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SALIM OLEOCHEMICALS, INC. v. M/V SHROPSHIRE

April 25, 2001

SALIM OLEOCHEMICALS, INC., PLAINTIFF,
v.
M/V SHROPSHIRE, ET AL., DEFENDANTS.



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

MEMORANDUM AND ORDER

This maritime action is brought by plaintiff Salim Oleochemicals, Inc. ("Salim" or "plaintiff") against M/V Shropshire ("Shropshire" or "the ship") in rem, Bibby International Services (ION) Ltd. ("Bibby"), Langton Shipping Ltd. ("Langton"), Botany Bay Parcel Tankers International ("Botany Bay"), and Botany Bay Management Services Pty. Ltd. ("Botany Management") (collectively "defendants"). Plaintiff sues for $737,136.67 in damages, plus interest and costs, arising from contamination to a liquid glycerine shipment. Pending before the Court are three motions: (1) defendants' motion to compel arbitration in London, (2) cross motions for summary judgment on the issue of limitation of liability, and (3) plaintiff's motion for sanctions against defense counsel. For the following reasons, (1) defendants' motion to compel arbitration in London is granted, (2) parties' cross motions for summary judgment are dismissed in light of the arbitration order, and (3) plaintiff's motion for sanctions is denied.

BACKGROUND*fn1

This suit is ultimately a contract action based upon two documents: the Contract and the shipment's Bill of Lading ("Bill") into which it was explicitly incorporated. The Contract, signed by Botany Bay and Salim Pte, contains a clause governing disputes arising from the Contract. It reads in relevant part:

"16. Law General average and charterparty arbitration to be conducted in London. English law to apply."

The Bill for the shipment at was issued on April 23, 1996. It named the Shropshire as the vessel, Salim as the cargo's consignee, and Botany Bay and Salim Pte as charterers. The Bill explicitly incorporated the Contract, stating:

"This shipment is carried under and pursuant to the terms of the contract of Affreightment/Charter party `C.D.A. dated 07TH NOV 1995 between BOTANY BAY PARCEL TANKERS INTERNATIONAL and SALIMOLEOCHEMICALS PTE LTD AS CHARTERERS' as Charterer, and all terms whatsoever of the said Contract of Affeightment/Charter Party including the arbitration clause specified therein apply to and govern the rights of the parties concerned in this shipment." (emphasis added)

Salim filed this action on April 29, 1997. Pursuant to a demand by plaintiffs, Langton had filed a letter of undertaking for the Shropshire on November 25, 1996 and posted a $600,000 bond. Defendants moved to stay the action pending arbitration in London pursuant to the arbitration clause in the Contract as incorporated in the Bill. Before the motion was fully briefed, however, the parties consented to arbitration in London. Defendants' counsel, J. Scott Provan, faxed a draft stipulation to plaintiff's counsel, Harold Kingsley, on January 7, 1998. Defendants' counsel included a cover note with the fax which read in relevant part:

"Attached hereto is a proposed Stipulation staying the proceeding in the United States District court for the Southern District of New York pending arbitration in London.
I have included Bibby International Services (ION) Ltd., Langton shipping Ltd. and Botany Bay Parcel tankers International as the parties to appear before the arbitrators in London. Obviously, Botany Bay Parcel Tankers International is a signatory to the COA [Contract of Affreightment] with Salim Oleochemicals Pte. Ltd. and we have included Bibby International Services (IOM) and Langton Shipping Ltd. as managers and owners of the M/V SHROPSHIRE. Salim Oleochemicals, Inc. are the purchasers of the cargo and purchased the cargo from Salim Oleochemicals Pte Ltd. and was named on the bill of lading.
We have not included Botany Bay Management Services Pty. Ltd. as they signed the COA as managers for Botany Bay Parcel Tanker International and therefore are not part of the COA."
  The draft stipulation attached read in relevant part:
"[T]he parties are directed to promptly institute arbitration pursuant to Clause 16 of the Contract of Affreigtment between Botany Bay Parcel Tankers and Salim Oleochemicals Pte., Ltd., Dated November 7, 1995 as incorporated in the terms and conditions of the Tanker Bill of ...

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