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TUBOS DE ACERO DE MEXICO, S.A. v. DYNAMIC SHIPPING

February 2, 1966

TUBOS DE ACERO DE MEXICO, S.A., Libelant,
v.
DYNAMIC SHIPPING INC., Potomac Steamship Corp., Feliz Compania Naviera, S.A., District Shipping Co., and Preveza Shipping Co., Respondents. In the Matter of the Arbitration between POTOMAC STEAMSHIP CORP., Petitioner, v. TUBOS DE ACERO DE MEXICO, S.A., Respondent


Herlands, District Judge.


The opinion of the court was delivered by: HERLANDS

HERLANDS, District Judge:

The two decisive questions posed by these motions and petition seeking arbitration are: whether the party objecting to the arbitration has raised a genuine issue as to the identity of the principals who entered into the charter containing the arbitration clause; and whether the court should summarily order a separate trial of that issue before directing arbitration.

 The surface complexity of the facts is a commentary on the conduct of the charter party business through agents, unnamed principals, a multiplicity of corporations, and a variety of foreign flag ships.

 The Charter Party of May 27, 1964

 On May 27, 1964, Tubos De Acero De Mexico, S.A. ("TAMSA"), as charterer, signed a contract of charter party (herein "the charter") covering seven consecutive voyages. The other signatory was Dynamic Shipping Inc. ("Dynamic"). The following description of Dynamic's capacity is included in the opening recital of the charter: "Dynamic Shipping, Inc., as Agents for Owners of the Liberian Flag steamer 'WANDERLUST' (Standard American built Liberty) of 7,271/4,469 tons gross 1 net Register or, at Owners' option, Standard American built Liberty substitute. Performing vessel to be nominated latest by August 1st, 1964." In signing the charter, Dynamic described its capacity in the following form of subscription: "Dynamic Shipping Inc. As Agents Only. N. Pateras [sgd]." The name of Dynamic's principal, that is, the owners of the S.S. WANDERLUST ("Owners"), was not mentioned in the charter.

 The Substituted Vessels

 The charter explicitly gave the Owners the option to substitute a different performing vessel in place of the S.S. WANDERLUST. *fn1" Only three of the seven contemplated voyages took place. The S.S. WANDERLUST was not used on any of the three voyages. Instead, in connection with each of these three voyages, Dynamic nominated and substituted a different vessel, as follows:

 First Voyage (completed around November 23, 1964)

 Dynamic nominated the S.S. MASTER ELIAS, a Liberian flag ship, owned by Feliz Compania Naviera, S.A. ("Feliz"), a Panamanian corporation. The substitution of this vessel was effectuated by a writing, "Addendum No. 1," dated July 15, 1964. This addendum explicitly refers to the charter of May 27, 1964 and to the fact that it had been "entered into between Dynamic Shipping, Inc., as Agents for Owners of the Liberian Flag S/S 'WANDERLUST' * * *" and TAMSA. The addendum provides that freight is payable "for account of Dynamic Shipping, Inc., as Agents for Owners." It is subscribed by Dynamic as follows: "Dynamic Shipping Inc. As Agents Only. N. Pateras [sgd] N. Pateras." It also provided that all terms of the May 27, 1964 charter were "to remain unaltered" except for the substitution of vessels.

 Under date of August 18, 1964, TAMSA and Dynamic signed "Addendum No. 2" which, like "Addendum No. 1," refers to Dynamic as "Agents for Owners."

 On July 7, 1964, Feliz and Dynamic signed a Fixture Memorandum whereby the S.S. MASTER ELIAS was made available for the said first voyage; and the terms of the May 27, 1964 charter were expressly incorporated by reference in that memorandum. The memorandum recited that Dynamic was "agents for Potomas [sic] Steamship Corp." and it was signed as follows: "Dynamic Shipping Inc. As Agents for Potomac Steamship Corp. [sgd] Anthony Pilla" and "Feliz Compania Naviera, S.A. [sgd] N. E. Pateras Attorney-In-Fact."

 Second Voyage (completed around May 18, 1965)

 Dynamic nominated the S.S. AGIA IRENE, a Greek flag ship, owned (according to TAMSA) by District Shipping Co. ("District"), a Greek corporation, and owned (according to Dynamic) by Hellas Parnassos Compania Naviera, S.A. ("Hellas"), a Panamanian corporation. The substitution of this vessel for the second voyage was effectuated by a writing, also entitled "Addendum No. 2," but dated November 23, 1964. This addendum explicitly refers to the charter of May 27, 1964 and to the fact that Dynamic entered into it "As Agents for Owners" of the S.S. WANDERLUST. Dynamic is also referred to "As Agents for Owners" in the provision for the payment of freight and in the subscription.

 On November 19, 1964, Hellas and Dynamic signed a Fixture Memorandum whereby the S.S. AGIA IRENE was made available for the said second voyage; and the terms of the May 27, 1964 charter were expressly incorporated by reference in that memorandum. The memorandum recited that Dynamic was "agents for Potomac Steamship Corp." and was signed as follows: "Dynamic Shipping Inc. As Agents for Potomac Steamship Corp. [sgd] Anthony Pilla" and "Hellas Parnassos Compania Naviera, S.A. [sgd] N. E. Pateras Attorney-In-Fact."

 Third Voyage (completed around August 10, 1965)

 Dynamic nominated the S.S. THEONYMPHOS TINOU, a Lebanese flag ship, owned by Preveza Shipping Co. ("Preveza"), a Liberian corporation. The substitution of this vessel for the third voyage was effectuated by a telephone conversation and two confirmatory cables. Dynamic itself time-chartered this vessel from its owners; and, in the time-charter dated June 9, 1965, Dynamic is described as "agents for Charterers." Dynamic signed that time-charter as follows: "Dynamic Shipping Inc. As Agents for Charterers. [sgd] N. Pateras."

 Cause of the Basic Dispute

 The parties differ as to the immediate cause of the dispute. According to TAMSA's libel (65 Ad. 946; filed September 20, 1965), Dynamic made "an unjustified * * * declaration," on or about July 15, 1965, "that there would be no further performance by Owners under the said Charter Party"; in a letter, Dynamic repeated "this unjustified * * * refusal to further perform the charter"; no vessel has been nominated or substituted to perform the fourth and succeeding voyages under the charter party; and TAMSA has suffered $90,000 damages.

 On the other hand, Dynamic claims: "Due to the charterers' repeated failures to pay the owners the freight on time and as it became due, Dynamic, acting as agents for the owners, cabled the charterers' New York representatives on June 15, 1965 advising them that they considered this charter cancelled immediately. The charterers' agents refused to accept the owners' notice of cancellation and claimed that there was no violation of the relevant terms of the charter party."

 TAMSA's Libel

 TAMSA's libel names five respondents: Dynamic, Potomac, Feliz, District and Preveza. The libel pleads the following six causes of action:

 the first, naming only Dynamic as respondent, charges that Dynamic entered the charter "as principal, acting for its own account, or as agent for a principal whose identity is unknown to libelant and has never been disclosed to libelant" and that Dynamic is liable in damages for breach of the charter;

 the second, naming only Dynamic as respondent, charges that Dynamic breached express and implied warranties of its authority to act for the owners of the various vessels and to bind them to the performance of the charter;

 the third, alleging that Potomac was the principal of Dynamic, sues Potomac for breach of the charter;

 the fourth, naming Feliz as the owner of the S.S. MASTER ELIAS, claims that Feliz became obligated to perform the charter by force of Dynamic's having substituted the S.S. MASTER ELIAS in place of the S.S. WANDERLUST to perform the charter, and ...


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