China Union Lines v. STEAMSHIP COMPANY OF 1949

• Decision Date: 14 December 1955
• Citation: 136 F. Supp. 597
• Parties: CHINA UNION LINES, Limited, Libellant, v. STEAMSHIP COMPANY OF 1949, Inc., Respondent.
• Court: U.S. District Court — Southern District of New York

136 F. Supp. 597

CHINA UNION LINES, Limited, Libellant, v. STEAMSHIP COMPANY OF 1949, Inc., Respondent.

United States District Court S. D. New York.

December 14, 1955.

Platow & Lyon, New York City, for libellant E. F. Platow, New York City, and George G. Platow, Corona, of counsel.

Zock & Petrie, New York City, for respondent Francis J. O'Brien, New York City, of counsel.

HERLANDS, District Judge.

This is an application by respondent for an order staying libellant from proceeding to arbitration in this matter. The chronology of the proceedings in this District, as well as in the Southern District of Texas, has a material bearing upon the merits of the motion at bar.

On December 9, 1954, libellant filed a libel in personam in this court, seeking damages in the sum of $36,000.

On February 2, 1955, respondent appeared and answered. It also filed a cost bond.

On February 9, 1955, upon motion made by libellant, an order was filed in this court whereby libellant's ad damnum clause was increased from $36,000 to $50,000.

On February 16, 1955, respondent caused to be filed a note of issue, after having served a copy of such note of issue on libellant the day before. The clerk's office duly assigned a calendar number to this cause.

On March 4, 1955, libellant proceeded in the United States District Court for the Southern District of Texas to attach respondent's funds in the approximate amount of $36,000. The libel filed in the Texas District Court prayed for a writ of foreign attachment.

On August 12, 1955, respondent moved in the Texas District Court for an order to transfer the cause to the Southern District of New York.

On August 22, 1955, libellant crossmoved in the Texas District Court for an order directing arbitration.

On September 28, 1955, Judge Allen B. Hannay of the United States District Court for the Southern District of Texas denied respondent's motion to transfer the cause to the Southern District of New York and, at the same time, directed that libellant's demand for arbitration proceed in accordance with paragraph "17" of the terms of the charter party between libellant and respondent. Fuller reference to the charter party and the arbitration provision will appear later in the course of this opinion.

On October 7, 1955, an order based on Judge Hannay's decision was duly entered in the Texas District Court (Exhibit 9 attached to the papers submitted in opposition to the motion at bar). Judge Hannay's order directed that the proceedings in the Southern District of Texas should be stayed "until arbitration has been had in the City of New York, State of New York, of the disputes and controversies" between libellant and respondent, "such arbitration to be had in accordance with the terms of clause 17 of that certain charter party of the Chinese steamship Chungking Victory made between the parties in the City of New York on the 30th day of November, 1950, and in accordance with the United States Arbitration Act." The order further directed the parties to appoint their respective arbitrators and to proceed with the arbitration "in the City of New York, State of New York." The order finally provided "that jurisdiction of the above entitled cause shall be and is hereby retained by this Court to take such further proceedings and to enter such decrees as may be appropriate upon the award duly made by the arbitrators in said arbitration." The order, as signed by Judge Hannay was "approved as to form" by the proctors for the respective parties.

At no time up to the present has libellant asked this court to refer the cause pending in this court to arbitration.

The charter party which contains the arbitration provision is the standard form of "Time Charter, Government Form." The arbitration provision is contained in paragraph "17" of the charter party; and that provision is quoted in article "Tenth" of the libel.

Arbitration proceedings are now governed by a specific statute — Title 9 U.S. C.A. §§ 1-14. It is respondent's contention that sections 4 and 8 of the arbitration statute have a decisive effect upon the motion at bar.

Section 4 provides, in part, as follows:

"The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed."

Thus, respondent argues that the plain wording of the statute requires that any arbitration in accordance with the terms of the agreement "shall be within the district" in which the petition for an order directing such arbitration is filed.

As appears from the foregoing chronology of the proceedings, libellant filed its petition for an order directing arbitration in the Southern District of Texas. It did not file a similar petition in this district. The only district within which the arbitration could proceed by force of a petition and court order would be the Southern District of Texas. However, the Texas District Court ordered the arbitration to proceed "in the City of New York." Hence, the order of the Texas District Court contravenes the provision contained in section 4 of the statute. In view of paragraph "17" of the charter party, which specifically provides that the arbitration shall proceed before three persons "at New York," libellant (in selecting the Texas District Court) chose the wrong forum in which to file its petition for an order directing arbitration.

Moreover, the merits of respondent's present motion rest upon additional grounds. Section 8 of the statute expressly recognizes and states that, where the basis of jurisdiction is by a cause of action which is begun "by libel and seizure of the vessel or other property of the other party", the court "shall then have jurisdiction to direct the parties to proceed with the arbitration and shall retain jurisdiction to enter its decree upon the award." This statutory provision was designed to protect a libellant who proceeded in rem, but who nevertheless desired to preserve his right to arbitration.

In the case at bar, however, libellant initiated the litigation by an in personam proceeding filed in this court on December 9, 1954. Issue was joined; respondent filed a cost bond; libellant further invoked the jurisdiction of this court by obtaining an order increasing its claim for damages to $50,000; a note of issue was filed; and the case is now on the calendar of this court. All of these proceedings took place in the Southern District of New York be...