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EASTERN FISH CO. v. SOUTH PACIFIC SHIPPING CO.

June 23, 2000

EASTERN FISH COMPANY; INSURANCE, COMPANY OF NORTH AMERICA, PLAINTIFFS,
V.
SOUTH PACIFIC SHIPPING CO., LTD., D/B/A ECUADORIAN LINE; SOUTH PACIFIC SHIPPING CO., LTD.; ECUADORIAN LINE, DEFENDANTS.



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

ORDER

This action arises from the alleged nondelivery, shortage, and loss of 1511 cartons of frozen shrimp. (Mazaroli Aff. ¶ 2; Smith Aff. ¶ 2.) Plaintiffs Eastern Fish Co. ("Eastern Fish") and Insurance Company of North America (collectively, "Plaintiffs") contend that the frozen seafood was lost on or about April 21, 1998 en route to the port of Guayaquil, Ecuador and now seek $140,000.00 in damages. Plaintiffs further contend that if a bill of lading had been issued, this Court would have been designated therein as having exclusive jurisdiction over this dispute.*fn1 Defendants South Pacific Shipping Co., Ltd. d/b/a Ecuadorian Line, Inc. ("SPS/ELI"), South Pacific Shipping Co., Ltd. ("South Pacific"), and Ecuadorian Line, Inc. ("Ecuadorian Line") (collectively, "Defendants") contend that pursuant to Paragraph 15 of (Appendix 1 to) the Service Contract, dated March 1, 1997, between Eastern Fish and SPS/ELI ("Service Contract") — a document which was in fact executed — a controversy or claim arising out of or relating to the Service Contract, such (according to Defendants) as the dispute at bar, shall be referred to arbitration. For the reasons set forth below, Defendants' motion to dismiss these proceedings is granted.

I. Background

On March 1, 1997, Defendant SPS/ELI entered into the Service Contract with Eastern Fish providing for the carriage of ten containers of frozen shrimp (and fish) from Ecuador Base Ports to North Atlantic and Florida Base Ports.*fn2 (Halaszynski Aff. ¶ 2.) The usual and customary practice was for each shipment to be carried from the supplier's premises to the port of loading by a subcontracting trucking company, hired and paid by Defendant Ecuadorian Line. (Bloom Dec. ¶ 3.) The cargo would then be loaded on a ship for transport by sea. Nine of the ten containers to be delivered under the Service Contract arrived in New York without incident. (Bloom Dec. ¶ 5.)

On April 21, 1998, at the premises of Langostino S.A., a shrimp exporter in Machala, Ecuador, the cargo of shrimp in question was loaded on behalf of Eastern Fish in Container NPDU400595-8. (Bloom Dec. ¶ 5; Halaszynski Aff. ¶ 4.) While the Container was being transported by the trucking company from Langostino's premises to the port of Guayaquil, Ecuador, it was hijacked by ten armed and masked men. (Bloom Dec. ¶ 5; Smith Aff. ¶ 3.) A bill of lading was never issued for this Container. (Bloom Dec. ¶ 6.) On April 19, 1999, Plaintiffs filed a complaint for damages (based upon contract and tort claims) against Defendants as common carriers and/or bailees. (Comp. ¶ 9.) On November 2, 1999, Defendants moved to dismiss or stay these proceedings pending arbitration arguing that arbitration (rather than litigation) under the Service Contract was the appropriate means of dispute resolution.*fn3

II. Analysis

A. Arbitration Generally

Arbitration as a means of resolving disputes is well established and broadly favored. See AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ("It has been established that where the contract contains an arbitration clause, there is a presumption of arbitrability . . ."); David L. Threlkeld & Co. v. Metallgesellschaft Ltd., 923 F.2d 245, 248 (2d Cir.), cert. dismissed, 501 U.S. 1267, 112 S.Ct. 17, 115 L.Ed.2d 1094 (1991) ("Federal policy strongly favors arbitration as an alternative dispute resolution process"). A court, in deciding whether a stay should be granted, must first determine whether the parties agreed to arbitrate and then determine whether the scope of the agreement encompasses the claim(s) being asserted. See United States Fire Ins. Co. v. National Gypsum Co., 101 F.3d 813, 816 (2d Cir. 1996) (citing Progressive Casualty Ins. Co. v. C.A. Reaseguradora Nacional De Venezuela, 991 F.2d 42, 45 (2d Cir. 1993)); Genesco Inc. v. T. Kakiuchi & Co., Ltd., 815 F.2d 840, 844 (2d Cir. 1987); Netherlands Curacao Co. N.V. v. Kenton Corp., 366 F. Supp. 744, 746 (S.D.N.Y. 1973) (citing Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967)).

Agreement to Arbitrate: Service Contract

"Under general contract principles, a party is bound by the provisions of a contract that he signs unless he can show special circumstances that would relieve him of such an obligation." Genesco, 815 F.2d at 845; see also Coleman v. Prudential Bache Securities, Inc., 802 F.2d 1350, 1352 (11th Cir. 1986) (per curiam); N & D Fashions, Inc. v. DHJ Industries, Inc., 548 F.2d 722, 727 (8th Cir. 1976). Eastern Fish entered into the Service Contract*fn4, which, as noted, contained the following (arbitration) clause in Appendix 1, Paragraph 15:

"The parties hereto agree that any controversy or claim arising out of or relating to this Service Contract or the breach thereof, shall be referred to and finally resolved by arbitration in the City of New York, New York, in accordance with the MARITIME ARBITRATION RULES of the SOCIETY OF MARITIME ARBITRATORS . . ." (Halaszynski Aff. Ex. 1 at 4.)

The question is not "whether there was subjective agreement as to each clause in the contract, but on whether there was an objective agreement with respect to the entire contract." Genesco, 815 F.2d at 846; see also N & D Fashions, 548 F.2d at 727. By entering the Service Contract, Eastern Fish clearly agreed to arbitrate.

Scope of Agreement

Plaintiffs contend that the Service Contract is not a contract of carriage because, among other things, it relates to volume commitments, service commitments, and rates. (Bloom Dec. ¶ 7.) Thus, Plaintiffs argue that the terms and conditions of the Service Contract do not apply to the lost (shrimp) cargo. (Bloom Dec. ¶ 7.) Defendants assert that the Service ...


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