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SIDERIUS, INC. v. M.V. "IDA PRIMA

July 12, 1985

SIDERIUS, INC., Plaintiff
v.
M.V. "IDA PRIMA," her engines, boilers, etc., and NEWSER NAVIGATION, S.A., COLUMBIA SHIPMANAGEMENT, LTD., WIL-MAR SHIPPING A/S and THE OCEANUS MUTUAL UNDERWRITING ASSOCIATION, Defendants



The opinion of the court was delivered by: LEVAL

PIERRE N. LEVAL, U.S.D.J.

MEMORANDUM AND ORDER

 Plaintiff Siderius, Inc. seeks to recover under ocean bills of lading for damage to three consignments of steel plate transported aboard defendant vessel, M.V. Ida I. Defendant Newser Navigation S.A. is the owner of the vessel. Defendants Wil-Mar Shipping A/S and Columbia Shipmanagement, Ltd., both Cyprus corporations, appear to be agents of Newser. Newser moves for summary judgment claiming that the action is time barred by the arbitration clause of the charter party which was incorporated by reference in the bills of lading.

 The following facts appear to be undisputed. Siderius purchased steel plate on a CIF basis from an Italian steel mill, Nuova Italsider S.p.A. ("Italsider"). The steel was to be delivered to Chicago with payment due 90 days after the date of the bills of lading. Under the terms of the CIF agreement, the cost of insurance was included in the price and the buyer, Siderius, was required to pay Italsider the invoiced amount regardless of any damage during transportation. It appears that Italsider, and not Siderius, arranged for the ocean transportation of the goods.

 On August 11, 1982, Wil-Mar, apparently as agent for Newser, entered into an agreement to let the Ida to charterer Sidermar di Navigacione, S.p.A. *fn1" Clause 26 of the charter party provided that:

 
Any dispute arising under this Charter Party to be referred to Arbitration in London in the customary manner. The right of both parties to refer a dispute to Arbitration ceases 12 months after date of completion of discharge . . . . Where this provision is not complied with, claims shall be deemed to be waived and absolutely barred.

 In August 1982, the shipment of steel at issue was loaded on the vessel and three bills of lading were issued to Italsider by the master of the vessel consigning the freight to Siderius. On the back of the bills of lading, the conditions of carriage provided that "All terms and conditions, liberties and exceptions of the Charty Party, dated as overleaf, are herewith incorporated."

 The vessel completed discharge in Chicago on September 21 or 22, 1982. At the time of discharge, Siderius noticed some salt water leakage in the vessel's holds and concluded that the steel was probably damaged.

 On September 24, 1982, Siderius telexed Columbia, the agent of Newser, stating that it intended to seize the vessel to obtain the necessary security and asking for the name of the owner's Protection and Indemnity (P & I) club representative (Plaintiff's Ex. C). Later that day, Lamorte Burns & Co. Inc., the owner's P & I club representative, contacted Siderius by phone. Lamorte Burns agreed to issue a Letter of Guarantee (or Undertaking) of the Oceanus Mutual Underwriting Association in the amount of $250,000 with a New York jurisdiction clause in consideration for Siderius' agreement not to seize the vessel. This agreement was memorialized by exchange of letters -- one by plaintiff's attorney dated September 27, 1982 and one by Lamorte Burns dated September 29, 1982. (Plaintiff's Exhibits D & E). A year later on September 22, 1983, just before the expiration of COGSA's one year limitation period, Lamorte Burns confirmed in writing that it had "extended [plaintiff's] time in which to institute suit and/or arbitration on behalf of the [vessel] and her owners up to and including December 19, 1983" (Plaintiff's Ex. F).

 This action was filed by Siderius on December 13, 1983. After December 19, 1983, defendant raised the contention that the action was barred by reason of failure to demand arbitration. Plaintiff then demanded arbitration.

 The earlier promised letter of guarantee was eventually issued by Lamorte Burns on December 29, 1983.

 Parties Contentions:

 The owner Newser contends that the action is barred under the charter party's arbitration clause since no demand for arbitration was made within 12 months after discharge or within the extension granted by the owner's representative. It argues that since that the charter party was incorporated into the bills of lading, Siderius as assignee of the bills of lading, was bound by the arbitration clause in the charter party. Newser points to two provisions in the bills of lading which refer to the charter party. On the back of the bills of lading is the small print condition of carriage mentioned above stating: "All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf are herewith incorporated." On the front of the bills a clause states "Freight payable as per charter-party dated 11/8/1982." Newser points to various decisions in this circuit, e.g., Son Shipping Co. v. DeFosse & Tanghe, 199 F.2d 687, 688 (2d Cir. 1952); Midland Tar Distillers, Inc., v. M/T Lotos, 362 F. Supp. 1311, 1312-13 (S.D.N.Y. 1973), in support of its argument that an arbitration clause in the charter party is incorporated in the bill of lading by the use of language similar to this.

 In response, Siderius argues that the charter party was insufficiently incorporated into the bills of lading. It relies on English law, quoting an opinion of Lord Denning, The Annefeld (1971), holding that an arbitration clause is not incorporated into the bill ...


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