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Bailey Shipping Ltd. v. American Bureau of Shipping

United States District Court, S.D. New York

March 28, 2014

BAILEY SHIPPING LIMITED, Plaintiff,
v.
AMERICAN BUREAU OF SHIPPING, et al., Defendants.

OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge.

Bailey Shipping Limited unilaterally sought to withdraw, without prejudice, a claim for negligent misrepresentation that is the subject of a pending arbitration. The respondents in that arbitration, the American Bureau of Shipping and its Greek affiliate, ABS Hellas (collectively, "ABS"), objected.The arbitral panel concluded that Bailey was not permitted to make such a withdrawal without ABS's consent.

Bailey now asks this Court to vacate that arbitral decision and permit it to withdraw its claim. Whether the panel's decision is correct on the merits is a close and an interesting question, but the Court may not consider it. Because the arbitral award at issue was not final, the Court lacks jurisdiction to consider Bailey's motion to vacate it.

BACKGROUND[1]

The complicated history of this litigation and the underlying relationship between the parties is fully set out in the Court's Order of September 23, 2013. (Dkt. #29, available at 2013 WL 5312540 (S.D.N.Y. Sept. 23, 2013)). In the interest of clarity, the Court will provide a brief summary of the relevant facts before proceeding to a description of the dispute pending before the Court.

A. History of the Action

In August 2007, Bailey Shipping Limited, a Marshall Islands corporation, bought an international shipping vessel named the M/V MAX from non-party Wave Navigation. (Dkt. #29 at 2). The vessel had several times been surveyed and classified as fit for sea travel and bulk carriage by ABS and ABS Hellas, both international classification societies. ( Id. at 4). Bailey alleges that the MAX was in far worse condition than its classification certificates represented. (Dkt. #1 at ΒΆΒΆ 35-41).

Bailey filed suit against ABS in the Piraeus Multimember Court of First Instance in Piraeus, Greece, in April 2012, alleging multiple claims falling into distinct categories: negligent misrepresentation, violation of the Greek consumer protection statute, violation of duties arising out of certain international conventions concerning shipping, and violation of duties arising from certain domestic Greek statutes governing the work of classification societies like ABS. (Dkt. #29 at 5-8).[2]

Several months later, ABS filed a demand for arbitration, arguing that the action was subject to the mandatory arbitration agreement contained in the certificates ABS had issued regarding the MAX. (Dkt. #8-9). Bailey then filed the Complaint in this action on August 3, 2012, seeking a declaratory judgment that it was not bound by any arbitration agreement with ABS. (Dkt. #1). ABS opposed and cross-moved to compel arbitration. (Dkt. #4-6). The Court ruled on August 20, 2012, that the arbitration clause bound Bailey to the extent that Bailey relied on the content of the certificates to prove its case and, in consequence, that any claim of negligent misrepresentation against ABS with respect to that content was necessarily reserved to arbitration. (Dkt. #13). The Court made no ruling at that time regarding the pending litigation in Greece or the extent to which individual claims in that litigation overlapped with or were distinct from a negligent misrepresentation cause of action. ( Id. ). One week later, the Court stayed this action pending the arbitration. (Dkt. #14).

Bailey sought to stay the arbitration itself during the pendency of the Greek litigation; the arbitral panel denied this application. (Dkt. #29 at 12-13). The Greek litigation continued to unfold. Then, on September 18, 2013, ABS filed an order to show cause why a foreign anti-suit injunction should not issue prohibiting Bailey from prosecuting the action in Greece, on the theory that the Greek litigation could not stand independent of the negligent misrepresentation claim the Court had ruled reserved to arbitration, and so should not proceed until that arbitration concluded. (Dkt. #20).

After briefing (Dkt. #21-28) and a lengthy oral argument (Dkt. #30), the Court ruled on September 23, 2013, that the arbitration would be dispositive of Bailey's duty-based claims arising from the international conventions and Greek regulatory statutes and so it was appropriate to enjoin Bailey from pursuing those claims in the Greek litigation. (Dkt. #29 at 24-27). The Court concluded, in contrast, that the claim under Greece's consumer protection law was sufficiently independent of the issues to be decided in the arbitration that Bailey should not be prohibited from pursuing that claim in Greek court even while the arbitration unfolded. ( Id. at 27-30).

B. The Instant Dispute

On August 9, 2013, before ABS moved for the anti-suit injunction discussed above, Bailey had informed ABS and the arbitral panel that it intended to withdraw the negligent misrepresentation claim that the Court had held reserved to arbitration and that, in consequence, the arbitration proceeding was terminated. (Lennon Decl., Ex. 2).[3]

ABS interposed an objection four days letter. It reasoned that because the "issue ha[d] been joined, " Bailey's attempt at withdrawal was "as improper in arbitration as it would be under the Federal Rules of Civil Procedure 41(a)(2) and 41(c)" in the absence of ABS's consent. (Lennon Decl., Ex. 3 at 1). ABS wrote the panel again on August 19, 2013, once more opposing Bailey's attempt to withdraw on the grounds that "ABS [wa]s entitled to a resolution of ...


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