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P/R CLIPPER GAS v. PPG INDUS.

October 23, 1992

In the Application of P/R CLIPPER GAS, Petitioner, against PPG INDUSTRIES, INC. and GEORGIA GULF CORPORATION, Respondents.


The opinion of the court was delivered by: SHIRLEY WOHL KRAM

 SHIRLEY WOHL KRAM, U.S.D.J.

 Petitioner P/R Clipper Gas ("Clipper Gas"), seeks an order directing respondent PPG Industries, Inc. ("PPG"), to join a pending arbitration involving Clipper Gas and Georgia Gulf Corporation ("Georgia Gulf"). PPG opposes the request for consolidation. For the reasons stated herein, Clipper Gas's petition to compel consolidated arbitration is granted.

 FACTS1

 Clipper Gas is, and was at all relevant times, the owner of the LPG Tanker Clipper Gas ("Tanker"). PPG and Georgia Gulf are both charterers of the Tanker. By a written agreement, dated February 16, 1989, respondent PPG chartered Clipper Gas's Tanker to carry approximately 6,500 metric tons of vinyl chloride monomer, from Lake Charles, Louisiana to Ulsan, South Korea. The charter agreement contained an arbitration provision that provided in relevant part:

 Any and all differences and disputes of whatsoever nature arising out of this Charter shall be put to arbitration in the City of New York . . . before a board of three persons, consisting of one arbitrator to be appointed by the Owner [Clipper Gas], one by the Charterer [PPG], and one by the two so chosen.

 For the same voyage, Clipper Gas entered into a separate agreement with Georgia Gulf to carry approximately 3,500 metric tons of vinyl chloride monomer from Plaquemine, Louisiana to Pasir Gudang, Malaysia. The Georgia Gulf agreement contained the same arbitration provision as that found in the PPG charter agreement, quoted above. Both Georgia Gulf and PPG agreed to the commingling of their respective cargoes of vinyl chloride monomer.

 The PPG cargo of vinyl chloride monomer was loaded first and then fully commingled with the Georgia Gulf parcel. The Tanker then proceeded to its first port, Ulsan, Korea, where the 6,500 metric tons of vinyl chloride monomer belonging to PPG were unloaded without apparent difficulty. The Tanker then proceeded to Pasir Gudang, Malaysia to unload the remaining 3,500 metric tons of vinyl chloride pursuant to the Georgia Gulf charter. At Pasir Gudang, however, the receiver refused to accept the Georgia Gulf parcel, claiming that there was a small quantity of water mixed in with the cargo. As a result of this claim of contamination by the receiver in Malaysia, Clipper Gas's Tanker was detained in port until an alternative purchaser for the cargo was found by Georgia Gulf. This delay resulted in damages to Clipper Gas of $ 177,047.50 which Georgia Gulf refused to pay. To recover the demurrage, Clipper Gas commenced an arbitration proceeding against Georgia Gulf in New York City. In response, Georgia Gulf asserted a counterclaim against Clipper Gas in the amount of $ 427,924.02 for the alleged contamination of the cargo. Clipper Gas replied that the alleged contamination was not caused by Clipper, but rather, was caused by either PPG or Georgia Gulf.

 At this point, Clipper Gas and Georgia Gulf have each selected one arbitrator, Mr. Manfred Arnold and Mr. Jack Berg, respectively. Messrs. Arnold & Berg appointed Richard B. Tesiman as the third arbitrator and Panel Chairman. Although the Panel has been selected and disclosures have been made in writing, no hearings have been held or are scheduled.

 By letter dated January 9, 1992, counsel for Clipper Gas demanded that PPG submit to arbitration, and consolidate with the pending Clipper Gas-Georgia Gulf proceeding. By letter dated February 11, 1992, counsel for PPG rejected the demand for arbitration. Both Clipper Gas and PPG have agreed to arbitrate in New York, but PPG will not agree to consolidation

 Clipper Gas contends that the Court should consolidate the arbitrations as common issues of fact between the three parties predominate this action, and because a consolidated proceeding would be more expeditious and reduce the risk of inconsistent awards. Although PPG does not refuse to arbitrate with Clipper Gas, PPG objects to what it terms a "preemptory demand [by Clipper to force] PPG [to] join an arbitration pending for two years between Clipper Gas and Georgia Gulf." See Memorandum in Opposition to the Petition of P/R Clipper Gas, dated April 17, 1992 ("PPG Opp."), at 7. PPG claims that as the charter agreement does not provide for a consolidated arbitration with Georgia Gulf, a consolidated arbitration with Georgia Gulf cannot be ordered. Specifically, PPG asserts that: (1) the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, acceded to by the United States in 1970 and implemented by Chapter 2 of the Federal Arbitration Act, 9 U.S.C. § 207 et seq. (1970), prohibits this Court from forcing the parties to arbitrate in any manner other than that specified by arbitral agreement, thus precluding consolidated arbitration with Georgia Gulf; (2) even if this Court could force PPG to join the Clipper Gas-Georgia Gulf arbitration, Clipper Gas waived its rights to demand consolidation by waiting until the arbitration panel was selected, documents were submitted, and the proceeding had been pending for two years; (3) Clipper Gas is estopped from demanding a consolidation which would result in substantial prejudice to PPG; and (4) the existing arbitration panel must be dismantled as the panel selection was done without PPG's knowledge or participation, and PPG may not be denied its right of arbitrator selection. PPG Opp. at 7-8.

 DISCUSSION

 I

 The Federal Arbitration Act, 9 U.S.C. § 4, provides in ...


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