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NATIONAL TITANIUM DIOXIDE CO. v. VELCO ENTERPRISES

March 16, 1995

THE NATIONAL TITANIUM DIOXIDE CO., LTD., Plaintiff, against VELCO ENTERPRISES, LTD., Defendant.


The opinion of the court was delivered by: PETER K. LEISURE

 LEISURE, District Judge:

 This is an action brought by National Titanium Dioxide Co., Ltd. ("Cristal") against Velco Enterprises, Ltd. ("Velco") seeking to recover the price of fifteen alleged sales of titanium dioxide by Cristal to Velco. Defendant now moves to compel arbitration and to stay the present action. Defendant argues that the underlying action brought by plaintiff is subject to mandatory arbitration, pursuant to a written agreement between Velco and Cristal. Plaintiff maintains that the dispute over payment for the fifteen sales of titanium dioxide does not fall within the scope of mandatory arbitration. For the reasons stated below, defendant's motion is granted in its entirety.

 BACKGROUND

 Velco is a Connecticut corporation with its principal place of business in New York. Cristal is a Saudi Arabian corporation with its principal place of business in Saudi Arabia. Cristal seeks to recover payment for fifteen separate sales of titanium dioxide, allegedly sold and delivered by Cristal to Velco between September 23, 1992 and October 19, 1993.

 On or about December 1, 1992, Velco and Cristal executed an Agency Agreement ("the Agreement") which provided for the sale of titanium dioxide by Cristal to Velco. According to Michel Goldschneider ("Goldschneider"), president of Velco, all of the alleged sales were intended to be made pursuant to the Agreement. Memorandum of Law in Support of Motion For a Stay Pending Arbitration ("Def. Mem."), at 2; see also Reply Affidavit of Michel Goldschneider ("Goldschneider Aff."), P 12. The terms of the Agreement included an arbitration clause which stated that:

 Def Mem. at Ex. A, P 18.

 The Agreement was later modified, by agreement of Velco and Cristal, to reflect a distributorship agreement rather than an agency agreement. The amendments, which were enumerated in a letter, dated December 30, 1992, stated that certain clauses, section 3, entitled "Sales of Products," section 5, entitled "Direct Sales" and section 7, entitled "Execution of Orders," would no longer "be of [] relevance." Def. Mem. at Ex. A.

 In addition, the first two sales of titanium dioxide disputed herein, which were shipped on October 31, 1992 and December 2, 1992, respectively, appear to predate the Agreement. Goldschneider, however, states that these two sales were intended to be covered by the Agreement. Goldschneider Aff., P 5. Finally, the Agreement contains a schedule limiting Velco's distribution territory to Hungary and the Ukraine. Section 4 of the Agreement, however, allows the distributor, Velco, to expand its territory by obtaining Cristal's prior written consent. In all fifteen of the disputed sales, Velco maintains that Cristal granted such prior written consent, which allowed Velco to distribute the titanium dioxide purchased from Cristal in areas outside Hungary and the Ukraine.

 DISCUSSION

 Defendant contends that plaintiff should be compelled to enter arbitration. Defendant bases its application on the language in the Agreement entered into between the parties, which states that if a dispute arises under the Agreement, "such dispute shall be referred to arbitration." Def. Mem. at Ex. A, P 18. Plaintiff opposes defendant's motion on the grounds that the Agreement's arbitration clause does not encompass the disputed payments for the fifteen sales of titanium dioxide at issue.

 The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et. seq., "reflect[s] Congress' recognition that arbitration is to be encouraged as a means of reducing the costs and delays associated with litigation." Deloitte Noraudit A/S v. Deloitte Haskins & Sells, 9 F.3d 1060, 1063 (2d Cir. 1993). The FAA is a statement of the "'liberal federal policy favoring arbitration agreements. . . .'" Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 844 (2d Cir. 1987) (quoting Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983)). Section 3 of the FAA provides that courts "upon being satisfied that the issue involved in [a] suit or proceeding is referable to arbitration under [] an agreement, shall. . . stay the trial of the action. . . ." 9 U.S.C. § 3 (1988) (emphasis added).

 Thus, once a court has determined that an arbitration agreement exists, "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. . . ." Moses H. Cone Memorial Hosp., 460 U.S. at 24-25; see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 87 L. Ed. 2d 444, 105 S. Ct. 3346 (1985). In fact, "'the existence of an arbitration clause in [an agreement] raises a presumption of arbitrability that can be overcome only if "it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute."'" Chiarella v. Vetta Sports, Inc., 1994 WL 557114, at *3 (S.D.N.Y. Oct. 7, 1994) (Leisure, J.) (quoting Associated Brick Mason Contractors, Inc. v. Harrington, 820 F.2d 31, 35 (2d Cir. 1987) (citation omitted)); see also United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-83, 4 L. Ed. 2d 1409, ...


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