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IN RE METAL TRANSP. CORP.

August 12, 1965

In the Matter of the Arbitration between METAL TRANSPORT CORPORATION, Petitioner, and COMPANIA NATIONAL NAVIERA, S.A., Respondent


The opinion of the court was delivered by: RYAN

RYAN, District Judge.

 Petitioner, METAL TRANSPORT, has moved for an order directing that arbitration proceed as provided for in Clause 43 of a charter party dated October 2, 1964 for the SS MARIA LEMOS for a voyage from ports in Brazil to South Japan (9 U.S.C. Sec. 4).

 The charter party provides in part that:

 
"Any and all differences and disputes of whatsoever nature arising out of this charter will be put to arbitration, in New York, * * *."

 The petitioner's claim of damage arising out of the respondent owner's alleged failure to tender the vessel pursuant to the charter party falls within the arbitration clause provided there was a valid, legal and enforceable agreement.

 Respondent has submitted an unquestioned copy of the charter party, which is dated (and apparently concluded in) London, October 2, 1964. It provides for charter of the "SS MARIA LEMOS", Greek flag, "expected ready to load about 20th November 1964, the lay days not to commence before 18th November 1964", for voyage to Angra dos Reis (Brazil) and thence to South Japan. Attached to the charter party is a further memorandum, dated London, 2nd October 1964, providing in part:

 
"2. Owners guarantee that Master will sign Bills of Lading dated in November covering the entire cargo, irrespective of date of completion of loading.
 
"3. Master to sign Bills of Lading and Manifest Angra dos Reis/Haifa to be exchanged after sailing for fresh Bills of Lading and Manifest Angra dos Reis/Japan.
 
"All other terms, conditions and exceptions of the Charter Party remain unchanged."

 In addition to the Charter party and addendum, there is affixed a letter, dated 2nd October 1964 written by Ore Chartering, Ltd., as Brokers for the Charterers "by telex authority" addressed to "The Owners, SS 'Maria Lemos'" reading

 
"In consideration of Owners agreeing to issue Bills of Lading and Manifest Angra dos Reis/Haifa to be subsequently exchanged for fresh Bills of Lading and Manifest Angra dos Reis/Japan, Charterers hereby undertake to indemnify Owners for any and all claims in respect of this cargo as a result of the above documentation."

 The addendum and letter providing that the owner would guarantee that the Master would issue November bills of lading "irrespective of the date of completion of loading" and that both the bills of lading and the manifest would recite that the cargo was being carried from Angra dos Reis to Haifa rather than Angra dos Reis to the vessel's true destination, Japan, constituted amendments to the charter party. Respondent contends that these supplemental provisions make the charter party and the arbitration agreement included therein illegal and that this question of legality should be determined by the Court rather than by arbitrators. Petitioner contends that the charter party is legal, and that this question of legality should be determined by arbitration.

 The legality of the charter party is an issue determinable by the Court. In re Kinoshita & Co., 287 F.2d 951 (2d Cir., 1961), the Court of Appeals for this Circuit, in deciding whether a claim of fraud in the inducement of a contract was cognizable by arbitrators, pursuant to an arbitration clause contained within that contract, stated:

 
"* * * we must first examine the record to ascertain whether there is any factual obstacle to considering the arbitration clause as separable, and whether the arbitration clause is sufficiently broad to cover the dispute about the alleged fraud. No such factual obstacle is found in this case as is evidenced by the agreement itself. There would be such an obstacle if it was claimed by appellant that appellant's signature to the contract was a forgery, or that for any ...

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