The opinion of the court was delivered by: WERKER
Petitioner Beromun Aktiengesellschaft ("Beromun"), a Liechtenstein corporation, commenced suit against respondents Societa Industriale Agricola "Tresse" Di Dr. Domenico E Dr. Antonio Dal Ferro ("SIAT"), an Italian partnership, and the American Arbitration Association ("AAA")
seeking an order directing SIAT to proceed to arbitration. SIAT cross moved to dismiss Beromun's petition on grounds of lack of subject matter and personal jurisdiction, failure to comply with the statute of frauds, failure to state a claim, and forum non conveniens.
Beromun contends that it entered into a contract to sell a quantity of corn to SIAT, that the contract contained an agreement to arbitrate which included a consent-to-personal-jurisdiction clause, and that SIAT breached the contract and must now proceed to arbitration. Alternatively Beromun asserts that several later written communications from SIAT to Beromun constitute enforceable agreements to arbitrate the subject matter of the alleged contract. For the reasons set forth below I have determined that no enforceable agreement to arbitrate exists. Therefore the petition must be dismissed for lack of subject matter and personal jurisdiction.
Beromun argues that it has an agreement with SIAT to arbitrate that falls within the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"), 3 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 38, as implemented by the Federal Arbitration Act, 9 U.S.C. §§ 201-08 (1978 Supp.).
Article II, section 1 of the Convention provides that contracting states shall recognize a written agreement to submit to arbitration disputes arising out of a defined legal relationship, whether or not contractual in nature. Article II, section 2 defines an agreement in writing as including "an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams." In acceding to the Convention the United States adopted the reservation clause contained in Article I, section 3 of the Convention, to wit, that the Convention will apply "only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial . . . ." Thus section 202 of the Arbitration Act provides that "(a)n arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the Convention."
Section 2 of title 9 acknowledges as valid any "written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal . . . ." Finally, to facilitate the submission of disputes to arbitration, 9 U.S.C. § 203 gives the district courts original jurisdiction, without regard to the amount in controversy, over any "action or proceeding falling under the Convention . . . ." Beromun invokes the court's jurisdiction under this section and seeks an arbitration order pursuant to 9 U.S.C. § 206.
If there is in fact an agreement to arbitrate, section 203 is properly asserted as the jurisdiction-giving statute by virtue of section 202. Section 202 would be satisfied since any existing agreement to arbitrate between Beromun and SIAT arises from a commercial relationship, I. e., the subject sale of corn, Siderius v. Compania de Acero del Pacifico, S.A., 453 F. Supp. 22, 24 (S.D.N.Y.1978), and because the contested agreement is between two foreign entities. Note 2, Supra ; Metropolitan World Tanker v. P.N. Pertambangan, 427 F. Supp. 2, 4 (S.D.N.Y.1975); Antco Shipping Co. v. Sidermar S.p.A., 417 F. Supp. 207, 215 (S.D.N.Y.1976), Aff'd without opinion, 553 F.2d 93 (2d Cir. 1977). The central issue of this litigation is whether a written agreement to arbitrate existed within the meaning of section 202 under the facts presented.
On the afternoon of Friday, October 4, 1974, Beromun purchased 25,000 long tons of American yellow corn for export during March 1 to March 20 of 1975. This transaction was consummated when Beromun's general agent in Italy, Societa Italiana Prodetti Arena S.p.a. ("SIPA") agreed to buy the corn from Koninklijke Bunge B.V. through an Italian grain broker, Enrico Marchetti ("Marchetti"). Marchetti does business under the trade names General Grain Company Establishment ("GGC") when negotiating international sales, and Margrain when dealing in the domestic Italian market.
Following the conclusion of the above deal, Ferruccio Zanghellini ("Zanghellini"), SIPA's trading officer, telephoned instructions to Marchetti to resell the aforesaid quantity of corn purchased earlier in the day by SIPA for Beromun. All resale terms were to be the same as the original sale terms, except that the resale price was adjusted upward.
Prior to the receipt of SIPA's directions to resell, Marchetti had spoken by telephone with defendant SIAT's principal, Dr. Antonio Dal Ferro ("Dal Ferro"), concerning several quantities of corn that Marchetti had for sale. Marchetti affid. at 3. After Marchetti spoke with Zanghellini, he once again communicated with Dal Ferro by telephone on Friday afternoon. The two discussed market conditions, and Marchetti informed Dal Ferro that he had 25,000 long tons of American corn available for sale at $ 166.00 per metric ton, the price stipulated by Zanghellini, and on other terms and conditions set forth in Exhs. 2 & 3.
Marchetti affid. at 3. According to Marchetti, Dal Ferro asked him to "save something for me," whereupon Marchetti explained that all that was available was the 25,000 ton quantity. Dal Ferro told Marchetti to "make it." Id. thereafter Marchetti called Zanghellini to tell him he had a buyer and sent identical telexes
to SIPA and SIAT on the evening of the same day. Those telexes provided in relevant part:
On Saturday morning, October 5, Dal Ferro telexed back to Marchetti:
CONTRACT DATED OCTOBER 4, 1974 BEROMUN AG-TRIESEN/OURSELVES LT 25,000 US 3 YELLOW CORN F.O.B. GULF
WITH REFERENCE TO YOUR TELEX CONFIRMATION OF THE TRANSACTION AT 1913 PLEASE NOTE THAT AT THE TIME OF THE CONCLUSION OF THE TRANSACTION WHAT WAS AGREED UPON WAS "QUANTITY" NOT THE TERM "ONE VESSEL." THESE ARE THE USUAL TERMS FROM WHICH WE CANNOT DEPART.
PLEASE INFORM SELLERS ABOUT IT.
Marchetti first saw the above telex from SIAT on Monday morning, October 7. On that same day, without contacting Beromun or SIPA, he spoke with Dal Ferro by telephone in Verona, Italy and tried to persuade the latter that the term "one vessel" was "irrelevant," Exh. 13, and "not a material term." Marchetti reply affid. at 3. According to Marchetti, "the conversation ended with a promise to talk again later on just to exchange information concerning the market." Exh. 13. Marchetti, although stating nowhere that he and Dal Ferro departed with a resolution of the dispute over the "one vessel" term, apparently was "under the impression that the difference had been cleared up . . . ." Id. This impression, however, was clearly one sided. That afternoon SIAT sent the following telex to Marchetti:
BEROMUN AG TRIESEN/OURSELVES
25,000 LT US 3 Y.C. FOB GULF
FOLLOWING UP ON OUR TELEX OF OCTOBER 5 10:02 A.M. WE ARE COMPELLED TO CONSIDER SUBJECT CONTRACT NULL. PLEASE TAKE NOTE OF ...