Bergesen v. Joseph Muller Corp.

• Decision Date: 07 October 1982
• Docket Number: No. 81 Civ. 7698-CSH.,81 Civ. 7698-CSH.
• Citation: 548 F. Supp. 650
• Parties: In the Matter of the Arbitration between Sigval BERGESEN, as Owners of the M.T. SYDFONN, FROSTFONN, and NORDFONN, Petitioner, and JOSEPH MULLER CORPORATION, Respondent.
• Court: U.S. District Court — Southern District of New York

548 F. Supp. 650

In the Matter of the Arbitration between Sigval BERGESEN, as Owners of the M.T. SYDFONN, FROSTFONN, and NORDFONN, Petitioner and JOSEPH MULLER CORPORATION, Respondent.

No. 81 Civ. 7698-CSH.

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

October 7, 1982.

Healy & Baillie, New York City, for petitioner; Raymond A. Connell, Elisa M. Pugliese, New York City, of counsel.

Moore, Berson, Lifflander & Mewhinney, New York City, for respondent; Michael T. Sullivan, Michael R. Sonberg, New York City, of counsel.

MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

Petitioner Sigval Bergesen, the Norwegian owner of three cargo vessels ("Bergesen"), commenced this action against respondent Joseph Muller Corporation ("Muller"), a Swiss corporation and charterer of the vessels, to confirm and enter judgment upon an award of arbitrators rendered in New York in favor of Bergesen and against Muller pursuant to arbitration clauses contained in the charter parties. Bergesen invokes the jurisdiction of this Court pursuant to Chapter 2 of 9 U.S.C., entitled "Convention on the Recognition and Enforcement of Foreign Arbitral Awards." 9 U.S.C. §§ 201-208 (the "Convention"). Muller contends that the arbitration award does not fall under the Convention, and that in consequence this Court lacks subject matter jurisdiction. The case presents, in circumstances rendering its avoidance impossible, the question of whether the Convention, as implemented by United States law, applies to awards involving foreign interests but made in the United States, or only to awards involving such interests and made in foreign countries. The Second Circuit has noted the disagreement of commentators on this question, I/S Stavborg v. National Metal Converters, Inc., 500 F.2d 424, 426 n.2 (1974), and itself characterized the controversy as "intriguing" in Andros Compania Maritima v. Marc Rich & Co., A.G., 579 F.2d 691, 699 n.11 (2d Cir. 1978), although finding it unnecessary to resolve the question in either case, or, so far as appears, in any other case.

This Court construes the Convention, as implemented by United States law, to apply to arbitration awards involving foreign interests and rendered in the United States. Accordingly the award will be confirmed, and judgment entered in Bergesen's favor.

I.

The charter parties provided for the ocean carriage of cargoes consisting of vinyl chloride monomer ("VCM") and propylene between American, Caribbean, and European ports. There is no dispute that the charter parties contained enforceable arbitration clauses,¹ or that arbitrable disputes arose between the parties, or that, under date of December 14, 1978, an arbitration panel appointed in accordance with the terms of the clauses awarded Bergesen $61,406.09, with additional interest running at the rate of 8% per annum until payment. Bergesen has been attempting ever since to collect this amount, together with an additional $8,462.00 and interest representing payment by Bergesen of arbitrators' fees and expenses which should have been paid by Muller.

Bergesen's initial effort at collection took the form of an action commenced in the courts of Switzerland in May, 1979. Certain details of that litigation are furnished in the affidavit of Dr. C. Mark Bruppacher, counsel for Bergesen, submitted on the present motion. I do not pretend to understand all the intricacies of Swiss law to which Dr. Bruppacher refers. It is sufficient to say that Bergesen has not yet obtained a recovery from Muller in the Swiss courts; and that Muller is resisting the Swiss action on the grounds that the arbitration award did not fall within the Convention, and that, in order to be enforceable as a judgment in Switzerland, "the award needed to be confirmed under the New York Civil Practice Law and Rules § 7150." Bruppacher affidavit of February 16, 1982 at ¶ 5.

If Muller is correct in those contentions— namely, that confirmation of the arbitration award in New York is a condition precedent to an enforceable judgment in Switzerland, and that this case does not fall under the Convention—then Muller may escape liability entirely. That is because it is now too late for Bergesen to move to confirm the award and for entry of judgment under either NYCPLR § 7510 or its counterpart, the Federal Arbitration Act of 1947, 9 U.S.C. §§ 1-14.² Under either statute, the motion to confirm the arbitration award must be made within one year of the award. NYCPLR § 7510; 9 U.S.C. § 9. The Convention, however, extends a potential lifeline to Bergesen in the form of 9 U.S.C. § 207, which permits an application to a court having jurisdiction for an order of confirmation "within three years after an arbitral award falling under the Convention is made..." It is that lifeline which Muller seeks to snatch from Bergesen's grasping fingers. The case turns upon whether or not the award is one "falling under the Convention."

II.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards was adopted at the conclusion of a United Nations conference which was held in New York in 1958. The United States implemented the Convention by enacting Chapter 2 of the Federal Arbitration Act, on July 31, 1970, Pub.L. 91-368, 84 Stat. 692, by which time the Convention was already in effect in 34 other countries.

The scope of the Convention, as enacted into United States law, is delineated in 9 U.S.C. § 202, which provides:

"Agreement or award falling under the Convention. An arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention. An agreement or award arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the Convention unless that relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states. For the purpose of this section a corporation is a citizen of the United States if it is incorporated or has its principal place of business in the United States."

The legislative history says of this section:

"Section 202 defines the agreements or awards that fall under the Convention. The second sentence of section 202 is intended to make it clear that an agreement or award arising out of a legal relationship exclusively between citizens of the United States is not enforceable under the Convention in U.S. courts unless it has a reasonable relation with a foreign state." H.R.Rep. No. 91-1181, 91st Cong., 2d Sess. 2, reprinted in 1970 U.S.Code Cong. & Ad.News 3601, 3602.

Confirmation of an award under the Convention is provided for by 9 U.S.C. § 207, which reads in its entirety:

"Within three years after an arbitral award falling under the Convention is made, any party to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award as against any other party to the arbitration. The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention."

It has been held that where entirely foreign interests agree to arbitrate in New York disputes arising out of their commercial relationship, this Court has jurisdiction under the Convention to compel arbitration and, if need be, appoint an arbitrator. Sumitomo Corp. v. Parakopi Compania Maritima, S.A., 477 F.Supp. 737 (S.D.N.Y.1979), aff'd, 620 F.2d 286 (2d Cir. 1980).³ The case at bar presents the question of whether the Convention's provisions with respect to confirming the arbitrators' award also apply where foreign interests agree to arbitration in New York. To sustain its contention that this question must be answered in the negative, Muller must demonstrate a Congressional intent, express in the implementing statute or implicit in its purpose or legislative history, to exclude from the enforcement provisions of the Convention arbitration agreements between foreigners calling for arbitration in New York.

The difficulty Muller faces is that when Congress, in enacting Chapter 2 of the Federal Arbitration Act, intended to exclude certain transactions or proceedings, it knew how to do so. Thus, as we have seen, 9 U.S.C. § 202 provides in part:

"An agreement or award arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the Convention unless that relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states." (emphasis added).

In Sumitomo Corp., supra, Judge Werker of this Court rejected a contention that an arbitration agreement solely between foreign parties did not fall under the Convention as implemented in this country by the Congress:

"In delineating the coverage of the Convention, Congress explicitly excluded purely domestic transactions. 9 U.S.C. § 202. Had Congress also intended to exclude purely foreign transactions, it undoubtedly would have done so explicitly as well." 477 F.Supp. at 741.

Here we deal, not with enforcement of the agreement to arbitrate, but with enforcement of the subsequent award. Had Congress, in delineating the coverage of the enforcement provisions of the Convention, desired to exclude awards rendered in the United States as opposed to a foreign country, it would equally undoubtedly have made that exclusion explicit. But there is no such limitation upon the awards entitled to enforcement under the Convention. Furthermore, the statute by which the Convention became a part of United States law is broad and remedial. 9 U.S.C. § 203 provides that "an action or proceeding falling under the Convention shall be deemed to arise under the laws...