Japan Sun Oil Co., Ltd. v. M/V MAASDIJK

• Citation: 864 F. Supp. 561
• Decision Date: 29 September 1994
• Docket Number: Civ. A. No. 94-1383.
• Parties: JAPAN SUN OIL CO., LTD. v. The M/V MAASDIJK, its engines, tackle, apparel, furniture, etc. in rem, and K/S Lisbet, Bergen Ship Management AS, Univan Management Services AS, Vulcanus, Nedlloyd Tankers, B.V. Seachem Tankers (USA), Inc. and Iino Kaiun Kaisha Ltd. (Tokyo).
• Court: U.S. District Court — Eastern District of Louisiana

864 F. Supp. 561

JAPAN SUN OIL CO., LTD. v. The M/V MAASDIJK, its engines, tackle, apparel, furniture, etc. in rem, and K/S Lisbet, Bergen Ship Management AS, Univan Management Services AS, Vulcanus, Nedlloyd Tankers, B.V. Seachem Tankers (USA), Inc. and Iino Kaiun Kaisha Ltd. (Tokyo).

Civ. A. No. 94-1383.

United States District Court, E.D. Louisiana.

September 29, 1994.

Francis A. Courtenay, Jr., Donald J. Volpi, Jr., Philip S. Brooks, Jr., Courtenay, Forstall, Guilbault, Hunter & Fontana, New Orleans, LA, for plaintiff.

Harvey Gardere Gleason, Wagner, Bagot & Gleason, New Orleans, LA, for Lisbet K/S, AS Vulcanus.

Maurie D. Yager, Terriberry, Carroll & Yancey, New Orleans, LA, for Nedlloyd Tankers, B.V.

Robert Taylor Lemon, II, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, for Iino Kaiun Kaisha, Ltd. Tokyo.

BERRIGAN, District Judge.

The defendant Iino Kaium Kaisha Ltd. (Tokyo) ("IKK") filed a Motion to Compel and to Stay Litigation pending Arbitration which was submitted on briefs. Having considered the memoranda of counsel, the exhibits, the record, and the applicable law, the Court GRANTS the IKK motion for the following reasons:

BACKGROUND

Plaintiff's cargo of rubber process oil, which had been loaded aboard the M/V MAASDIJK at Burnside, Louisiana, allegedly arrived in Yokohama, Japan "short in quantity and contaminated and damaged severely." Document 1, p. 4. In this court, plaintiff, a corporation with its principal place of business in Japan, sued the vessel in rem, and six other defendants in personam who allegedly are the owners, operators, charterers and/or managers of the M/V MAASDIJK. The defendants are all corporations organized and existing under the laws of unspecified foreign nations.

ANALYSIS

In this motion, IKK contends that the applicable bills of lading and charter parties require compulsory arbitration in London. In opposition to IKK's motion, the plaintiff contends that the arbitration clauses in the bills of lading and charter parties are vague and unenforceable and that their enforcement, if any, will violate the Carriage of Goods By Sea Act ("COGSA").

Agreements to arbitrate are heavily favored and rigorously enforced by the courts. See e.g. 9 U.S.C. § 1 et seq; Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987); Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625, 105 S.Ct. 3346, 3353, 87 L.Ed.2d 444 (1985); Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); Southern Constructors Group v. Dynalectric Co., 2 F.3d 606, 610, n. 15 (5th Cir.1993); Hartford Lloyd's Insurance Co. v. Teachworth, 898 F.2d 1058, 1061 (5th Cir. 1990). 9 U.S.C. § 2 provides:

A written provision in any maritime transaction ... to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or inequity for the revocation of any contract.

"As a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. ..." Moses H. Cone Memorial Hospital, 460 U.S. at 24, 103 S.Ct. at 941. This is especially true in agreements affecting interstate and foreign commerce.

Concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require that we enforce the parties' agreement for foreign arbitration, even assuming that a contrary result would be forthcoming in a domestic context.

Mitsubishi Motors Corp. 473 U.S. at 629, 105 S.Ct. at 3355 (1985).

The Federal Arbitration Act ("FAA"), specifically 9 U.S.C. § 3¹ and 9 U.S.C. § 4,² provides this Court with the general authority to order compulsory arbitration in London and to stay these proceedings pending the disposition of the London arbitration. The Convention on Recognition and Enforcement of Foreign Arbitral Awards "Convention" also requires Courts to enforce any written agreement which provides arbitration as the mechanism to resolve international commercial disputes. 9 U.S.C. § 201. Whether parties should generally be compelled to arbitrate involves a two-step inquiry. "First, the court must determine whether the parties agreed to arbitrate the dispute. Mitsubishi Motors Corp., 473 U.S. at 625, 105 S.Ct. at 3353. ... Then it must consider whether any federal statute or policy renders the claims nonarbitrable. Id. at 628, 105 S.Ct. at 3355." R.M. Perez & Assoc., Inc. v. Welch, 960 F.2d 534, 538 (5th Cir.1992). A limited inquiry into the validity of arbitration is also appropriate under the Convention:

(1) is there an agreement in writing to arbitrate the dispute ...;

(2) does the agreement provide for arbitration in the territory of a Convention signatory;

(3) does the agreement to arbitrate arise out of a commercial legal relationship; and

(4) is a party to the agreement not an American citizen?

Sedco, Inc. v. Petroleos Mexicanos Mexican Nat'l Oil Co. (Pemex), 767 F.2d 1140, 1144 (5th Cir.1985).

In the case at bar, the Tanker Bills of Lading between Ergon, Inc., as shipper, and Japan Sun Oil Company ("Japan Sun"), as consignee, two of which were dated at Burnside, Louisiana on March 24, 1993, and one of which was dated at Burnside, Louisiana on April 27, 1993, provide for arbitration:

3. ARBITRATION. Any and all differences and disputes of whatsoever nature arising out of this Bill of Lading shall be put to Arbitration in the City of New York or in the City of London, whichever place is specified in the Charter Party and in accordance with the Arbitration clause therein. (Emphasis added.)

Document 10, Exhibit A. The face of each Tanker Bill of Lading provides that

the shipment is carried under and pursuant to the terms of the Contract of Affreightment/Charter Party dated FEB. 12, 1993 at AS PER CHARTER PARTY between SEACHEM TANKERS LTD., MONROVIA and IINO — KAIUN KAISHA as Charterer, and all the terms whatsoever of the said Contract of Affreightment/Charter Party including the Arbitration clause, cargo lien clause, and the conditions appearing on both sides of this Bill of Lading to apply and to govern the rights of the parties concerned in this shipment. A copy of a Contract of Affreightment/Charter Party may be obtained from the Shipper or the Charterer upon request. (Emphasis added.)

Id. The February 12, 1993, Tanker Voyage Charter Party between SEACHEM TANKERS LTD. MONROVIA, LIBERIA and IKK provides:

24. ARBITRATION Any and all differences and disputes of whatsoever nature arising out of this Charter shall be put to arbitration in the City of New York or in the City of London whichever place is specified in Part I of this charter pursuant to the laws relating to arbitration there in force, before a board of three persons, consisting of one arbitrator to be appointed by the Owner, one by the Charterer, and one by the two so chosen. The decision of any two of the three on any point or points shall be final.... (Emphasis added.)

Document 9, Exhibit B. The same language is contained in the February 12, 1993, Tanker Voyage Charter Party between IKK and Japan Sun. Id., Exhibit C. In neither Charter Party is New York or London designated in Part I as the place of arbitration. However, a February 16, 1993, addendum to the February 12, 1993, Tanker Voyage Charter Party between SEACHEM TANKERS LTD. MONROVIA, LIBERIA and IKK, specifies that "the place of General Average and arbitration shall be London in accordance with English law." Id., Exhibit B. Plaintiff contends that it did not agree to and had no notice of the addendum, and therefore should not have to arbitrate this dispute in London.

"Arbitration should not be denied `unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue....' Doubts as to arbitrability are to be resolved in favor of arbitration." (Citations omitted.) Commerce Park at DFW Freeport v. Mardian Construction Co., 729 F.2d 334, 338 (5th Cir.1984).

The February 12, 1993, Charter Party between Seachem Tankers Ltd. and IKK is the only Charter Party expressly referenced on the face of the Tanker Bills of Lading of March 24, 1993 and April 27, 1993, to which Japan Sun is the consignee. Those Tanker Bills of Lading expressly state on their face that "all the terms whatsoever of the said Contract of Affreightment/Charter Party including the Arbitration clause ... apply and ... govern the rights of the parties concerned in this shipment." Id. That would include the addendum of February 16, 1993, which designates London as the place of arbitration. Accordingly, the Court finds that there is an agreement in writing to arbitrate the dispute, and that written agreement is enforceable because it provides for arbitration in the territory of a Convention signatory, it arises out of a commercial legal relationship, and the parties to the agreement are not American citizens.

Having found that an agreement to arbitrate exists, the Court now addresses the second inquiry: whether any federal statute or policy renders the claims nonarbitrable. In this case, the plaintiff particularly contends that compulsory arbitration in London will violate COGSA.

Under ... the FAA, the party opposing arbitration carries the burden of showing that Congress intended in a separate statute to preclude a waiver of judicial remedies, or that such a waiver of judicial remedies inherently conflicts with the underlying purposes of that other statute.

Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 483, 109 S.Ct. 1917, 1921, 104 L.Ed.2d 526 (1989).

"COGSA was passed in 1936 as the American enactment of the Hague Rules, and was part of an international effort to achieve uniformity and...