Odfjell Asa v. Celanese Ag

• Decision Date: 18 December 2004
• Docket Number: No. 04 Civ. 1758(JSR).,04 Civ. 1758(JSR).
• Citation: 348 F.Supp.2d 283
• Parties: ODFJELL ASA, Odfjell USA, Inc., Odfjell Seachem As, Jo Tankers As, Jo Tankers, BV, and Jo Tankers, Inc., Plaintiffs, v. CELANESE AG, Celanese, Ltd. and Millennium Petrochemicals, Inc., Defendants. In the Matter of the Arbitration Between Celanese Ltd., Celanese Chemicals Europe GMBH, and Millennium Petrochemicals, Inc., Claimants, and Odfjell Asa, Odfjell Seachem As, Odfjell U.S.A., Inc., Jo Tankers As, Jo Tankers BV, and Jo Tankers, Inc., Respondents.
• Court: U.S. District Court — Southern District of New York

348 F.Supp.2d 283

ODFJELL ASA, Odfjell USA, Inc., Odfjell Seachem As, Jo Tankers As, Jo Tankers, BV, and Jo Tankers, Inc., Plaintiffs, v. CELANESE AG, Celanese, Ltd. and Millennium Petrochemicals, Inc., Defendants.

In the Matter of the Arbitration Between Celanese Ltd., Celanese Chemicals Europe GMBH, and Millennium Petrochemicals, Inc., Claimants, and

Odfjell Asa, Odfjell Seachem As, Odfjell U.S.A., Inc., Jo Tankers As, Jo Tankers BV, and Jo Tankers, Inc., Respondents.

No. 04 Civ. 1758(JSR).

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

December 18, 2004.

Gregory J. Wallance, Kaye Scholer LLP, New York, NY, for Petitioner.

Joseph J. Samarias, Steven F. Cherry, Wilmer, Cutler & Pickering, McLean, VA, Richard J. Rappaport, McGuireWoods LLP, Chicago, IL, Matthew Phineas Previn, Paul Adam Engelmayer, Wilmer, Cutler & Pickering, New York, NY, Richard L. Jarashow, McGuireWoods LLP, New York, NY, for Plaintiffs.

Hector Torres, Harold G. Levison, Kasowitz, Benson, Torres & Friedman, New York, NY, Gary William Dunn, Kasowitz, Benson, Torres & Friedman LLP, New York, NY, for Defendants.

Karen Asner, White & Case, New York, NY, for Stolt Nielsen.

MEMORANDUM ORDER

RAKOFF, District Judge.

By Order dated December 7, 2004 (the "December 7 Order"), the Court (a) granted the motion of claimants Celanese Ltd., Celanese Chemicals Europe GmbH, Celanese Pte., Ltd., Grupo Celanese S.A., and Servicios Corporativos Celanese S. de RL de C.V. (collectively, "Celanese") and Millennium Petrochemicals, Inc. to enforce arbitration subpoenas requiring the custodians of records of non-parties Stolt-Nielsen S.A., Stolt-Nielsen Transportation Group, BV, Stolt-Nielsen Transportation Group Inc., and Stolt-Nielsen Transportation Group, Ltd. (collectively "Stolt-Nielsen") to appear before the arbitration panel, testify, and produce certain documents, and (b) denied the motion of Stolt-Nielsen to quash or stay a similar arbitration subpoena requiring Paul E. O'Brien, the former Senior Vice President and General Counsel of Stolt-Nielsen Transportation Group Ltd., to appear before the panel, testify, and produce certain documents. This Memorandum Order explains the reasons for the December 7 Order and addresses Stolt-Nielsen's subsequent motion for a stay of that Order.

Basic familiarity with the factual background of the underlying arbitration is here assumed. See Odfjell ASA et al. v. Celanese et al., 2004 WL 1574728, 2004 U.S. Dist. LEXIS 13151 (S.D.N.Y. Jul. 14, 2004). Briefly, claimants are chemical producers who had entered into a variety of shipment contracts with respondents and with Stolt-Nielsen. The arbitration claims involve assertions that respondents Odfjell ASA, Odfjell USA, Inc., Odfjell Seachem AS, Jo Tankers AS, Jo Tankers, BV, and Jo Tankers, Inc. were co-conspirators in a scheme to fix prices, rig bids, and engage more generally in anti-competitive conduct in the parcel tanker shipping market, all in violation of federal antitrust laws.

The present dispute over the Stolt and O'Brien subpoenas plays out against the backdrop of an earlier dispute previously resolved by this Court involving other subpoenas. Specifically, by Order dated May 28, 2004 and subsequent Memorandum dated August 4, 2004 (the "August 4 Memorandum"), the Court denied the claimants' motion for an order compelling non-party Hendrikus van Westenbrugge to comply with two arbitration subpoenas directing him to appear at a pre-hearing deposition. See Odfjell ASA et al. v. Celanese AG et al., 328 F.Supp.2d 505 (S.D.N.Y.2004). In so ruling, the Court explained that Section 7 of the Federal Arbitration Act ("FAA") confers upon arbitrators only the power to compel non-parties to appear before the arbitrators, not the power to compel non-parties to participate in depositions or other forms of pre-hearing discovery outside the presence of the arbitrators. Id.

Seemingly taking its cue from this Court's May 28 Order (as elaborated by the August 4 Memorandum), the arbitration panel, on July 6, 2004, issued several subpoenas duces tecum directing Stolt-Nielsen "to appear in an arbitration proceeding" on July 28, 2004 and to produce at that time "all documents produced by Stolt-Nielsen to the United States Department of Justice (`DOJ') or to the European Commission (`EC') in connection with any investigation conducted by the DOJ or the EC concerning the parcel-tanker industry and all documents collected by the DOJ and EC from Stolt-Nielsen in the course of such investigation." Subpoenas Duces Tecum, Jul. 6, 2004, attached as Ex. 33 to Declaration of Gary W. Dunn, Aug. 19, 2004 ("Aug. Dunn Decl."). In a separate subpoena duces tecum dated July 22, 2004, the panel directed Paul O'Brien "to appear in an arbitration proceeding" on July 28, 2004 and to produce various documents at that time. Subpoena Duces Tecum, attached as Ex. 34 to Aug. Dunn Decl. By letter dated July 19, 2004, Stolt-Nielsen requested that the arbitration panel vacate the subpoenas directed to the Stolt-Nielsen entities on the grounds that the FAA does not allow arbitrators to issue subpoenas duces tecum to non-parties and that the subpoenas seek confidential information that could undermine the ongoing investigations by the DOJ and EC. See Letter from Karie Jo Barwind, Jul. 19, 2004, attached as Ex. 35 to Aug. Dunn Decl. By letter dated July 22, 2004, the arbitration panel denied this request, stating that "[i]t is the Panel's position that the subpoena it issued is a valid hearing subpoena" and that the panel could take up the issue of confidentiality at the hearing itself. See Letter from John J. Gibbons, Jul. 22, 2004, attached as Ex. 36 to Aug. Dunn Decl. By letter dated July 23, 2004, Stolt-Nielsen again refused to appear, and the July 28th hearing was adjourned. See Letter from Karie Jo Barwind, Jul. 23, 2004, attached as Ex. 37 to Aug. Dunn Decl.

Although the foregoing subpoenas, unlike the "deposition" subpoenas this Court had earlier considered, facially recited that they were returnable before the arbitration panel, they did not seemingly require any hearing-like activity by the arbitrators and hence might have been argued to exceed the panel's jurisdiction under Section 7 of the FAA. On August 3, 2004, however, the panel amended the subpoenas. The new subpoenas to the various Stolt-Nielsen entities commanded their respective custodians of records "to appear and testify in an arbitration proceeding" on August 12, 2004, and "to bring with [them] and produce at that time and place any and all documents and things, of which [they] have custody or control, which are responsive" to the requests for documents turned over to the DOJ and the EC. Subpoenas, Aug. 3, 2004, attached as Ex. 32 to Aug. Dunn Decl. (emphasis added). By letter dated August 9, 2004, Stolt-Nielsen again refused to comply. See Letter from Karie Jo Barwind, Aug. 9, 2004, attached as Ex. 38 to Aug. Dunn Decl. Thereafter, claimants moved in this Court to compel compliance.

Similarly, on August 3, 2004, the panel also issued an amended subpoena to Paul O'Brien likewise commanding him to "appear and testify in an arbitration proceeding" on August 12, 2004 and to bring eight specified sets of documents at the same time. Subpoena, Aug. 3, 2004, attached as Exhibit A to Declaration of Karen M. Asner, Oct. 6, 2004 ("Oct. 6 Asner Decl.") (emphasis added). Unlike Stolt-Nielsen, O'Brien did not contest the subpoena. Stolt-Nielsen, however, did so, eventually moving in this Court to quash the subpoena.¹ As a result, the return date on the amended subpoenas, both to Stolt-Nielsen and to O'Brien, were adjourned pending resolution of the motions before this Court.

Thereafter, the Court received extensive briefing and oral argument both on claimants' motion to compel compliance with the Stolt-Nielsen subpoenas and Stolt-Nielsen's motion to quash the O'Brien subpoena. With respect to the former, Stolt-Nielsen's primary argument is that the subpoenas are just a thinly-disguised attempt to obtain the pre-hearing discovery that the August 4 Memorandum forbade. However, as noted, the instant subpoenas to Stolt-Nielsen, unlike the deposition subpoenas addressed in the August 4 Memorandum, call for the non-party to appear before the arbitrators themselves to testify and to produce certain documents. This difference is dispositive.

Section 7 of the FAA states that the arbitrators "may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as...