241 F.3d 135 (2nd Cir. 2001), 98-9477, United States Titan v Guangzhou Zhen Hua Shipping Co.

Docket NºDocket No. 98-9477
Citation241 F.3d 135
Party NameU.S. TITAN, INC., Petitioner Appellee, v. GUANGZHOU ZHEN HUA SHIPPING CO., LTD., Respondent Appellant.
Case DateFebruary 15, 2001
CourtUnited States Courts of Appeals, Court of Appeals for the Second Circuit

Page 135

241 F.3d 135 (2nd Cir. 2001)

U.S. TITAN, INC., Petitioner Appellee,

v.

GUANGZHOU ZHEN HUA SHIPPING CO., LTD., Respondent Appellant.

Docket No. 98-9477

United States Court of Appeals, Second Circuit

February 15, 2001

Argued: June 24, 1999

Appeal from a judgment of the United States District Court for the Southern District of New York (William C. Conner, Judge), entered October 7, 1998, upon an August 5, 1998 opinion and order, as amended September 25, 1998, granting the motion of Petitioner-Appellee to compel arbitration in London and denying the motion of Respondent-Appellant to dismiss on the grounds of lack of subject-matter jurisdiction, lack of personal jurisdiction, and improper venue, and upon a September 29, 1998 opinion and order, clarifying the scope of arbitration.

AFFIRMED.

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[Copyrighted Material Omitted]

Page 137

Stanley McDermott III, Piper & Marbury, L.L.P., New York, NY (Leo G. Kailis, Of Counsel) for Petitioner-Appellee.

Lizabeth L. Burrell, Burlingham Underwood LLP, New York, NY (Michael Marks Cohen, Of Counsel) for Respondent-Appellant.

Before: MINER, JACOBS, and PARKER, Circuit Judges.

PARKER, Circuit Judge:

Respondent-Appellant Guangzhou Zhen Hua Shipping Co., Ltd. ("Zhen Hua") appeals from a judgment of the United States District Court for the Southern District of New York (William C. Conner,

Page 138

Judge), entered October 7, 1998, upon an August 5, 1998 opinion and order, as amended September 25, 1998, granting the motion of Petitioner-Appellee to compel arbitration in London and denying the motion of Respondent-Appellant to dismiss on the grounds of lack of subject-matter jurisdiction, lack of personal jurisdiction, and improper venue, see U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 16 F.Supp.2d 326 (S.D.N.Y. 1998), ("Titan I"), and upon a September 29, 1998 opinion and order, clarifying the scope of arbitration, see U.S. Titan, Inc. v. Guangzhou Zen Hua Shipping Co., 182 F.R.D. 97 (S.D.N.Y. 1998), ("Titan II").

On appeal, Zhen Hua contends principally that the district court exceeded the scope of its jurisdiction under the Federal Arbitration Act, 9 U.S.C. §§ 1-16, (the "FAA") by compelling arbitration of the parties' dispute pursuant to a charter party1 allegedly negotiated by the parties in September 1995. More specifically, Zhen Hua argues that the court should not have determined whether the parties had formed a charter party because the parties had allegedly negotiated an "ad hoc" agreement to arbitrate that issue and that the court erred in finding that no such "ad hoc" agreement existed. In addition, Zhen Hua asserts that the district court lacked subject-matter jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1603-1611, that the district court lacked personal jurisdiction over Zhen Hua, and that venue in the Southern District of New York was improper. For the reasons set forth below, we affirm.

I. BACKGROUND

Petitioner-Appellee U.S. Titan, Inc. ("Titan") is a corporation organized under the laws of Texas, with its principal place of business in Pelham, New York. Zhen Hua is a state-owned corporation organized under the laws of the People's Republic of China, engaged primarily in the shipping industry, with its principal place of business in Guangzhou (also known as Canton), China.

A. The Negotiations

In August 1995, Titan and Zhen Hua began negotiating a time charter2 of the M/T BIN HE (the "BIN HE"), a ship owned by Zhen Hua. The parties conducted negotiations through two shipbrokers in Connecticut, Seabrokers (representing Titan) and Seagos (representing Zhen Hua). The two Connecticut brokers served as conduits for the transmission of many of the communications from one party to the other. Most of the parties' communications during the negotiations are memorialized in writings transmitted via facsimile or telex between and among the brokers and the parties. These communications establish the following chronology of the negotiations.

On September 22, 1995, Zhen Hua offered to charter the BIN HE to Titan for 12 months at $15,250 per day, with an option for an additional 12 months at $15,750 per day. The parties proceeded to negotiate different time periods and rates, as well as several other terms, the details of which are not relevant to the issues before us. On September 26, 1995, Zhen Hua sent Titan a "firm counter [offer]":

Accept/Except:

Period - 6 mos. plus/minus 30 days at CHOPT

CHOPT next 12 mos.

Rates - $15,250 first period

Optional $15,750 second period.

Page 139

Upon receipt of this telex, Titan informed its broker, Seabrokers, that "Charterers are in agreement and accept Owner[']s last offer." Seabrokers then sent via fax to Seagos and Titan a fixture "recap," confirming the "Owners and Charterers' agreement." The agreement was based on the "Shelltime 4 Time Charter," a standard time charter, see Michael Wilford et. al., Time Charters 28-36 (4th ed. 1995), containing an arbitration clause that provides for arbitration in London at the election of either party.3 The recap from Seabrokers to Seagos and Titan contained, in part, the following language:

WE ARE PLEASED TO RECAP OWNER[']S AND CHARTERERS' AGREEMENT AS FOLLOWS, FOR THE TIMECHARTER OF:

VESSEL:

MT BIN HE...

..

PERIOD- 6 MOS. PLUS/MINUS 30 DAYS AT CHOPT

CHOPT NEXT 12 MOS.

UNDERSTOOD +/- 30 DAYS

ONLY TO BE USED ONCE,

DURING THE FINAL PERIOD.

RATES- $15,250 FIRST PERIOD.

$15,750 FOR OPTIONAL PERIOD[.]

..

SUBJECTS-

CP DET'LS, SATISFACTORY INSPECTION OF THE VSL AT DD, RELEASE BY OWNERS FROM CAMARO TC, THENCE US TITAN BOD APPROVAL WITHIN 3 DAYS FOLLOWING RECEIPT OF THEIR DENHOLM INSPECTION REPORT.4

After Zhen Hua dry-docked the BIN HE in Hong Kong, Denholm Ship Management (Overseas) Ltd. ("Denholm") conducted the inspection contemplated by the parties. Following a preliminary inspection, which revealed several problems with the ship, Zhen Hua apparently began considering a sale of the BIN HE.

On October 19, 1995, Titan received from Denholm an initial summary report on the drydock inspection. On October 23, Titan informed Seabrokers that it had concerns about the seaworthiness of the BIN HE, but would await Denholm's final report. Titan indicated also that it was interested in a "purchase option" and "would like to know what steps the Owner intends to take to bring the vessel up to an acceptable trading standard." Seabrokers relayed this message to Seagos, which, acting through Henry Chen, responded later that day:

NOW OWNERS HAVE DECIDED TO SELL THE VESSEL ON CASH BASIS. THEY ARE ASKING $27 MILLION ON THE MARKET. BUT I RECKON WILL GO AT $26 MILLIONS [sic]. PROSPECTIVE BUYERS WILL BE INSPECTING THIS WEEK WHILE THE VSL IS STILL IN THE YARD.

OWNERS THANK TITAN'S INTEREST AND ADVICE. THEY ASK US TO CONVEY THEIR WILLINGNESS TO ENTERTAIN FUTURE BUSINESS PROPOSALS AND LOOK FORWARD

Page 140

TO POSSIBLE COOPERATION.

On October 24, Titan faxed a message to Seabrokers, noting that the final inspection had not yet arrived and remarking:

It is encouraging that [Zhen Hua is] now in a position to sell the vessel if we do not exercise our option for the time charter. We assume therefore that the vessel has been successfully withdrawn from Camaro. We await Owners [sic] confirmation of this withdrawl [sic] per our 9/26 Agreement, so we can begin marketing the vessel for voyage and/or consecutive voyage charter.

Titan also asked Seabrokers to determine whether Zhen Hua would "provide a purchase option throughout the period of [its] charter."

On October 25, 1995, Seagos, through Chen, faxed Seabrokers, stating in relevant part:

WE KNOW THAT AFTER THE VSL FAILED THE SUB WITH U.S. TITAN ON MONDAY, [ZHEN HUA'S] PREFERENCE IS TO DO A STRAIGHT SALE..., AND NOT TO GIVE PURCHASE OPTIONS. IF YOU THINK [TITAN] IS STILL INTERESTED IN THE TIME CHARTER OF THE VSL, PLEASE ASCERTAIN IF U.S. TITAN CAN TAKE [DELIVERY] OF THE VSL UPON OWNERS LIFT [sic] THEIR SUBJECT.

On the same day, Titan apparently became concerned that a misunderstanding might have developed between the parties. Consequently, Titan wrote again to Seabrokers,5 which, in relevant part, states:

FIRST, LET ME BE PERFECTLY CLEAR WITH HENRY/OWNERS, MY FAX OF OCTOBER 23 WAS NOT A REJECTION OF THE VESSEL. IT IS DIFFICULT TO SEE HOW THIS COULD BE SO INTERPRETED. IN FACT IT WAS CLEARLY STATED THAT THE INSPECTION REPORT WAS DUE WEDNESDAY (TODAY) AND "WE ARE SERIOUS ABOUT THIS VESSEL." FRANKLY, OWNERS [sic] RECENT LACK OF RESPONSE CONVEYS THE IMPRESSION OF A RECENT DISINTEREST ON THEIR PART IN TRYING TO CONCLUDE THIS CHARTER....

WE RECEIVED THE FULL DENHOLM REPORT TODAY[, OCTOBER 25,] AND AFTER REVIEW AND ASSUMING OWNERS COOPERATION PER THE AGREED ELIGIBILITY CLAUSE, WE LIFT OUR INSPECTION SUBJECT.

WE NOW LOOK TO OWNERS TO LIFT THEIR CAMARO WITHDRAWL [sic] SUBJECT. THE TITAN BOARD WILL MAKE ITS DECISION WITHIN THE 3 WORKING DAYS AFTER THE LIFTING OF THIS SUBJECT PER OU[R] 9/26 AGREEMENT....

Seabrokers forwarded the fax to Henry Chen of Seagos.

On October 26, Chen informed Seabrokers that the BIN HE had been "WITHDRAWN FROM CAMARO," and stated that "[TITAN] APPROVED THE VSL BELATEDLY. HOWEVER, IF TITAN IS STILL SERIOUS WITH [sic] THE VSL, OWNERS CAN CONSIDER A [TIME CHARTER] ARRANGEMENT FOR THE TIME BEING." In response, on October 26 Titan advised Seabrokers that it was "PLEASED TO FINALLY LEARN... THAT [THE] VESSEL [HAD BEEN] OFFICIALLY WITHDRAWN FROM THE CAMARO CHARTER AND [THAT] OWNERS [HAD] LIFTED THIS SUBJECT." Titan stated further that it would respond with its board's approval by the close of business on October 30. In fact, Titan's board of

Page 141

directors approved the charter party on October 27.

On October 30, Titan sent a telex direct to Chen, as well as to Seabrokers, stating, in part, as follows:

CLEARLY, TITAN'S POSITION IS THAT IT HAS DONE WHAT WAS REQUIRED TO CONCLUDE THE 6 MONTH, OPTION 12 MONTH T/C CONTRACT WHICH IT...

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    ...Whether there was a meeting of the minds between the parties is a question of fact. U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 145 (2d Cir.2001). Where the facts are inconsistent with a finding that the parties mutually agreed to all relevant aspects, no contract wil......
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    ...28 U.S.C. § 1391(f)(1). The same analysis, therefore, applies to both defendants. See U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 153 (2d Cir. 2001) (observing that § 1391(b)(2) and § 1391(f)(1) use identical statutory language and require same analysis). The language......
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    ...Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 127 (2d Cir.2002); U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 152 (2d Cir.2001). This test is more onerous than that required for an assertion of "specific jurisdiction"--that is, jurisdiction......
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    • 27 Agosto 2013
    ...New York Convention, 21 U.S.T. 2517, 330 U.N.T.S. 38, art. II, § 1; see U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 146 (2d Cir. 2001). Article II, § 2 of the Convention, in turn, defines " an agreement in writing" as " an arbitral clause in a con......
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143 cases
  • 283 F.Supp.2d 777 (N.D.N.Y. 2003), 1 01-CV-1331, Ramada Franchise Systems, Inc. v. Boychuk
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Court of Northern District of New York
    • 17 Septiembre 2003
    ...Whether there was a meeting of the minds between the parties is a question of fact. U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 145 (2d Cir.2001). Where the facts are inconsistent with a finding that the parties mutually agreed to all relevant aspects, no contract wil......
  • 307 F.Supp.2d 553 (S.D.N.Y. 2004), 03 Civ. 845, Concesionaria DHM, S.A. v. International Finance Corp.
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Courts. 2nd Circuit. Southern District of New York
    • 6 Marzo 2004
    ...28 U.S.C. § 1391(f)(1). The same analysis, therefore, applies to both defendants. See U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 153 (2d Cir. 2001) (observing that § 1391(b)(2) and § 1391(f)(1) use identical statutory language and require same analysis). The language......
  • 409 F.Supp.2d 427 (S.D.N.Y. 2006), 05 Civ. 8915, Erne Shipping, Inc. v. HBC Hamburg Bulk Carriers GmbH & Co. KG
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Courts. 2nd Circuit. Southern District of New York
    • 11 Enero 2006
    ...Lambert v. Fiddler Gonzalez & Rodriguez, 305 F.3d 120, 127 (2d Cir.2002); U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 152 (2d Cir.2001). This test is more onerous than that required for an assertion of "specific jurisdiction"--that is, jurisdiction......
  • 970 F.Supp.2d 157 (S.D.N.Y. 2013), 13 Civ. 2597 (PAE), Variblend Dual Dispensing Sys., LLC v. Seidel GmbH & Co., KG
    • United States
    • Federal Cases United States District Courts 2nd Circuit United States District Courts. 2nd Circuit. Southern District of New York
    • 27 Agosto 2013
    ...New York Convention, 21 U.S.T. 2517, 330 U.N.T.S. 38, art. II, § 1; see U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 146 (2d Cir. 2001). Article II, § 2 of the Convention, in turn, defines " an agreement in writing" as " an arbitral clause in a con......
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    • Connecticut Bar Journal Nbr. 2009, January 2009
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