Stena Bulk, as disponent owner of the M/T "Goldmar", Claimant v. Citgo Asphalt Refining Co., as Charterer, Respondent
United States of America: Society of Maritime Arbitrators of New York, Inc.: David W. Martowski, Chairman, Manfred W. Arnold and Jack Berg, arbitrators: Award Number 3902: November 22, 2005
John D. Kimball, of Healy & Baillie, for Stena
Derek A. Walker, of Chaffe McCall, for Citgo
WHETHER OWNERS, NOT A PARTY TO THE CHARTERPARTY BETWEEN DISPONENT OWNERS AND SUBCHARTERERS, COULD BE COMPELLED TO TAKE PART IN ARBITRATION PROCEEDINGS UNDER THE SUBCHARTER: WHETHER AN AFFILIATE OF THE SUBCHARTERERS, NOT A PARTY TO THE SUBCHARTER, COULD BRING A CLAIM IN SUCH PROCEEDINGS
A majority of the arbitration panel in this case a) allowed a company, not itself a signatory to the charterparty containing the arbitration clause, to bring a claim in the arbitration, on the grounds that its claim arose from a breach of charter, was "intertwined" with other claims under the charter arising from the same incident and it was itself in close corporate relationship with the signatory party, and b) refused to compel another non-signatory, namely the vessel owners, to participate in the proceedings, on the ground that parties to contracts with separate arbitration agreements could not be compelled to consolidate those proceedings.
DMC Category Rating: Developed
This case note has been contributed by Patrick V. Martin, a retired New York attorney and active arbitrator, who specializes in charterparty and commodity disputes.
The arbitration proceedings were at a preliminary stage and the factual allegations were sketchy. The vessel was owned by Stelmar – a party unrelated to Stena - who chartered it to Stena, the claimant. Stena chartered the vessel to Citgo, the respondent. The berth owner was PDVSA. Citgo requested that the Panel issue an order that all these parties be joined in a consolidated arbitration.
The second issue was governed by a different case, Astra Oil Company, Inc. v. Rover Navigation, 344 F. 3d 276 (2d Cir. 2003). Astra was the affiliate of the charterer AOT. Astra was not a signatory to the charter party, which contained a New York arbitration clause. The performing vessel was delayed in transit allegedly due to its unseaworthiness. Astra claimed damages, based on loss of market. Astra demanded that the Owner (Rover) arbitrate this claim. The Owner refused and the District Court [the court of first instance] denied Astra’s motion to compel arbitration. The Second Circuit Court of Appeals reversed the District Court’s decision. It held that, since the Owner was a signatory to the charter party, it could be compelled to arbitrate claims brought by a non-signatory where the claim arose out of the alleged breach of charter, where the non-signatory’s claim was closely intertwined with the charterparty and there was a close corporate and operational relationship between the signatory and the non-signatory claimant – in this case, Astra and AOT, the Court finding that the Owner had treated Astra as the de facto charterer.
The panel majority, applying these principles to the dispute at hand, found that Citgo and PDVSA were closely related companies and further that PDVSA’s claim for dock damage was closely intertwined with Stena’s claim for demurrage and Citgo’s counterclaim, all of them arising out of a single incident, namely, the aborted berthing operation of the "Goldmar". Thus, the panel allowed PDVSA to intervene in the pending arbitration.
There was a vigorous dissent by the Chairman, Mr. Martowski. He asserted that PDVSA’s claim for dock damage was in tort, not in contract, and should be properly asserted against the vessel owner, Stelmar, who was not a signatory to the charter between Stena and Citgo..
The dispute was subsequently settled and no final award was issued.
1. a non-signatory (Stelmar) could not be compelled to
Since there was no final award, the extent of the arbitrators’ powers on these issues was not tested in legal proceedings.
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