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UNION CARBIDE CORPORATION v. M/T MONTE CARMELO

United States District Court, S.D. New York
Dec 11, 2002
01 Civ. 1227 (JSM) (S.D.N.Y. Dec. 11, 2002)

Opinion

No. 01 Civ. 1227 (JSM)

December 11, 2002


OPINION AND ORDER


Defendant Jo Tankers, Inc. has moved to dismiss the complaint, or alternatively, to stay this action pending arbitration in London. For the reasons given below, Defendant's motion to dismiss is denied, but this action is stayed pending arbitration in London.

I. Background

This action arises out of the shipment of methyl isobutyl ketone (MIBK) and hexylene glycol from Ravenna, Italy to Texas City, Texas aboard the M/T Monte Carmelo. Plaintiff, Union Carbide Corp. ("UCC"), received approximately 300 metric tons of MIBK shipped by Defendant Sisas Industries S.P.A. ("Sisas") from Ravenna, Italy on or about February 20, 2000, aboard the M/T Monte Carmelo.

The cargo was discharged on March 28, 2000. In May 2000, UCC sent a notice of claim to Defendant Jo Tanker, agent for Maritima Fluviale Di Navigazione, the owners of the M/T Monte Carmelo, alleging that the MIBK was contaminated with caSLcium bromide. On February 16, 2001, UCC brought suit against the M/T Monte Carmelo, Jo Tankers, Sisas, and Maritima Fluviale di Navigazione.

The shipment was governed by a bill of lading which identified Sisas as the shipper of the cargo, and UCC as the consignee and the notify party. The bill of lading provided that, "[a]ll terms and conditions, liberties and exceptions of the Charter Party . . . are herewith incorporated." Def.'s Notice of Mot. Ex. 2.

The charter party to which the bill of lading referred was an agreement between Jo Tankers, as the agent of the owner of the vessel, and Sisas, as charterer. Def.'s Notice of Mot. Ex. 1. The charter party establishes the terms of the shipment of chemicals from Ravenna to Texas City. The charter party includes an arbitration clause that states:

Any and all differences and disputes of whatsoever nature arising out of this Charter shall be put to arbitration in the City of London. . . . Either party hereto may call for such arbitration by service upon any officer of the other.

Def.'s Notice of Mot. Ex. 1.

II. Discussion

The Second Circuit has held that when "a clause in a charter party . . . provide[s] for arbitration of `any and all differences and disputes of whatsoever nature arising out of this Charter,' [the clause is] binding on parties to a bill of lading which incorporate[s] the charter party by reference." Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional De Venezuela, 991 F.2d 42, 48 (2d Cir. 1993). The bill of lading between UCC and Sisas incorporated the charter party:

All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated.

Notice of Mot. Ex. 2.

"If a charter party's arbitration clause is expressly incorporated into a bill of lading, nonsignatories of the charter party who are linked to that bill through general principles of contract or agency law may be bound." Continental U.K. Ltd and Anagel Confidence Compania Naviera, 658 F. Supp. 809, 813 (S.D.N.Y. 1987) (citing Son Shipping Co. v. De Fosse Tanghe, 199 F.2d 687, 688 (2d Cir. 1952). UCC, as consignee of the goods shipped by Sisas, is linked to the charter party through general principles of contract law. UCC "stood in a direct contractual relationship with the goods' seller and thus must take the consequences of that seller's agreement with the carrier." Kaystone Chem., Inc. v. BOW-SUN, No. 88 Civ. 5859, 1989 WL 39498, at *4 (S.D.N.Y. April 19, 1989).

When determining whether an arbitration clause included in a charter party is binding on a party to a bill of lading who is not a signatory to the charter party, the incorporated arbitration language must be "broad enough to allow nonsignatories' disputes to be brought within its terms."Continental U.K. Ltd., 658 F. Supp. at 814. In determining whether a clause is broad enough to include parties to the bill of lading "courts have consistently drawn a distinction between [an] arbitration clause specifically identifying the parties to which it applies, and a broader form of arbitration clause which does not restrict the parties." In re Southwind Shipping Co., 709 F. Supp. 79, 82 (S.D.N.Y. 1989). Clauses calling for arbitration of "[a]ny and all disputes of whatsoever nature arising out of this Charter," are considered broad. See id., 709 F. Supp. at 82-83; Lucky Metals Corp. v. M/V AVE, No. 95 Civ. 1726, 1995 WL 575195, at *2 (S.D.N.Y. Sept. 28, 1995)

Plaintiff argues that in Instituto Cubano De Estabilizacion Del Azucar v. T/V Golden West, 246 F.2d 802 (2d Cir. 1957), the court found that an arbitration clause identical to the one in the instant case did not bind nonsignatories to the charter party. Pl.'s Mem. of Law at 4. Plaintiff misinterprets this case. Although the charter party in Golden West included an arbitration clause identical to the one at issue in this case, Golden West could not be compelled to arbitrate because it was not a signatory to the original charter party or to the bill of lading, not because the arbitration clause was so narrow as to confine arbitration to signatories to the charter party, as Plaintiff argues. M/V Golden West, 246 F.2d at 803-804.

Plaintiff, as consignee, is a party to the bill of lading, which incorporates the broad arbitration clause from the charter party. Therefore, Defendant's request to stay this action pending arbitration in London is granted. Defendant's motion to dismiss plaintiff's complaint is denied, but the Court will close this case on the active docket of the Court without prejudice to the right of Plaintiff to reopen the case to enforce an arbitration award.


Summaries of

UNION CARBIDE CORPORATION v. M/T MONTE CARMELO

United States District Court, S.D. New York
Dec 11, 2002
01 Civ. 1227 (JSM) (S.D.N.Y. Dec. 11, 2002)
Case details for

UNION CARBIDE CORPORATION v. M/T MONTE CARMELO

Case Details

Full title:Union Carbide Corporation, Plaintiff, v. "M/T Monte Carmelo," her engines…

Court:United States District Court, S.D. New York

Date published: Dec 11, 2002

Citations

01 Civ. 1227 (JSM) (S.D.N.Y. Dec. 11, 2002)