13‐0939‐cv
International Chartering Services, Inc. et al. v. Eagle Bulk Shipping Inc. et al.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
CORRECTED SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY
1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR
AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second
Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley
Square, in the City of New York, on the 3rd day of June, two thousand fourteen.
PRESENT: ROSEMARY S. POOLER,
BARRINGTON D. PARKER,
RICHARD C. WESLEY,
Circuit Judges.
INTERNATIONAL CHARTERING SERVICES, INC.,
PERACO CHARTERING (USA) LLC,
Plaintiffs‐Appellees,
‐v.‐ 13‐0939‐cv
EAGLE BULK SHIPPING INC., ANEMI
MARITIME SERVICES, S.A.,
BITTERN SHIPPING LLC, KINGFISHER
SHIPPING LLC, AVOCET SHIPPING LLC,
CRANE SHIPPING LLC, WREN SHIPPING LLC,
JAY SHIPPING LLC, CANARY SHIPPING LLC,
MARTIN SHIPPING LLC, THRASHER
SHIPPING LLC, ORIOLE SHIPPING LLC, OWL
SHIPPING LLC, WOODSTAR SHIPPING LLC,
NIGHTHAWK SHIPPING LLC,
Defendants‐Appellants.
FOR APPELLANTS: BRUCE G. PAULSEN (Jeffery M. Dine, Ryan Scott
Suser, on the brief) Seward & Kissel LLP, New York, NY
FOR APPELLEES: MARY ANN MARLOW (Christopher P. Keane, on the
brief) Keane & Marlow, LLP, East Brunswick, NJ
Appeal from the United States District Court for the Southern District of
New York (Nathan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED AND DECREED that the judgment of the United States District
Court for the Southern District of New York is REVERSED and that the cause is
REMANDED for proceedings consistent with this order.
Defendants‐Appellants, Eagle Bulk Shipping, and various of its
subsidiaries, appeal from an order entered by the United States District Court for
the Southern District of New York denying their motion to compel arbitration.
We assume the parties’ familiarity with the case.
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Background
Defendant Eagle Bulk Shipping is an operator of merchant ships and
wholly owns each of the other defendants. The subsidiary defendants are Anemi
Maritime Services, a provider of ship management services, and thirteen shell
companies, each of which owns a single merchant ship. Plaintiffs, International
Chartering Services (ICS) and Peraco Chartering, are ship brokers. Between 2006
and 2007 they negotiated contracts, known as “charter parties,” in which the
now‐bankrupt Korea Line Corporation (KLC), agreed to charter Defendants’
ships.1 ICS signed the charter parties as Defendants’ agent, but Plaintiffs were not
themselves parties to the agreements. The charter parties provided for arbitration
in London for any disputes arising between “Owners and the Charterers.” In
addition to creating the chartering relationship and providing for arbitration in
London, the charter parties obligated Defendants to pay Plaintiffs certain
commissions “on hire earned and paid under th[ese] Charter[s].” In 2011,
following KLC’s bankruptcy Defendants and KLC renegotiated the charter
parties. Defendants then ceased paying a portion of the commissions from the
original charter parties and Plaintiffs filed this suit. Defendants moved to compel
1
KLC is not a party to this action.
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arbitration, and the district court denied the motion. Defendants then filed this
interlocutory appeal.
Discussion
Defendants assert that plaintiffs must arbitrate because their claims arise
from the charter parties. Plaintiffs respond that (1) their claims do not arise under
the charter parties, but from separately enforceable agreements, and (2) even if
their claims were governed by the charter parties, they are not signatories, and
thus are not bound to its arbitration clause. We address these arguments in
reverse order.
A. Whether the Charter Parties May Bind the Plaintiffs
When determining whether a party is bound to arbitrate we apply
“[o]rdinary principles of contract and agency” law. MAG Portfolio Consultant,
GMBH v. Merlin Biomed Grp. LLC, 268 F.3d 58, 61 (2d Cir. 2001). In doing so, “we
have concluded that where a company knowingly accepted the benefits of an
agreement with an arbitration clause, even without signing the agreement, that
company may be bound by the arbitration clause.” Id. (internal quotations marks
omitted). Consequently, to the extent that the Plaintiffs’ claims arise under the
charter parties, they may be compelled to arbitrate.
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Determining that the plaintiffs seek the benefit of the charter parties, does
not end the inquiry, however. Because arbitration is contractual, we must also
scrutinize the language of the contract itself. By its terms, the charter parties’
arbitration clause only applies to “Owners and the Charterers.” Since Plaintiffs
are plainly neither, the district court reasoned, the arbitration clause does not
bind them.
Were substantive federal maritime law to apply, this might be correct.2
Defendants, however, argue that the charter parties elect English law, and that
English law should apply.3 Under English law we must interpret the phrase
“Owners and Charterers” to encompass Plaintiffs because they are treated as
2
Compare Deloitte Noraudit A/S v. Deloitte Haskins & Sells, U.S., 9 F.3d 1060,
1065 (2d Cir. 1993) (applying an arbitration clause covering ʺany other
disagreementʺ to a non‐party) with Imp. Exp. Steel Corp. v. Mississippi Valley Barge
Line Co., 351 F.2d 503, 505‐06 (2d Cir. 1965) (narrowly applying an arbitration
clause that bound only ʺOwners and the Charterersʺ).
3
Whether or not Defendants preserved this argument before the district
court is a close question. In light of our longstanding recognition that on matters
of maritime law “it is . . . desirable, if possible, that the courts of England and of
the United States in like manner should be in accord,” however, we consider the
argument preserved so that this widely used maritime contract may be properly
interpreted. See Senator Linie Gmbh & Co. Kg v. Sunway Line, Inc., 291 F.3d 145, 170
(2d Cir. 2002) (quoting Lehigh & Wilkes‐Barre Coal Co. v. Globe & Rutgers Fire Ins.
Co., 6 F.2d 736, 738‐39 (2d Cir. 1925)).
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assignees from the owners or charterers. Nisshin Shipping Co. v. Cleaves & Co. Ltd.,
1 Lloydʹs Rep. 38, 45‐46 (Q.B) (2004). Since English law and federal law produce
different results, the choice of law analysis is essential. Yet, the district court
failed to determine which law should govern this dispute. Accordingly, we
remand for the district court to consider this question by applying federal
maritime choice of law rules. Blue Whale Corp. v. Grand China Shipping Dev. Co.,
Ltd., 722 F.3d 488, 498 (2d Cir. 2013).
B. Claims based on Prior Agreements
With respect to Plaintiffs’ assertions that their claims are all based on prior,
independent, and separately enforceable agreements, Defendants urge us to end
this litigation and compel arbitration. They contend that there were no separate
agreements, and that any evidence of prior and/or separately enforceable
agreements would be barred by the parol evidence rule. We decline to follow
Defendants’ proposed course. This case is before us only on a motion to compel
arbitration, not a motion for summary judgment, and the district court did not
reach any of the arguments that Defendants now press. On remand, the district
court should determine whether plaintiffs have claims that are independent of
the charter parties, and if so, permit plaintiffs to litigate these claims.
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For the foregoing reasons, the judgment of the district court is hereby
REVERSED and the cause REMANDED for further proceedings consistent with
this order.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk
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