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IBETO PETROCHEMICAL INDUSTRIES, LTD. v. BEFFEN

November 21, 2005.

IBETO PETROCHEMICAL INDUSTRIES, LTD., Plaintiff,
v.
M/T "BEFFEN," her engines, tackle, boiler, etc., in rem; and BRYGGEN SHIPPING AND TRADING A/S, in personam, Defendants.



The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

I. INTRODUCTION

Ibeto Petrochemical Industries, Ltd. ("Ibeto") filed suit against M/T Beffen ("Beffen") and Bryggen Shipping and Trading (collectively, "defendants") when base oil shipped by defendants from the United States to Nigeria in the Beffen allegedly arrived contaminated.*fn1 On March 4, 2005, plaintiff filed suit in this Court for breach of defendants' "duties to the plaintiff as common carrier by water for hire."*fn2 Plaintiff now moves for voluntary dismissal of this suit under Federal Rule of Civil Procedure 41 (a)(2).*fn3 Defendants oppose this motion and have filed a motion to dismiss or stay the suit in favor of arbitration in London and to enjoin plaintiff from pursuing the identical claim in Nigeria in a suit plaintiff filed on March 19, 2004.*fn4 In the alternative, defendants move for a declaration "limiting any recovery by plaintiff to $500 pursuant to the compulsorily applicable COGSA liability limitation."*fn5

  II. BACKGROUND

  On February 6, 2004, the Beffen left the Port of Paulsboro, New Jersey carrying base oil on behalf of plaintiff.*fn6 The shipment was executed via a charter party fixture sent by email from defendants to plaintiff on December 31, 2003,*fn7 incorporating the contractual provisions of two other documents: the "Asbatankvoy" and "Chemlube" Terms.*fn8 When the Beffen arrived in Nigeria on March 5, 2004, the base oil was allegedly contaminated.*fn9 Plaintiff obtained a bond to secure the boat in Nigeria and notified defendants on March 4, 2005 that it was commencing arbitration;*fn10 plaintiff filed the instant suit in the Southern District of New York on the same day in order "to protect the time for suit."*fn11 On August 9, 2005, five months after plaintiff began arbitration proceedings in London, plaintiff notified defendants that it had closed the arbitration and intended to pursue litigation in Nigeria.*fn12 Plaintiff moved for a Rule 41 (a)(2) dismissal of the Complaint in this case on September 9, 2005.*fn13

  III. LEGAL STANDARD

  A. Arbitrability The determination of whether a dispute is arbitrable under the FAA comprises two questions: "(1) whether there exists a valid agreement to arbitrate at all under the contract in question . . . and if so, (2) whether the particular dispute sought to be arbitrated falls within the scope of the arbitration agreement."*fn14 To find a valid agreement to arbitrate, a court must apply the "generally accepted principles of contract law."*fn15 "[A] party is bound by the provisions of a contract that [it] signs, unless [it] can show special circumstances that would relieve [it] of such obligation."*fn16 It is well established that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit."*fn17 A court should consider only "whether there was an objective agreement with respect to the entire contract."*fn18

  Because there is "a strong federal policy favoring arbitration . . . where [] the existence of an arbitration agreement is undisputed, doubts as to whether a claim falls within the scope of that agreement should be resolved in favor of arbitrability."*fn19 Thus, the Second Circuit has emphasized that
any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. Accordingly, [f]ederal policy requires us to construe arbitration clauses as broadly as possible. We will compel arbitration unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.*fn20
However, although federal policy favors arbitration, it is a matter of consent under the FAA, and "a party cannot be required to submit to arbitration any dispute which [it] has not agreed so to submit."*fn21

  The Second Circuit has established a three-part inquiry for determining whether a particular dispute falls within the scope of the arbitration agreement.*fn22 First, "a court should classify the particular clause as either broad or narrow."*fn23 Second, if the clause is narrow, "the court must determine whether the dispute is over an issue that `is on its face within the purview of the clause,' or over a collateral issue that is somehow connected to the main agreement that contains the arbitration clause."*fn24 "Where the arbitration clause is narrow, a collateral matter will generally be ruled beyond its purview."*fn25 Third, if the arbitration clause is broad, "there arises a presumption of arbitrability and arbitration of even a collateral matter will be ordered if the claim alleged implicates issues of contract construction or the parties' rights and obligations under it"*fn26 or "[i]f the allegations underlying the claims `touch matters' covered by the parties' agreements."*fn27 In making this determination, courts must "focus on the factual allegations in the complaint rather than the legal causes of action asserted."*fn28

  B. The Standard of Review for a Motion to Enjoin a Foreign Proceeding "It is beyond question that a federal court may enjoin a party before it from pursuing litigation in a foreign forum."*fn29 However, "principles of comity counsel that injunctions restraining foreign litigation be used sparingly and granted only with care and great restraint. That is because an anti-suit injunction, though directed at the litigants, effectively restricts the jurisdiction of the court of a foreign sovereign."*fn30

  When determining whether to enjoin a foreign action, a court should consider the relationship between the suit at bar and the suit in the foreign jurisdiction. "An anti-suit injunction against parallel litigation may be imposed only if: (A) the parties are the same in both matters, and (B) resolution of the case before the enjoining court is dispositive of the action to be enjoined."*fn31 If this threshold has been met, the court should also consider the following factors ("China Trade factors"):
(1) frustration of a policy in the enjoining forum; (2) the foreign action would be vexatious; (3) a threat to the issuing court's in rem or quasi in rem jurisdiction; (4) the proceedings in the other forum prejudice other equitable considerations; or (5) adjudication of the same issues in separate actions would result in delay, inconvenience, expense, inconsistency, or a race to judgment.*fn32
"A salient consideration in this case is that, given the federal policy favoring the liberal enforcement of arbitration clauses, an anti-suit injunction may be proper where a party initiates foreign proceedings in an attempt to sidestep arbitration."*fn33

  C. Rule 41(a)(2) and Voluntary Dismissal

  Generally, a plaintiff may voluntarily dismiss an action without a court order if it does so before defendant serves its answer, or if it enters into a stipulation of dismissal with all parties.*fn34 Here, however, defendants have answered the complaint and oppose plaintiff's motion to dismiss voluntarily. In such circumstances, "an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper."*fn35

  The court should permit a Rule 41 (a)(2) dismissal only when it will not prejudice the defendants.*fn36 "The general rule is settled for the federal tribunals that a plaintiff possesses the unqualified right to dismiss [its] complaint . . . unless some plain legal prejudice will result to the defendant other than the mere prospect of a second litigation upon the subject matter."*fn37 The exception to this rule is when a defendant has already gone through ...


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