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

R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT

. C ITATION TO A SUMMARY ORDER FILED ON OR AFTER J ANUARY

1, 2007, IS PERMITTED AND IS GOVERNED BY F EDERAL R ULE OF A PPELLATE P ROCEDURE 32.1 AND THIS COURT ’ S L OCAL R ULE 32.1.1.

W HEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT

, A PARTY MUST CITE EITHER THE F EDERAL A PPENDIX 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 3 rd 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,

Plaintiff s

‐ 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.

2Background

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.

3arbitration, 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.

4Determining 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 ʺ any other

disagreement ʺ 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 ʺ Owners and the Charterers ʺ ).

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)).

5assignees from the owners or charterers. Nisshin Shipping Co. v. Cleaves & Co. Ltd.

,

1 Lloyd ʹ s 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.

6For 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

7