United States District Court, S.D. New York
IOTA SHIPHOLDING LTD and BLUMENTHAL JMK GMBH & CO. KG, Petitioners,
STARR INDEMNITY AND LIABILITY COMPANY, as a subrogor of TERNIUM MEXICO S.A. DE C.V. and TERNIUM INTERNACIONAL COSTA RICA, S.A., and MARINSA INTERCONTINENTAL, S.A., Respondents.
OPINION AND ORDER
KATHERINE POLK FAILLA, District Judge
Petitioners Iota Shipholding Ltd.
(“Iota”) and Blumenthal JMK GmbH & Co.
(“Blumenthal, ” and together with Iota,
“Petitioners”) brought this action pursuant to
the Declaratory Judgment Act, 28 U.S.C. § 2201, and the
Federal Arbitration Act, 9 U.S.C. §§ 1-16 (the
“FAA”), (i) to enjoin an arbitration commenced in
New York by Respondent Starr Indemnity and Liability Company
(“Starr”), in its capacity as subrogor of Ternium
Mexico S.A. de C.V. (“Ternium Mexico”) and
Ternium Internacional Costa Rica, S.A. (“Ternium Costa
Rica, ” and together with Ternium Mexico, the
“Ternium Entities”), and (ii) to declare that
there is no valid arbitration agreement between these
parties. The Court has jurisdiction over Petitioners'
claim under 28 U.S.C. §§ 1332 and 1333, and
Petitioners have designated their claim an admiralty or
maritime claim under Federal Rule of Civil Procedure 9(h).
have moved for summary judgment, seeking a declaration that
there is no valid arbitration agreement between these parties
and an injunction or permanent stay of the underlying
arbitration. Starr has cross-moved for summary judgment
seeking dismissal of this action and an order remanding this
matter to arbitration. For the reasons that follow,
Petitioners' motion is granted and Starr's motion is
The Shipment of and Damage to the Ternium Entities'
2013, Ternium Mexico sold 2, 552 bundles of square,
rectangular, and mechanical tubing produced in Tampico,
Mexico (the “Cargo”), to Ternium Costa Rica.
(Petition, Ex. 1, ¶¶ 2, 8). This Cargo was loaded
on board the M/V Lita in Tampico. (Id. at
¶ 7). Starr contends that the Cargo was in good order
and condition at the time of its loading. (Id. at
M/V Lita sailed from Tampico to Puerto Limón,
Costa Rica, where the ship arrived on August 6, 2013.
(Petition, Ex. 1, ¶ 12). The M/V Lita
encountered storms during its journey that caused damage to
the Cargo; damage surveys found that 40-45% of the total
Cargo was damaged. (Id. at ¶¶ 13-16).
Additionally, two packages of the Cargo were lost overboard.
(Id. at ¶ 14). Because Ternium “could not
affirmatively segregate damaged material on a per bundle/per
package basis, ” it “instead proposed a
reasonable depreciation of 42.86% of the total value of the
segregated material.” (Id. at ¶ 18). The
physically damaged Cargo was valued at $173, 875.14, and the
two lost bundles valued at $1, 750.17. (Id. at
The Maritime Contracts
Cargo was shipped pursuant to a collection of contracts,
which the Court will describe in this section.
The Voyage Charter
parties agree that non-party Alexander & Blake Ltd.
(“A&B”),  chartered the M/V Lita to
Ternium Mexico pursuant to a Voyage Charterparty dated July
26, 2013 (the “Voyage Charter”). (Resp't 56.1
Opp. ¶ 5).
Annex I, the Voyage Charter defines certain terms used
therein. (Pet'r 56.1, Ex. 1(C)). The Charterer is
“as stated in ... the beginning of this Charter Party,
” where the Voyage Charter identifies the
“Shipper” as Ternium Mexico. (Id.). The
“Owner” is “the disponent owner of the
Vessel who signs the present Charter Party identified at the
beginning of this Charter Party, ” where the Voyage
Charter identifies the “Owner of the vessel” as
A&B Limited. (Id.).
third section, the Voyage Charter outlines a set of
requirements for the proper shipment of the Cargo. As
relevant here, this section provides that the liability of
the Charterer, Ternium Mexico, “for each shipment under
this Charter Party and the Charterer's responsibility for
damages to the Cargo ... shall cease ... on Cargo being
shipped, lashed[, ] and secured.” (Pet'r 56.1, Ex.
Voyage Charter also contains an arbitration clause, which
This Charter Party shall be governed by and construed in
accordance with English Law (without regard to conflict of
law rules and principles). Should any dispute arise between
Owner and Charterer, the matter in dispute shall be
[referred] to three arbitrators in New York/London, one to be
appointed by each of the parties hereto, and the third by the
two so chosen. Their decision or that of any two of them
shall be final, and for the purpose of enforcing any award,
this agreement may be made a rule of court. The arbitrators
shall be commercial men. The proceeding shall be conducted in
accordance with the rules of the Society of Maritime
(Pet'r 56.1, Ex. 1(C), ¶ 15) (emphasis omitted).
The Bills of Lading
parties also agree that upon the shipment of the Cargo from
Tampico, “CONGENBILL” form bills of lading were
executed “by [Respondent Marinsa Intercontinental, S.A.
(‘Marinsa')] [o]nly as ship's port agents for
& on behalf of the master and to incorporate by reference
a CHARTER-PARTY dated JULY 26, 2013.” (Pet'r 56.1
¶ 9 (internal quotation marks omitted) (quoting
Petition, Ex. 1(D)). Each bill of lading identifies the
“Shipper” as Ternium Mexico, the
“Consignee” as Ternium Costa Rica, and the
Carrier as the “Owners MV ‘Lita.'”
(Petition, Ex. 1(D)). The Master of the M/V Lita is
identified on the Bills of Lading as the ship's Captain,
Franczyk Jerzy. (Id.).
Bills of Lading direct that their “[f]reight [is]
payable as per CHARTER-PARTY dated JULY 26, 2013.”
(Petition, Ex. 1(D)). For their “CONDITIONS OF
CARRIAGE, ” the Bills of Lading direct a reader to
“SEE OVERLEAF.” (Id.). Thereon, each
bill of lading notes that it is “to be used with
charter-parties.” (Id. (emphasis omitted)).
And the first-listed condition of carriage in each case
specifies that “[a]ll terms and conditions, liberties
and exceptions of the Charter Party, dated as overleaf,
including the Law and Arbitration Clause, are herewith
The Time Charter
with regard to this contract that the parties' positions
diverge. Petitioners allege that A&B chartered the
M/V Lita to Ternium Mexico under the Voyage Charter
in A&B's capacity as a disponent owner, having itself
chartered the M/V Lita from its true owners under a
time charter that is also dated July 26, 2013 (the
“Time Charter”). (See Petition ¶
12; Pet'r 56.1 ¶¶ 10-14; Pet'r 56.1, Ex. 2;
Pet'r 56.1 Reply ¶¶ 3-13). This Time Charter
“calls for arbitration exclusively in Germany, and
further expressly prohibits issuance of bills of lading
prejudicial to the Time Charter's provisions.”
(Pet'r 56.1 ¶ 11 (citing id., Ex. 2)). The
parties agree that a time charterer was permitted to
sub-charter the time-chartered vessel, though the Time
Charter's terms provided that if they did so, Time
“Charterers [would] remain responsible for the
fulfillment of ...