Chilean Nitrate Sales Corp. v. The Nortuna

• Decision Date: 17 February 1955
• Citation: 128 F. Supp. 938
• Parties: CHILEAN NITRATE SALES CORP., Libelant, v. THE NORTUNA, her engines, etc., John Aage Wilson and Oceanwide Steamship Company, Inc., Respondents.
• Court: U.S. District Court — Southern District of New York

128 F. Supp. 938

CHILEAN NITRATE SALES CORP., Libelant, v. THE NORTUNA, her engines, etc., John Aage Wilson and Oceanwide Steamship Company, Inc., Respondents.

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

February 17, 1955.

Hill, Rivkins, Middleton, Louis & Warburton, New York City, for libelant, Arthur O. Louis, J. Edwin Carey, New York City, of counsel.

McNutt & Nash, New York City, for respondent, Oceanwide S. S. Co., Inc., Thorolv T. Waaland, New York City, of counsel.

DAWSON, District Judge.

The issue in this case is whether an arbitration clause contained in a charter party between the ship owner and the shipper of merchandise is binding upon the consignee of the merchandise under the particular facts of this case and requires that a claim for damages for injury to the cargo be arbitrated.

The issue arises because respondent, Oceanwide Steamship Company, Inc., has moved to stay all proceedings pending an arbitration. Since the facts did not appear clearly from the papers submitted on the motion, I directed, by a memorandum dated December 9, 1954, that a hearing be held. This hearing was held and testimony taken on January 19, 1955.

The following facts appear without substantial dispute:

1. On April 20, 1951, John Aage Wilson, as disponent owner of the S. S. Nortuna, chartered her by a long term charter to Chilean Nitrate & Iodine Sales Corp., a Chilean corporation. The charter party contained a provision for the determination by arbitration of any dispute that might arise "between owners and the charterers".

2. By an addendum to the charter party dated May 21, 1952, it was agreed that effective that date, the owner of the ship was Oceanwide Steamship Company, Inc., the respondent herein. This addendum to the charter party constitutes a novation, and with respect to the rights and liabilities under the charter party, Oceanwide Steamship Company, Inc. must be regarded as the owner of the S. S. Nortuna.

3. On or about April 21, 1953, Chilean Nitrate & Iodine Sales Corp., the Chilean corporation, shipped a bulk cargo of sodium nitrate to the United States. The bill of lading which was issued on the shipment showed the Chilean corporation as the shipper and the Guaranty Trust Company of New York as consignee. The bill of lading contained a clause stating that —

"Insofar as applicable all other conditions and exceptions to be as per time charter dated New York, April 20th of 1951, between * *"

4. The amended libel alleges that the libelant was the "shipper, consignee, or owner of the shipment" and states that it "brings this action on its own behalf and, as agent and trustee, on behalf of and for the interest of all parties who may be or become interested in the said shipment, as their respective interests may ultimately appear."

5. Libelant, a New York corporation, is a wholly-owned subsidiary of Chilean Nitrate & Iodine Sales Corp., the Chilean corporation. The testimony before me shows that in fact the New York corporation, acting as agent for the Chilean corporation, had hired the S. S. Nortuna, paid the hire, and signed the charter party as such agent. The Treasurer of the New York corporation testified that the charter party had not been submitted to the Chilean corporation for approval, and that it had been signed as a matter of routine as agent for the Chilean corporation. The Treasurer further testified that the New York corporation was familiar with the terms of the charter party and during the life of the charter party it had issued instructions to the Master of the vessel. The testimony further shows that on July 10, 1953, the New York corporation presented to the agents of the respondent owners a "Claim for Loss and Damage of Bulk Nitrate ex-vessels"; that included in the loss computations of this claim were not only amounts for damage to the nitrate cargo covered by the bill of lading that is the basis of this action, but also certain "Off-Hire" credits that could accrue only to the charterer. The testimony further shows that sales of nitrates are made by the Chilean corporation to its New York subsidiary pursuant to a purchase contract negotiated annually. No sales slips are rendered with the sales, nor are the accounts due and payable within a specified time. The New York corporation sells the nitrate. The accounts between the two companies are reconciled on the books of the corporations as an inter-company accounting procedure with the New York corporation running merely an open account on its books with the Chilean corporation. The testimony further shows that the New York subsidiary maintained a sizeable Marine Traffic Department which issued comprehensive instructions as to the care and handling of nitrate cargoes to the Masters of vessels which had been time chartered by the Chilean corporation.

Libelant, the New York corporation, has brought this action for damages to the cargo. Respondent has moved for an order granting a stay of the trial and of all proceedings herein until arbitration is had.

The issue is whether libelant is bound by the arbitration provision contained in the charter party. Libelant contends that it is a separate corporate entity and that it is not bound by the arbitration provision in a charter between its parent and the owner of the vessel. The arbitration provision, by its terms, is limited to controversies that might arise between the owner and the charterer, i. e., between the owner of the ship and the Chilean corporation. Is the present controversy one between...