Sociedad Anonima de Navegacion Petrolera v. Cia. de Petroleos de Chile SA
Decision Date | 07 May 1986 |
Docket Number | No. 85 Civ. 7776 (GLG).,85 Civ. 7776 (GLG). |
Citation | 634 F. Supp. 805 |
Parties | SOCIEDAD ANONIMA DE NAVEGACION PETROLERA, Petitioner, v. CIA. DE PETROLEOS DE CHILE S.A. and Lilian Shipping Corp., Respondents. |
Court | U.S. District Court — Southern District of New York |
Kirlin, Campbell & Keating, New York City, for petitioner; Richard H. Sommer, Keith W. Heard, of counsel.
Healy & Baillie, New York City, for respondent CIA. De Petroleos De Chile S.A.; Gordon W. Paulsen, Andrew M. Kramer, of counsel.
Sociedad Anonima De Navegacion Petrolera ("SONAP"), the time charterer of the vessel LUCERNA, petitions for an order directing consolidation of two arbitration proceedings, one between itself and Lilian Shipping Corporation ("Lilian"), the owner of the LUCERNA, and the other between itself and Compania De Petroleos De Chile S.A. ("COPEC"), the subcharterer of the vessel.
COPEC opposes SONAP's motion on the grounds that (1) this Court lacks authority to compel consolidation of the arbitrations, and (2) consolidation is not warranted in this case in any event.
On June 1, 1985, SONAP entered into a time charter agreement with Lilian for use of the LUCERNA for a renewable period of twelve months. The vessel was to be placed at SONAP's disposal "no later than June 30, 1985, in default of which Charterer shall have the option to cancel this Charter. ..." Heard Affidavit of February 25, 1986, Exhibit A, cl. 5(b). The agreement also provided that "any and all differences and disputes of whatever nature arising out of this Charter shall be put to arbitration...." Id. at Exhibit A, cl. 28. Shortly after chartering the LUCERNA, SONAP subchartered the vessel to COPEC. The subcharter agreement contained the same cancellation and arbitration provisions as those quoted above. SONAP, as the "Chartered Owner," was to deliver the vessel at Curacao no later than June 30, 1985; COPEC had the option of canceling the subcharter if the vessel was not timely delivered. The vessel was not delivered by June 30, 1985. On July 10, COPEC canceled its subcharter with SONAP. Thereafter, SONAP canceled its charter party with Lilian.
Lilian demanded arbitration with SONAP regarding the cancellation. SONAP, in turn, demanded arbitration with COPEC. COPEC is willing to arbitrate with SONAP alone, but opposes SONAP's request for consolidation of the arbitrations into one proceeding. Lilian does not oppose consolidation.
SONAP contends that the arbitrations should be consolidated because they involve common issues of law and fact, and because SONAP would be prejudiced by having to arbitrate separately with COPEC and Lilian. COPEC argues that consolidated arbitration cannot be compelled when the parties have not expressly consented thereto.
Id. at 974-75 (footnote omitted).
Id. at 1309.2 Accord Conoco Shipping Co. v. Norse Shipping Co. (PTE), 1983 A.M.C. 1146 (S.D.N.Y.1983) ( ).
COPEC points out that Nereus and its progeny have recently been criticized by several courts. In Weyerhaeuser Co. v. Western Seas Shipping Co., 743 F.2d 635 (9th Cir.), cert. denied, ___ U.S. ___, 105 S.Ct. 544, 83 L.Ed.2d 431 (1984) (hereafter "Weyerhaeuser"), the Ninth Circuit upheld a district court's refusal to compel consolidation of arbitrations among a shipowner, charterer, and subcharterer. It declined to follow the Second Circuit's liberal interpretation of the Arbitration Act. Rather, it concluded that a court could "only determine whether a written arbitration exists, and if it does, enforce it `in accordance with its terms.'" Id. at 637 (quoting 9 U.S.C. § 4). According to the Ninth Circuit's interpretation of the Arbitration Act, a court can only order consolidated arbitration if the parties' agreement provides for such a procedure. In Weyerhaeuser, the parties 3Id.
The Lilian/SONAP and SONAP/COPEC agreements did not specifically require "only arbitration between the parties" to each agreement. The relevant provision, clause 28, called for arbitration of "any and all differences and disputes ... arising out of this Charter...." Were we to follow Weyerhaeuser, we could compel neither consolidation nor separate arbitrations, since the express terms of the parties' agreements provide neither for consent to nor prohibition of consolidation of related arbitrations. However, Weyerhaeuser is not controlling precedent for our decision, since it emanates from another circuit. We must look to the decisions of the Second Circuit and the Supreme Court for authority in the case before us. COPEC suggests that the Supreme Court's recent decision in Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985) (hereafter "Byrd"), provides controlling precedent for our interpretation of the Arbitration Act.
In Byrd, an investor brought suit in federal court against a broker, alleging violations of federal securities laws and pendent state law claims. Byrd had signed a "Customer Agreement," in which he had agreed to arbitrate any controversy between himself and the broker arising out of their agreement. The broker moved to have the federal court compel arbitration of the pendent state claims. It did not seek to compel arbitration of the federal claims since, pursuant to Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953), it assumed that the arbitration agreement was unenforceable as to the federal securities claims. The district court refused to compel arbitration of the state claims; the circuit court affirmed that decision. The Supreme Court, however, reversed and required the parties to arbitrate the state claims, even though the result would be a bifurcation of the proceedings. Byrd, supra, 105 S.Ct. at 1241.
Id. at 1242-43. See Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 20, 103 S.Ct. 927, 939, 74 L.Ed.2d 765 (1983).
Although instructive on the issue of compelling arbitration of state claims while proceeding with federal litigation, Byrd presents no holding on the issue of compelling consolidation of two related arbitration proceedings. Nevertheless, a recent case from this district relied on Byrd in denying a petition to compel consolidated arbitration. In Ore & Chemical Corp. v. Stinnes Interoil, Inc., 606 F.Supp. 1510 (S.D.N.Y. 1985) (hereafter "Ore & Chemical"), Judge Edelstein followed the reasoning of the Ninth Circuit in Weyerhaeuser, rather than the Second Circuit in Nereus, which he found to be contrary to the Supreme Court's pronouncements in Byrd on the scope of the Federal Arbitration Act.
Judge Edelstein interpreted Byrd to require enforcement of private arbitration agreements, as written, despite any resulting inefficiency in resolving disputes. Ore & Chemical, supra, 606 F.Supp. at 1513. Accordingly, he found that consolidated arbitrations could not be...
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