hazardous waste on the property which allegedly occurred during Sandvik's
ownership of the plant. Consequently, Neill declined to go forward with
the acquisition. Id.
Upon learning of these environmental problems, the Disston Company
instituted two actions in the United States District Court for the
Western District of Virginia against Sandvik alleging: 1) violations of
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. § 9601 et seq. (1988), and the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq.
(1988); 2) breach of the Sales Agreement; and 3) negligence by Sandvik in
causing the environmental problems. See Salman Affid. at 45 & 49. Sandvik
moved to stay these actions and to compel arbitration claiming that all
of the Disston Company's claims arose out of or related to the Sales
Agreement. Id. at 46. The court granted Sandvik's motions and directed
arbitration. Id. at 51.
On September 18, 1990, the Disston Company and Libby served Sandvik
with a Demand for Arbitration asserting various claims which allegedly
arose out of or related to the Sales Agreement. Kreindler Affid. at 25.
Subsequently, Sandvik instituted this action against Libby asking for:
(1) the amount of $3.9 million allegedly owed to Sandvik under the Note;
*fn2 (2) a declaration that Libby's guarantee under the Note is valid
and enforceable; and (3) an injunction against the arbitration instituted
by Libby. See Salman Affid. at ¶ 9 & Exhibit A.
"[A]rbitration should be compelled `unless it may be said with positive
assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute.'" McAllister Bros.,
Inc. v. A & S Transp. Co., 621 F.2d 519, 522 (2d Cir. 1980) (quoting
United Steelworkers of Am. v. Warrior & Gulf Navigation Co.,
363 U.S. 574, 582-83, 80 S.Ct. 1347, 1352-53, 4 L.Ed.2d 1409(1960)).
Moreover, federal arbitration policy requires courts to "construe
arbitration clauses as broadly as possible," David L. Threlkeld & Co., v.
Metallgesellschaft Ltd. (London), 923 F.2d 245, 250 (2d Cir. 1991)
(quoting S.A. Mineracao da Trindade-Samitri v. Utah Int'l, Inc.,
745 F.2d 190, 194 (2d Cir. 1984)), and "any doubts concerning the scope
of arbitrable issues should be resolved in favor of arbitration." Moses
H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103
S.Ct. 927, 941, 74 L.Ed.2d 765 (1983).
Tested by that standard, this case must be stayed in favor of
arbitration. All of the claims at issue here relate to matters arguably
encompassed by the broad arbitration clause set forth in the original
purchase agreement to which Libby, contrary to the assertions made by
Sandvik, was unquestionably a party. See Michele Amoruso E Figli v.
Fisheries Dev. Corp., 499 F. Supp. 1074, 1080 (S.D.N.Y. 1980) (citing
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 406, 87
S.Ct. 1801, 1807, 18 L.Ed.2d 1270(1967)) (the language "arising out of or
relating to this agreement" has been labeled a "broad arbitration
clause"). Sandvik's attempt to treat the extension agreements as separate
and distinct from the underlying obligations initially incurred ignores
the reality of what was obviously a connected series of transactions.
Indeed, strong evidence supporting this view is Sandvik's own successful
attempt to stay Disston Company's Virginia action based upon breaches of
the purchase agreement in favor of arbitration. In any event, it cannot
be said with any positive assurance that the disputes at issue are not
subject to arbitration, and the Court must, therefore, consistent with
authorities referred to above, resolve any dispute as to arbitrability in
favor of arbitration.
The Court rejects Libby's argument that Sandvik is barred under New
York law from contesting the arbitrability of Libby's claims because
Sandvik failed to move to stay arbitration within twenty days after
service of Libby's Demand for Arbitration, as required by New York's
Civil Practice Law and Rules § 7503(c) (McKinney 1980). Aetna Life &
Casualty Co. v. Stekardis, 34 N.Y.2d 182, 185, 313 N.E.2d 53,
356 N.Y.S.2d 587(1974); See In re Arbitration between Daniel Matarasso
and Contimental Casualty Co., 56 N.Y.2d 264, 267, 436 N.E.2d 1305,
451 N.Y.S.2d 703(1982). Where, as here, a case arises under the Federal
Arbitration Act*fn3, federal, and not state, arbitration law applies.
That requirement is therefore not applicable. See Rothberg v. Loeb,
Rhoades & Co., 445 F. Supp. 1336, 1339 (S.D.N.Y. 1978) (holding that
since there is no comparable time limitation in the Federal Arbitration
Act, federal law applies and plaintiffs are not barred by any time limits
set forth in CPLR section 7503(c)); accord Michele Amoruso E Figli v.
Fisheries Dev. Corp., 499 F. Supp. 1074, 1080 n. 9 (S.D.N.Y. 1980); see
also Masthead Mac Drilling Corp. v. Fleck, 549 F. Supp. 854 (S.D.N Y
1982). But see Morgan v. Nikko Sec. Co. Int'l, 691 F. Supp. 792, 794 n. 1
Sandvik's motion for a preliminary injunction staying the arbitration
is denied and Libby's cross-motion to stay this action is granted. The
Clerk of the Court is directed to enter judgment accordingly and to close
the above-captioned action.
It is SO ORDERED.