In the case of Scherk v. Alberto-Culver Co., 1973, the U.S Supreme Court ruled in favor of upholding an arbitration clause in an international contract dispute. The Alberto-Culver Company had purchased three companies owned by Oscar Scherk, and as part of their agreement, any disputes would be settled through arbitration in Paris. When a conflict arose regarding alleged misrepresentations made by Scherk during negotiations, Alberto-Culver sought relief from American courts instead of following the agreed-upon arbitration process. However, the Supreme Court held that because this was an international transaction with potential conflicts between different nations' laws and regulations, it was important to respect parties' decision to resolve disputes via private arbitration rather than domestic litigation. This ruling reinforced both the enforceability of international commercial agreements and also highlighted how such contracts can help avoid uncertainties inherent in transnational legal disputes.

In the dissenting opinion for Scherk v. Alberto-Culver Co., Justice Douglas argued that the majority's decision to uphold an arbitration clause in a contract between two international parties undermined American securities law and public policy. He contended that by allowing foreign corporations to evade U.S. laws through contractual provisions, the Court was essentially permitting them to exploit American investors without any legal repercussions. Furthermore, he expressed concern over the potential implications of this ruling on future cases involving transnational contracts and stressed that it could set a dangerous precedent where foreign entities could bypass domestic regulations at will.