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RAPTURE SHIPPING, LTD. v. ALLAROUND FUEL TRADING B.V.

February 10, 2004.

RAPTURE SHIPPING, LTD., Plaintiff, -against- ALLAROUND FUEL TRADING B.V., CHEMOIL and CHEMOIL CORPORATION, Defendants


The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge

ORDER & MEMORANDUM OPINION

Procedural Background

  Plaintiff Rapture Shipping Ltd. ("Rapture"), a Liberian corporation, filed this action seeking to recover $1,048,483 in alleged property damage and for punitive damages from Defendants Allround Fuel Trading B.V. ("AFT") and Chemoil Corporation ("Chemoil").*fn1 This suit was filed on January 31, 2003, after a similar action was dismissed in December 2002 by the Rotterdam Court of First Instance (the "Rotterdam Court"). Rapture alleges that defective marine diesel oil*fn2 delivered by the defendants caused the breakdown of the M/V Monagas II's ("Monagas II") auxiliary engines. Presently before the Court is a motion by the defendants to compel arbitration and stay the action.

  Facts

  Through its agent, Oceanmaris Management Inc., Rapture contracted with Praxis Energy Agents, S.A. ("Praxis") for the provision of marine fuel oil to its vessel, the Monagas II. In order to fulfill its contract with Rapture, Praxis entered into a bunker nomination contract with AFT and AFT's parent company, Chemoil. Both the Oceanmaris/Rapture-Praxis and Praxis-AFT/Chemoil contracts are dated November 12, 1999. The Page 2 Praxis-AFT/Chemoil bunker nomination lists Praxis as the buyer, Chemoil/AFT as the seller and supplier and the Monagas II as the motor vessel to receive the fuel. See Brennan Aff., Ex. 5. The contract also states that Praxis was "[a]cting as contractual buyers and in accordance with instructions received by purchaser M/V `Monagas II' and owners." Id. In addition, the agreement set forth that the bunker was being nominated in accordance with Chemoil/AFT's general terms and conditions. Id.

  On November 15, 1999, AFT/Chemoil sent, by facsimile, a bunker confirmation to Praxis. The bunker confirmation reaffirmed that the sale was based on Chemoil's standard terms and conditions for the sale of marine fuel oil, and offered to provide a copy of those terms and conditions if so requested. See Brennan Aff. Ex. 6. The bunker confirmation established that [t]he fuel oil will be supplied with the express recognition that procurement was authorized by the owner of the vessel." Id. Finally, the bunker confirmation stated that AFT/Chemoil would "assume that all parties agree to this confirmation unless we are notified in writing within 24 hours." Id.

  Although the Monagas II is listed as the vessel to receive the fuel, Rapture is not a signatory or listed as a party to the Praxis-AFT/Chemoil agreement. In fact, Rapture claims not have been aware of either the Praxis-AFT/Chemoil agreement or the November 15, 1999 bunker confirmation. See Lennon Aff. ¶ 5. Page 3 Rapture makes this claim despite the fact that the Praxis-AFT/Chemoil agreement indicates that it was to be sent to Rapture or its agent, Oceanmaris, as the end users of the fuel oil. See Brennan Aff. Ex. 5.

  On November 19, 1999, Chemoil delivered the bunkers to the Monagas II while the vessel was docked in the Port of Rotterdam. Upon delivery of the marine oil fuel, the Chief Engineer of the Monagas II signed a receipt for the fuel. See Brennan Aff. Ex. 7. The receipt signed by the Chief Engineer stated in plain terms that the fuel was delivered "in accordance with Chemoil Corporation's Standard Terms and Conditions of sale." Id. By signing the receipt, the Chief Engineer declared that a copy of the Standard Terms and Conditions had been provided and that he had the authority to bind the "vessel and her owner." Id.

  Included among the "Standard Terms and Conditions of Sale of Marine Fuel By Chemoil" is an arbitration provision. Article 12 of the Standard Terms and Conditions state in pertinent part:
a) Any controversy or claim between Buyer and Seller, or between Buyer and the fuel barge contractor, relating solely to the quality or quantity of marine fuels delivered or to be delivered hereunder or to the sum payable for such fuel shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association.
Brennan Aff. Ex. 8.

  On or about November 25, 1999, the Monagas II suffered a blackout. Rapture alleges that the blackout was the result of a Page 4 breakdown of and damage to the Monagas II's engine equipment that was caused by defective and unreasonably dangerous marine fuel oil supplied by AFT and Chemoil at the Port of Rotterdam. See Compl. ¶ 11. According to Rapture, the Monagas II was left powerless and stranded during gale force weather conditions that necessitated the procurement of salvage assistance. Id. at ¶ 12.

  Initially, Rapture sued AFT for damages in the Court of First Instance in Rotterdam, The Netherlands (the "Rotterdam action"). Rapture's claims for relief were based both on theories of contract law and tort. Of particular relevance, Rapture argued that AFT had acted as the selling party toward Rapture and thereby created a contractual relationship between the two parties. Among the defenses offered by AFT in opposition to Rapture's claims was the proposition that the Rotterdam Court was not the proper forum. AFT argued that the dispute belonged in arbitration. AFT's argument was made in response to Rapture's contention that a contractual relationship existed between Rapture and AFT.*fn3

  By decision dated December 19, 2002, the Rotterdam Court Page 5 dismissed Rapture's claims. See Brennan Aff. Exs. 3, 4. The Rotterdam Court assumed that, as Rapture suggested, a contractual relationship was created. The court determined, however, that if a contract had been formed it necessarily incorporated Chemoil's standard terms and conditions of sale. As such, the arbitration clause included therein applied and the Rotterdam Court was not a suitable forum for the action. See Brennan Aff. Ex. 4. Not long after the Rotterdam Court dismissed its action, Rapture brought suit in this Court.

  Discussion

  Unlike the Rotterdam action in which Rapture sought damages based on contract and tort law, the instant action is confined to claims of product liability, negligence and fraud. Nonetheless, Rapture's claims are based on the same incident and involve the same parties.*fn4 Furthermore, the primary affirmative defense raised — that arbitration should be compelled and the action stayed — is identical to the defense raised and litigated in the Rotterdam action. The initial issue facing the Court, therefore, is what, if any, weight should the Rotterdam Court's decision carry in this action. Not surprisingly, the parties are of differing minds when it comes to settling ...


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