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Bailey Shipping Limited v. American Bureau of Shipping

United States District Court, S.D. New York

July 18, 2014




Pending before the Court is a motion by a third party to this action, the Atlantic Bank of New York ("ABNY"), to quash an arbitration subpoena served on it, as well as a cross-motion by Defendants American Bureau of Shipping and its affiliates and employees (collectively, "Defendants" or "ABS") to compel compliance with that subpoena. For the reasons set out below, ABNY's motion is denied and Defendants' motion is granted.


The complicated history of this litigation and the underlying relationship between the parties is fully set out in the Court's Orders of September 23, 2013 (Dkt. #29, available at 2013 WL 5312540 (S.D.N.Y. Sept. 23, 2013)), and March 28, 2014 (Dkt. #40, available at 2014 WL 1282504 (S.D.N.Y. Mar. 28, 2014)). Familiarity with the facts and the Court's prior rulings is assumed.

The present dispute focuses on a subpoena issued by the arbitral panel commanding ABNY's testimony "as to all banking transactions surrounding and involving" a National Bank of Greece check ostensibly used to acquire the shipping vessel at the heart of this action, as well as "all communications, notations, or instructions" issued by ABNY in connection with it, and further ordering production of relevant documents. (Patel Ex. B, C). ABNY clarified errors in that subpoena on March 4, 2014 (Ewig Ex. 9), and then responded to a corrected subpoena by producing the responsive documents in its possession on March 21, 2014 ( id. at Ex. 10). These documents consisted of records of the National Bank of Greece's account at ABNY and a copy of an electronic record ostensibly related to the negotiation of the check in question. ( Id. at Ex. 10-A, 10-B, 10-C).

The arbitral panel inquired of the parties whether a hearing was required despite the production of these records. (Ewig Ex. 14). Defendants insisted that testimony would be required nonetheless to interpret the meaning of the documents. ( Id. at Ex. 16). Although Plaintiff Bailey argued that such testimony would be unnecessary because "the banking documents speak for themselves" ( id. at Ex. 15), the panel refused to withdraw the subpoena (Dkt. #54 Ex. 1).

ABNY thereupon filed a motion with the Court to quash the subpoena on April 23, 2014. (Dkt. #42-45). Defendants filed papers opposing that motion and cross-moving to compel compliance with the subpoena on May 1, 2014. (Dkt. #47-49). ABNY filed a reply in support of its motion to quash and an opposition to Defendants' motion to compel on May 22, 2014 (Dkt. #55-57), and the motions were fully submitted with Defendants' reply brief in further support of their motion to compel on May 28, 2014 (Dkt. #59-60).


A. Applicable Law

"[I]t is difficult to overstate the strong federal policy in favor of arbitration, " and it is a policy courts in this Circuit "have often and emphatically applied.'" Arciniaga v. Gen. Motors Corp., 460 F.3d 231, 234 (2d Cir. 2006). "[C]ourts have an extremely limited' role in reviewing" the decisions of arbitral panels under any circumstances. Rich v. Spartis, 516 F.3d 75, 81 (2d Cir. 2008) (quoting Wall Street Assoc., L.P. v. Becker Paribas, Inc., 27 F.3d 845, 849 (2d Cir. 1994)). The Supreme Court has explained that the limited role of the courts in reviewing arbitral decisions "maintain[s] arbitration's essential virtue of resolving disputes straightaway.'" Oxford Health Plans LLC v. Sutter, 133 S.Ct. 2064, 2068 (2013) (quoting Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 588 (2008)) (alteration in Oxford Health Plans ).

B. Application

The Court has already ruled earlier in this action, in the context of an effort to vacate an arbitral decision about the status of the arbitration itself, that the "cardinal principles" of deference that guide federal court review of arbitral decisions do not permit review "of orders governing discovery, the introduction of evidence, or hearing format"; doing so would challenge the "strong federal policy in favor of arbitration'" enshrined in the Federal Arbitration Act ("FAA"). Bailey Shipping Ltd. v. Am. Bureau of Shipping, No. 12 Civ. 5959 (KPF), 2014 WL 1282504, at *8 (S.D.N.Y. Mar. 28, 2014) (quoting Arciniaga, 460 F.3d at 234). The very same situation is presented here and so the subpoena will remain undisturbed.

Section 7 of the FAA provides that "arbitrators... may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as evidence in the case." 9 U.S.C. ยง 7. To begin with, though ABNY at first argued to the contrary (ABNY Br. 8), there is now no question that "arbitrators may, consistent with section 7 [of the FAA], order any person to produce documents so long as that person is called as a witness at a hearing." Life Receivables Trust v. Syndicate 102 at Lloyd's of London, 549 F.3d 210, 218 (2d Cir. 2008).

Relatedly, ABNY argued that the subpoena at issue here is defective because it refers to an arbitration "proceeding" rather than a "hearing." (ABNY Br. 8). But this is a distinction without a difference, and ABNY unsurprisingly offers no authority in support of the semantic line by which it would cabin the panel's powers under Section 7. ABNY does not and cannot argue that the "proceeding" at which the subpoena commands them to appear would not be held before the arbitration panel charged with adjudicating this dispute. And the Second Circuit has held "that Section 7 unambiguously authorizes arbitrators to summon ...

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