The Supreme Court cleared the way yesterday for federal arbitration of a dispute in which United Nuclear Corp. is seeking to force General Atomic Corp. to give up at least $700 million worth of uranium.
The action is a victory for GAC, which contended that New Mexico State Judge Edwin L. Felter in Santa Fe had flouted an Oct. 31 order of the Supreme Court to permit GAC to pursue federal remedies.
In Falls Church, however, UNC said that Felter's "final judgment . . . in United nuclear's favor "remains in full force and effect."
The action came two weeks after the court rejected without comment challenges that GAC had filed to two separate pre-trial orders issued by Felter.
In the more important order, the judge held GAC in default, and therefore liable, on the ground that it had obstructed justice.
He said it had consistently conceled the "true facts" about the so-called international uranium cartel about the participation in it of Gulf Oil Corp., half owner of GAC. In this regard, Felter said, GAC had acted with "the utmost bad faith."
Yesterday's action stemmed from a Dec. 16 Felter decision in which he concluded that GAC had waived any right to federal arbitration, partly because it had not demanded arbitration in a timely manner.
In an unsigned opinion, the Supreme Court said that Felter had done precisely what it had said in October he "lacked the power to do: interfere with attempts by GAC to assert in federal forums what it views as its entitlement to arbitration."
Felter "is without power under the United States Constitution to interfere with efforts by the GAC to obtain arbitration in federal forums," the opinion said.
The court went on to term it "inconceivable," in light of the earlier proceedings, that Felter "was free to again impede GAC's attempt to assert its arbitration claims in federal forums."
Six days before the court let Felter's default order stand, the Justice Department filed a misdemeanor suit in Pittsburgh accusing Gulf Oil of having conspired to fix the price of foreign uranium sold in the United States.
On the same day that Justice sued, Gulf filed a $1.3 billion countersuit against Westinghouse Electric Corp. charging predatory price fixing of uranium that caused losses believed to be "in the hundreds of millions of dollars.
Earlier, Westinghouse, a principal supplier of nuclear fuel to utilities, had filed a suit against Gulf and 28 other uranium producers seeking $7.5 billion in antitrust damages for having joined in an alleged conspiracy between 1972 and 1975 to increase uranium prices sevenfold.
The maxe of litigation dates back to 1972, when, at Canada's initiative, the carterl, called the Uranium Market Research Organization, was formed secretly in Paris. Other participants included Australia, France, South Africa and Gulf Minerals of Canada, a Canadian-charter subsidiary of Gulf Oil.
Recently, the government of Canada, in a friend-of-the-court brief, unsuccessfully pleaded with the Supreme Court to review Felter's default order.
In 1973, UNC signed a contract to supply GAC with 27 million pounds of uranium at $6 to $10 a pound. In turn, GAC was obligated to re-sell much or all of the fuel to utilities. But during the next two years, the market price rose sharply - to $40 last October. In late 1975, UNC sought to invalidate the contract by filing an antitrust suit in Felter's court.