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