The opinion of the court was delivered by: LOUIS STANTON, District Judge
Coimex has applied by letters to the court dated April 7, 2005
(with exhibits) and April 12, 2005, opposed by Cargill in its
letter dated April 8, 2005, with exhibits, for a direction to
Cargill to suspend further prosecution of Cargill's pending
litigation in Switzerland, pending the determination of Coimex's
petition to arbitrate, in New York, the issues involved in that
litigation. After hearing the parties today, by counsel, the
application for a stay of the Swiss litigation is denied.
As demonstrated by the correspondence and submissions already
received in this case, the fundamental issue is whether
petitioner Coimex and respondent Cargill have an agreement to
arbitrate the amount of demurrage*fn1 payable for delays in
loading shipments of ethanol that Coimex sold to Cargill "FOB and stowed" on Cargill's
nominated ships at Santos, Brazil.
The contract of sale had no arbitration clause. Its provision
regarding loading conditions adopted the method of calculating
demurrage set forth in a standard form of charter agreement, the
ASBATANKVOY*fn2 charter party form. The sales contract
paragraph 9(b) stated "NOR*fn3 laytime counting to be as
per ASBATANKVOY charter party form." "Laytime counting" deals
with calculating the effects of delays and the amount of
The ASBATANKVOY charter party form contains, inter alia,
provisions defining and governing the giving of notice of
readiness and commencement of laytime (¶ 6), hours for loading
and discharging and counting of delays due to breakdown or
inability of the vessel to load or discharge, port regulations
prohibiting loading or discharging of cargo at night, time
consumed in moving between berths, discharging ballast water,
etc. (¶ 7), and liability for payment of demurrage under various
circumstances (¶ 8). Clearly, those provisions were incorporated
by reference into the parties' contract of sale.
The ASBATANKVOY form as a whole is far more comprehensive,
containing 26 numbered paragraphs (some with subdivisions)
covering all aspects of the ship's charter. Paragraph 24 provides
for arbitration of "Any and all differences and disputes of
whatsoever nature arising out of this Charter" in New York City
or London, whichever is specified elsewhere in the charter. Of
course no such place was specified in the contract of sale
between the parties to this case, for their contract had no
Coimex argues that the phrase in its contract of sale "NOR
laytime counting to be as per ASBATANKVOY charter party form"
incorporated not only the ASBATANKVOY provisions regarding
counting laytime, but also the ASBATANKVOY arbitration clause.
No reason appears to support such a sweeping conclusion. The
contract of sale contains no language adopting any portion of the
ASBATANKVOY form except those specifically referring to notice of
readiness and laytime counting.
Under the entire ASBATANKVOY charter form, all its substantive
provisions are covered by its arbitration clause. That coverage
is provided only by the language of its arbitration clause, not
by that of any of the independent substantive clauses. Thus, one
can freely select and incorporate an ASBATANKVOY substantive
clause, without also incorporating its arbitration provision.
Each clause of the ASBATANKVOY form stands alone, and none is
automatically the subject of arbitration unless one also
incorporates the arbitration clause.
Here, since the parties' contract of sale did not adopt the
ASBATANKVOY arbitration clause, they are not bound by it. Accordingly Coimex's argument, that a duty to arbitrate was
incorporated in its sales agreement by the reference to the
ASBATANKVOY form, is untenable as a matter of law.
In its petition, Coimex alleges that both parties nevertheless
intended to arbitrate any disputes under the contract, based on
their long-time participation in commodities trading and
transportation, and their prior course of dealings with each
other. This may raise triable issues of fact, requiring further
proceedings rather than immediate dismissal of the petition.
However, as the situation appears at present there is
insufficient evidence of an agreement to arbitrate to justify
enjoining either party from proceeding with litigation, whether
here or in Switzerland.