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IN RE TSAKALOTOS NAVIGATION CORP.

September 1, 1966

In the Matter of the arbitration between TSAKALOTOS NAVIGATION CORP., as agents for the owners of the S.S. GENERAL TSAKALOTOS, Petitioner, and SONACO, SOCIEDAD INTERNACIONAL DE COMERCIO S.A., Respondent, Under Charter Party dated September 10, 1965

Tenney, District Judge.


The opinion of the court was delivered by: TENNEY

MEMORANDUM

TENNEY, District Judge.

 Petitioner moves pursuant to the United States Arbitration Act, 9 U.S.C. §§ 4-6 (1947), for an order directing respondent, a Spanish corporation, to proceed to arbitration and appointing an arbitrator to act for respondent. Petitioner is a New York corporation acting as authorized agent of the Chatham Shipping Co., a Liberian corporation, which owns the S.S. GENERAL TSAKALOTOS, a Greek flag steamer.

 In an agreement dated September 10, 1965, petitioner and respondent entered into a charter party whereby respondent hired the S.S. GENERAL TSAKALOTOS. The charter provided for the vessel to carry 9,800 tons of grain from a United States port to one to three ports in Spain. The petitioner alleges that the vessel sailed from New Orleans on October 15, 1965 and arrived at Malaga on November 5, Tarragona on November 13, and Seville on November 21, 1965, and that during this period the vessel was on demurrage for 26 days, 5 hours and 38 minutes. *fn1" It is further alleged that respondent failed to pay the balance due for freight expenses and for demurrage. This is the main dispute before this Court, although there are other disagreements which are important to the Spanish suit discussed hereinafter.

 On November 30, 1965, petitioner's agent wrote to respondent's agent proposing that respondent pay $10,000 for demurrage on account, $2,750 toward the freight charges with respondent agreeing to pay the remainder of the freight charge when discharge of the cargo was completed, and the submission to arbitration in New York of the demurrage and freight disputes as per the charter party. The charter party had incorporated by reference the New York Produce Exchange Arbitration Clause which provides:

 
Should any dispute arise between Owners and the Charterers, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them, shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the Court. The Arbitrators shall be commercial men.

 Respondent claims that this letter constituted a demand for compliance with petitioner's proposals. Although the two translations of this letter from Spanish to English differ greatly, it cannot, by any means, be interpreted as anything more than a proposed settlement of the dispute subject to a counterproposal by respondent. No answer to this letter was received.

 On December 1, 1965, petitioner's agent again wrote to respondent's agent advising it that a lien had been placed on part of the cargo in accordance with clause 8 of the charter party which provided:

 
8. Owners shall have a lien on the cargo for freight * * * [and] demurrage. * * * Charterers shall also remain responsible for freight and demurrage incurred at port of discharge, but only to such extent as the Owners have been unable to obtain payment thereof by exercising the lien on the cargo.

 The letter further stated that because the charterer refused to consider the owners' claim, there was no choice but to place the lien on part of the cargo because discharge of the cargo was almost completed. It continued by stating that the owners requested arbitration immediately upon discharge of the cargo and that the owners would name their arbitrator shortly. There was no mention of possible court action to foreclose the lien. Respondent alleges in the affidavit of Mr. Diez, the managing director of SONACO, that the owners offered to arbitrate only the issues of extra freight and demurrage. I find that the letter of December 1, 1965 does not so limit the scope of the arbitration. Again, respondent did not reply.

 In any event, on December 25, 1965, petitioner instituted proceedings in "Voluntary Jurisdiction" in the Court of First Instance Number Three of Seville, Spain. This was done pursuant to the Spanish Commercial Code, Arts. 665-66. Petitioner alleges that this was done solely to protect its lien for freight and demurrage. *fn2" On January 15, 1966, respondent appeared in the Seville proceedings. This had the effect of changing the proceeding to a litigated one (called "incidentes"), requiring the respondent to file a formal "opposition" which was done on February 9 or 10, 1966. With this, respondent interposed counterclaims for insurance premiums and cargo damage which were matters outside the scope of the freight and demurrage disputes. Petitioner alleges that it was forced to answer the "opposition" in order to preserve its lien. This is not denied by respondent. Accordingly, on April 5, 1966, petitioner filed an answer but did not assert any other claims against respondent. This proceeding is now awaiting consideration in the Spanish Court and, at the earliest, will not be heard until some time in September of this year.

 Meanwhile, by letter dated January 24, 1966, attorneys for petitioner demanded that the claims be arbitrated in accordance with the charter party, named its arbitrator and demanded that respondent appoint its arbitrator within seven days. Upon failure of respondent to reply, a petition was filed in this Court, requesting the relief hereinbefore mentioned. The petition and notice of motion were served on respondent by registered mail in Spain.

 There are two main issues before the Court:

 1. Is the question of waiver for the Court or for the arbitrators ...


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