an untimely request, since it was filed with Krupp's first statement on the substance of the dispute which implied acceptance of the jurisdiction of the court. The correct procedure pursuant to article 8 MAL was for Krupp to apply for a stay of court proceedings, after receiving the statement of claim but before submitting a statement of defence.

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