Astra Oil v. Rover Navigation
In this case, the United States Court of Appeals for the Second Circuit reversed a decision from the District Court for the Southern District of New York in which it had denied appellant Astra Oil Company, Inc.’s ("Astra") petition to compel Rover Navigation, Ltd. ("Rover") to arbitrate Astra’s claims arising out of the late delivery by Rover of Astra’s cargo. Even though Astra was not a signatory to the charter party which contained the arbitration clause, the Second Circuit held that the petition should have been granted because Astra’s claims were premised on alleged breaches of duties under the charter, that is, that Rover breached warranties of speed and seaworthiness, and thus were inextricably intertwined with that agreement. Moreover, the Court held, the relationship between Astra and the actual signatory to the charter was sufficiently close, and Rover had treated Astra and the actual signatory sufficiently interchangeably, that Rover should be estopped from resisting arbitration.
DMC Category Rating: Developed
Case Note contributed by Monique Des Rosiers, attorney with the law firm Healy & Baillie LLP. Healy & Baillie are the International Contributors to the website for the USA.
Moreover, the Court noted that Astra’s claims against Rover alleged breaches of duties owed under the charter party to make timely delivery, that is, the warranties of speed and seaworthiness, and did not allege breach of the independent sales contract. In sum, the Court concluded that the petition to compel arbitration should have been granted based on (1) the undisputed evidence of a close corporate and operational relationship between Astra and AOT; (2) the fact that Astra’s claims against Rover invoked duties arising under the charter party between Rover and AOT; and (3) the fact that Rover treated Astra as if it were a party to the charter party, by accepting direction from Astra during the voyage.
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