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PHILIPP BROS. DIV. OF ENGELHARD MINERALS & CHEMS.

April 9, 1980

PHILIPP BROTHERS DIVISION OF ENGELHARD MINERALS & CHEMICALS CORPORATION, Plaintiff, against EL SALTO, S.A., Defendant.


The opinion of the court was delivered by: LASKER

In this suit alleging breach of contract by a Guatamalan corporation, the plaintiff moves to confirm an ex parte attachment and for a preliminary injunction. The defendant opposes these motions and moves to dismiss.

In September, October, and November of 1979, Philipp Brothers Division of Engelhard Minerals & Chemical Corporation (Philipp) entered into five contracts with El Salto, S.A. (El Salto) by which El Salto agreed to sell sugar to Philipp. The agreements were in standard written form. *fn1" From September 1979 through March 1980, there was extensive correspondence between the parties by telex, letter, telephone calls and personal visits. Throughout this period, El Salto contended (and continues to contend) that in addition to the terms of the written contracts, the parties had orally agreed that Philipp would furnish cash advances of up to $ 750,000. to El Salto to finance purchases of sugar cane for processing in El Salto's mill. When Philipp did not make such advances, El Salto declared the contracts void by telex of February 19, 1980. Philipp has at all times denied that there was any commitment on its part to make cash advances as a condition of the contract. When El Salto declared the contract at an end, Philipp commenced this suit and moved by ex parte order to attach El Salto's assets in this jurisdiction. The motions now pending followed.

The issues raised are:

 1. Whether the court has in personam jurisdiction, and, if not, quasi-in-rem jurisdiction over El Salto?

 2. Has Philipp established "that it is probable that (it) will succeed on the merits" within the meaning of CPLR ยง 6212(a), thereby justifying the continuance of the attachment?

 3. Has Philipp shown that it will be irreparably harmed if a preliminary injunction is not granted?

 1. Jurisdiction

 Relying on Merrill Lynch, Pierce, Fenner & Smith Inc. v. Lecopulos, 553 F.2d 842 (2d Cir. 1977), Philipp contends that this court has personal jurisdiction over El Salto because each of the five contracts between the parties provides for arbitration in New York of any disputes arising under the contract. In Merrill Lynch, the Court of Appeals held that a contract clause requiring that disputes be arbitrated in New York constituted a consent by each party to the jurisdiction of the courts within the state. Quoting its own previous opinion in Victory Transport Inc. v. Comisaria General, 336 F.2d 354, 363 (2d Cir. 1964), cert. denied, 381 U.S. 934, 85 S. Ct. 1763, 14 L. Ed. 2d 698, the court observed that "To hold otherwise would be to render the arbitration clause a nullity." 553 F.2d at 844.

 It is true that the plaintiff here has not yet demanded the arbitration to which it is entitled under the contract. Such a failure, however, is at least at the moment not fatal. In Merrill Lynch the court rejected the argument that an agreement to arbitrate in New York was not an effective consent to jurisdiction until a demand for arbitration had been made; and remarked:

 
"That (the plaintiff) chose instead to file suit and move for a stay evidently to gain the benefit of attachment is not improper." Id. at 845.

 Accordingly, we find that the court has jurisdiction of the person of El Salto. *fn2"

 The decision in Sterling National Bank v. Southern Scrap Export Co., 468 F. Supp. 1100 (S.D.N.Y.1979), on which El Salto relies, is not to the contrary. There, among other critical differences, the plaintiff itself was not a party to the arbitration agreement and thus not entitled to the benefits of consent to jurisdiction which it conferred. Id. at 1103 n. 2.

 2. Quasi-in-Rem Jurisdiction

 El Salto contends that the court does not have quasi-in-rem jurisdiction because El Salto's contacts with New York are not sufficient to satisfy the "minimum contacts" standard of International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), as required as a matter of due process under the Supreme Court's decision in Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977). See also Rush v. Savchuk, 444 U.S. 320, 100 S. Ct. 571, 62 L. Ed. 2d 516 (1980). In view of our determination that in personam jurisdiction exists, it is unnecessary to decide whether the court also has quasi-in-rem jurisdiction over El Salto. However, we are substantially impressed by Philipp's argument that El Salto's contacts with New York do satisfy the minimum contacts test, especially in light of the Second Circuit's decision in Intermeat Inc. v. American Poultry Inc., 575 F.2d 1017 (2d Cir. 1978). The facts here establish that 1) the five contracts in question were mailed by Philipp from New York to El Salto, signed by El Salto and returned to Philipp in New York; 2) in the year preceding this lawsuit, El Salto transacted more than $ 5,000,000. of business with New York sugar buyers, including the plaintiff and four or five other ...


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