United States District Court, S.D. New York
MEMORANDUM OPINION AND ORDER
TAYLOR SWAIN United States District Judge
March 27, 2017, Plaintiff Integr8 Fuels Inc.
(“Integr8”) filed a Complaint against Defendant
Daelim Corporation (“Daelim”), as well as a
Motion, by Order to Show Cause, for a Preliminary Injunction
and Temporary Restraining Order enjoining Daelim from
pursuing arbitration against Integr8. (Docket entry nos. 1
(Complaint) & 9.) This Court ordered Daelim to show cause
why a preliminary injunction should not issue. (Docket entry
no. 3.) The parties submitted briefing pursuant to a schedule
set forth in the Court's Order, and the Court heard oral
argument on April 7, 2017. The parties also submitted
supplemental post-argument letters on April 21 and 24, 2017.
(Docket entry nos. 20 and 23.) The Court has jurisdiction of
this action pursuant to 28 U.S.C. section 1331 and 9 U.S.C.
Court has carefully considered the submissions and arguments
of both parties. For the reasons set forth below,
Plaintiff's motion is denied. This Memorandum Opinion and
Order sets forth the Court's findings of fact and
conclusions of law in accordance with Federal Rules of Civil
Procedure 52 and 65.
Integr8 is a seller of marine fuels to vessel owners and
operators throughout the world. (Complaint ¶ 12.)
Defendant Daelim is a vessel charterer of ships to be used in
international trade. (Docket entry no. 7 (Declaration of Kim
Jae Ho (“Ho Decl.”)) ¶ 3.) Daelim entered
into a charter party agreement with Korea Line Corporation
(“KLC”), the disponent owner of the vessel M/T DL
NAVIG8 (the “Vessel”), which is owned by DL
Maritime S.A. (“Maritime”). (Id.
¶¶ 5-6.) Pursuant to the charter party, Daelim was
required to keep the Vessel free and clear of encumbrances,
including liens. (Id. ¶ 7 & Ex. 1, Clause
October 2014, Daelim contracted with Grace Young
International, Ltd. (“Grace”) to provide a bunker
stem to the Vessel in Hong Kong. (Id. ¶ 8 &
Ex. 2.) Daelim paid Grace in full for the bunker stem, which
was delivered as agreed. (Id. ¶¶ 10-14
& Exs. 3-4.) Grace, in turn, contracted with a
corporation called Hitec to provide the bunker stem. (Docket
entry no. 8 (Declaration of Karnan Thirupathy
(“Thirupathy Decl.”)) ¶ 12.) Hitec then
contracted with Dynamic Oil Trading (Singapore) Pte Ltd.
(“Dynamic”) to provide the bunker stem.
(Id. ¶ 12.) Dynamic then contracted with
Plaintiff Integr8 to provide the bunker stem in Hong Kong.
(Id. ¶ 13.)
contract between Dynamic and Integr8 (id. Ex. DD
(the “Integr8 Contract”)) identifies the
“Buyer” of the bunker stem as: “Dynamic Oil
Trading (Singapore Pte Ltd) AND JOINTLY AND SEVERALLY
OWNERS/MANAGING OWNERS/OPERATORS/ MANAGERS/DISPONENT
OWNERS/CHARTERERS.” (Integr8 Contract, p. 1.)
Additionally, the Integr8 Contract provides that
“Integr8 Fuels Inc. General Terms and Conditions
(including the arbitration clause within those General Terms
and Conditions) will apply to this contract.”
(Id.) The Integr8 Fuels Inc. General Terms and
Conditions (Complaint Ex. B (the “Integr8 GTC”))
include an arbitration clause that provides, in pertinent
part, that “[a]ny dispute arising under, in connection
with or incidental to this Contract shall be heard and
decided at New York City, New York State, by three
persons.” (Id. § 11.1)
November 2016, Integr8 filed an action against Maritime and
Dynamic in the Dubai Court of First Instance, alleging that
Integr8 had not been paid for the bunker stem it supplied to
the Vessel in Hong Kong pursuant to its contract with
Dynamic. (Thirupathy Decl. ¶ 2 & Ex. AA.)
Integr8 moved in the Dubai court for an order arresting the
Vessel and seeking a maritime lien for necessities, which
motion was granted and an arrest ordered. (Id.
¶¶ 3-5.) The Vessel was arrested, and Maritime
deposited the amount of the claim with the Dubai court in
order to have the arrest lifted. (Id. ¶ 5.) The
case in Dubai was dismissed and is currently on appeal.
(Id. ¶ 9.)
November 2016, solicitors in Dubai for KLC contacted Daelim
to notify Daelim of the arrest of the Vessel, and
Integr8's allegations that it had not been paid for the
bunker stem. (Ho Decl. ¶ 15.) Daelim was notified that
the Vessel's owners (KLC and/or Maritime) “would
seek damages against Daelim as a result of Integr8's
arrest of the Vessel in Dubai.” (Ho Decl. ¶
February 14, 2017, Daelim served a demand for arbitration on
Integr8. (Complaint ¶ 2 & Ex. A (the
“Demand”).) The Demand identifies the operative
arbitration agreement as the one contained in the Integr8
GTC. (Demand, p. 1.) The Demand specifies several issues and
claims to be put to the arbitrators: (1) “whether
Integr8 has a valid maritime lien for necessaries under U.S.
law against M/V DL NAVIG8;” (2) “a declaratory
ruling alleviating [Daelim] from any and all liability for
the aforementioned stem;” (3) “an anti-suit
injunction enjoining any further litigation including that
previously pending in Dubai on the above issues;” and
(4) “in the alternative, indemnity in full for any
liability Daelim incurs as a result of the Dubai or any other
proceeding initiated by Integr8 in regards to this
stem.” (Id. p. 2.) At oral argument, the
parties represented that arbitrators have been selected, and
that the arbitration proceedings are on hold pending this
Court's decision on Plaintiff's motion for a
preliminary injunction. (Tr. 35:16-22.)
party seeking a preliminary injunction must either show that
he is likely to succeed on the merits; that he is likely to
suffer irreparable harm in the absence of preliminary relief;
that the balance of equities tips in his favor; and that an
injunction is in the public interest; or he may show
irreparable harm and either a likelihood of success on the
merits or sufficiently serious questions going to the merits
to make them a fair ground for litigation and a balance of
hardships tipping decidedly toward the party requesting the
preliminary relief.” Am. Civil Liberties
Union v. Clapper, 785 F.3d 787, 825 (2d Cir. 2015)
(internal citation and quotation marks omitted).
Complaint seeks a declaratory judgment that there is no
enforceable arbitration agreement between Daelim and Integr8.
In determining whether a dispute is arbitrable, the Court
must address 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.” Nat'l Union Fire Ins.
Co. v. Belco Petroleum Corp., 88 F.3d 129, 135 (2d
Cir.1996). As an initial matter, Integr8 asserts that the
contractual arbitration clause here is insufficient to compel
arbitration because there is no direct contractual
relationship between Integr8 and Daelim.
record currently before the Court shows that Integr8 entered
into a written agreement, drafted by Integr8, with Dynamic.
That agreement included a defined term, “Buyer, ”
that covered Dynamic as well as the Charterers of the vessel.
Daelim has proffered uncontested evidence indicating that
Daelim was the Charterer of the vessel at the time Integr8
contracted with Dynamic. The Court accordingly concludes that
the Integr8 Contract, which Integr8 drafted, embodies
Integr8's agreement to arbitrate any dispute even
incidental to the bunker stem transaction, with a diverse
range of parties in interest that includes Daelim, as the
Charterer of the vessel. That contract expressly incorporated
the arbitration clause of the Integr8 GTC, which also defines
the term “Buyer” to include the charterers of the
vessel. Accordingly, the Court ...