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February 29, 2000


The opinion of the court was delivered by: Scheindlin, District Judge.


Petitioner Louis Dreyfus Negoce S.A. ("Dreyfus") moves this Court, pursuant to the United States Arbitration Act, 9 U.S.C. § 1 et seq., and the Declaratory Judgment Act, 28 U.S.C. § 2201, for an order: (1) declaring that the claim brought by respondent Blystad Shipping & Trading Inc. ("Blystad") against Dreyfus is not subject to arbitration in New York; (2) staying any further proceedings in the pending New York arbitration; and (3) enforcing a choice of law/choice of forum provision stipulating that Blystad's claim must be brought in London. For the reasons set forth below, Dreyfus' motion is denied.


A. Facts

On November 27, 1996, Blystad and Dreyfus entered into a tanker voyage charter party (the "Charter"), providing for the carriage of a shipment of crude degummed soyabean oil from the United States to China. See Affidavit of Clifford A. Dahl, Assistant Chartering Manager at Dreyfus ("Dahl Aff."), ¶ 2. Blystad was the time charterer of a vessel known as the M.T. THORSFREDDY (the "Vessel"), owned by Jahre Dahl Bergesen ("Bergesen"). See id.; Affidavit of David Nourse, counsel for Dreyfus ("Nourse Aff."), Ex. C. Dreyfus intended to sell the soyabean oil to Lief Enterprise Pty Ltd. ("Lief"), which intended to sell it to Kaland Limited ("Kaland"). See Nourse Aff., ¶¶ 2, 11.

The Charter provided that the Vessel would pick up the soyabean oil at Brownsville, Texas, and New Orleans, Louisiana, and discharge it at "One (1) safe berth each/One (1)/Two (2) safe port(s) CHINA;" the Charter did not specify the discharge port in China. See Dahl Aff., Ex. B, Cl. C. In December 1996, the soyabean oil was loaded onto the Vessel at Brownsville and New Orleans. See Dahl Aff., ¶¶ 8, 9; Nourse Aff., ¶ 4. Pursuant to instructions received from Lief, tanker bills of lading providing that the soyabean oil should be discharged at Qingdao, China, were issued. See Nourse Aff., ¶ 4; Dahl Aff., ¶ 9, Exs. C, D.

On or about January 13, 1997, as the Vessel was approaching China, Blystad advised that the Vessel was expected to arrive at Qingdao on January 18, but that the original bills of lading had not yet arrived. See Nourse Aff., ¶ 5; Dahl Aff., ¶ 12. Blystad requested that Dreyfus arrange for a letter of indemnity from the receivers of the soyabean oil, so that the Vessel might discharge the soyabean oil on its arrival in Qingdao without waiting for presentation of bills of lading. See id. Blystad provided Dreyfus with a form letter of indemnity; Dreyfus forwarded this form letter to Lief. See Nourse Aff., ¶ 5; Dahl Aff., ¶ 13.

On or about January 15, 1997, Lief advised Dreyfus that Kaland, the ultimate buyer, had requested that the discharging port be changed to Qin Huang Dao, China. See Nourse Aff., ¶ 6; Dahl Aff., ¶ 13. The Charter contained a provision specifically related to a change in the discharge port; that provision states, in relevant part:

[T]he Charterer warrants that the cargo shall be discharged at the ports and berths specified in Part I. Any change in loading or discharging ports or berths shall be made only as the result of special agreement in writing between Charterer and Owner, and in such case, Charterer shall assume all cost incident to such change, including the value of the vessel's time if the voyage is prolonged thereby.

Dahl Aff., Ex. B, Cl. 6(c). Dreyfus relayed Kaland's request to Blystad and indicated that letters of indemnity regarding the change of destination and the discharge of cargo without the presentation of the original bills of lading would be issued by both Lief and Dreyfus. See Nourse Aff., ¶ 6; Dahl Aff., ¶ 13. Blystad advised Dreyfus that the Vessel's expected arrival date in Qin Huang Dao was January 18 and requested that the letters of indemnity be forwarded. See Nourse Aff., ¶ 6; Dahl Aff., ¶ 13.

On or about January 20, 1997, Dreyfus received two letters of indemnity from Lief. See Nourse Aff., ¶ 7; Dahl Aff., ¶ 16. These letters of indemnity were typed on Lief's letterhead, signed on its behalf, and dated January 17 and 20, 1997; they were in the form provided by Blystad and were addressed to Blystad, as "owners," and Dreyfus, as "charterers." See Nourse Aff., ¶ 7; Dahl Aff., ¶ 16, Ex. K. Dreyfus endorsed both letters of indemnity by adding its name, address, and signature on the second page of each letter and then superimposing a copy of the text of the letters, thus endorsed, upon Dreyfus' letterhead. See Nourse Aff., ¶ 8; Dahl Aff., ¶ 17, Ex. L. Dreyfus then forwarded these endorsed letters of indemnity to Blystad, which confirmed that the letters were in order and that the Vessel had been instructed to discharge the soyabean oil without delay. See Nourse Aff., ¶ 8; Dahl Aff., ¶ 18.

The letters of indemnity state, in relevant part:

In consideration of your complying with our above request we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss or damage of whatsoever nature which you may sustain by reason of delivering the goods to China Ocean Shipping Agency, Qin Huang Dao in accordance with our request.
2. In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the goods as aforesaid, to provide you or them from time to time with sufficient funds to defend the same.
3. If the vessel or any other vessel or property belonging to you should be arrested or detained or if the arrest or detention thereof should be threatened, [in connection with the delivery of the goods as aforesaid,] to provide such bail or other security as may be required to prevent such arrest or detention or to secure the release of such vessel or property and to indemnify you in respect of any loss, damage or expenses caused by such arrest or detention whether or not the same may be justified.
4. As soon as all original Bills of Lading for the above goods shall have arrived and/or come into our possession, to produce and deliver the same to you [or to your agents at Port of Discharge] whereupon our liability hereunder shall cease [immediately].
5. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to, or liable under, this indemnity.
6. This indemnity shall be construed in accordance with English Law and each and every person liable under this indemnity shall, at your request, submit to the jurisdiction of the High Court of Justice of England.

Dahl Aff., Exs. K, L.*fn1

After discharging the soyabean oil at Qin Huang Dao, the Vessel was arrested by order of the Tianjin Maritime Court. See Nourse Aff., ¶ 9. The Vessel remained under arrest for about three months. See id. Following its release, the Vessel discharged a second parcel of soyabean oil at Shantou, China, and then left China. See id.

B. Procedural History

On March 5, 1997, Blystad commenced an action against Dreyfus and Lief in the High Court of Justice, Queens Bench Division, Commercial Court, in London (the "London High Court"). See Nourse Aff., ΒΆ 10; Unsworn Declaration Under Penalty of Perjury of Stephen Kirkpatrick, counsel for Dreyfus in London ("Kirkpatrick ...

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