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PENALVER v. COMPAGNIE DE NAVIGATION FRUTIERE

March 28, 1977

ARTURO PENALVER, Plaintiff, against COMPAGNIE DE NAVIGATION FRUTIERE, "MATOUBA", Defendant and Third Party Plaintiff, LAURITZEN PENINSULAR REEFERS, LTD., Third Party Defendant.


The opinion of the court was delivered by: PLATT

MEMORANDUM AND ORDER

PLATT, D.J.

 This is a motion by the third party defendant, Lauritzen Peninsular Reefers, Ltd. (hereinafter "charterers"), for an order pursuant to Title 9 U.S.C. § 3 staying the third party action filed against it pending arbitration.

 The main action was commenced on April 25, 1975, alleging that the plaintiff, Arturo Penalver, while in the employ of Pittston Stevedoring, a company hired by the charterers to unload the vessel "Matouba", was injured because of the negligence of the defendant. The defendant, Compagnie De Navigation Frutiere (hereinafter "owners"), denied the charges, raised various affirmative defenses, and filed a third party complaint against the charterers alleging that if the plaintiff's injuries resulted from negligence aboard its vessel, the negligence was caused by the primary and active fault of the charterers, its agents, servants, or employees and/or from the charterers' breach of its duties and obligations under the charter party. The charterers have not filed an answer to the third party complaint, believing that to do so might be construed as a waiver of its rights under the arbitration clause of the charter agreement which provides that:

 "Any dispute arising under the Charter to be referred to arbitration in London (or such other place as may be agreed) one Arbitrator to be nominated by the Owners and the other by the Charterers, and in case the Arbitrators shall not agree then to the decision of an Umpire to be appointed by them, the award of the Arbitrators or the Umpire to be final and binding upon both parties."

 The charterers thus argue that this dispute is subject to arbitration and that the third party action should be stayed pending such arbitration. The owners contend that a stay should not be granted because the dispute arises outside of the charter agreement and is not subject to arbitration.

 Title 9 U.S.C. § 3 provides that:

 "If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration."

 The issue before this Court is whether the parties intended the arbitration clause of the agreement to cover the claim sued upon. Benedict on Admiralty, Rev. 7th Ed. (1975), Vol. 2, Ch. VIII, § 104.

 We note initially that the party seeking a stay has the burden of proof. Nederlandse Erts-Tankersmaatschappij, N.V. v. Isbrandtsen Company, Inc., 339 F.2d 440, 442 (2d Cir. 1964). However, there is a strong federal policy in favor of arbitration; Carcich v. Rederi Aì Nordie, 389 F.2d 692, 696 (2d Cir. 1968), and "it has long been the rule to resolve any doubt as to the submission agreement in favor of coverage." Federal Commerce & Navigation Co. v. Kanematsu-Gosho, Ltd., 457 F.2d 387, 390 (2d Cir. 1972). *fn1"

 Two clauses in this agreement support the conclusion that the third party dispute should be subject to arbitration. Clause four provides in part that:

 "The Charterers... also to arrange and pay for loading, trimming, stowing... unloading, weighing, tallying and delivery of cargoes..."

 This clause shifts the responsibility of proper discharge of the cargo to the charterer, and, as the Second Circuit has observed:

 "... that responsibility includes whatever damage results from improper discharge, whether to the cargo or to ...


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