Ramesh Cheruvoth v. SeaDream Yacht Club, Inc., and SeaDream Yacht Club Limited Corporation

At a glance

Parties

Ramesh Cheruvoth (assignee of Abdulla Saleh Kamel, Saudi Arabia) v. SeaDream Yacht Club, Inc. (Florida) and SeaDream Yacht Club Limited Corporation (Bahamas)

Case no.

No. 1:19-cv-24416-GAYLES/OTAZO-REYES

Court

U.S. District Court, Southern District of Florida

Forum and rules

Court proceeding on a motion to compel arbitration under the New York Convention (9 U.S.C. §§ 201–208). The arbitration clause provides for arbitration under the Norwegian Arbitration Act 2004, seated in Oslo.

Treaty

New York Convention, Article II

Court

Darrin P. Gayles, United States District Judge

Sector

Yacht charter / cruise

Outcome

Motion granted in part and denied in part (22 October 2020). The plaintiff was compelled to arbitrate in Oslo and the case was dismissed without prejudice. SeaDream Yacht Club, Inc.'s request to be dismissed as an improper party was denied.

The dispute

Ramesh Cheruvoth, domiciled in Saudi Arabia, sued two SeaDream companies in Florida federal court. The claims, assigned to him by Abdulla Saleh Kamel, were for quantum meruit, breach of implied contract, unjust enrichment and breach of oral contract. The dispute concerned two "Standard Yacht Hire Agreements" to charter a small cruise ship for Mediterranean voyages in July 2018 and August 2019. Section 14 of each agreement chose Norwegian law and provided for arbitration in Oslo under the Norwegian Arbitration Act, before three arbitrators. The plaintiff argued that the first agreement was never executed. He argued that the second was null and void because conditions precedent were never met: timely signature, a deposit, full payment, a letter of credit and an original copy. The defendants moved to compel arbitration and to dismiss the action. SeaDream Yacht Club, Inc. also sought dismissal, or summary judgment, as an improper party.

Key holdings

1. The court found that it had jurisdiction on two grounds: diversity of the parties, and federal question jurisdiction because the motion arose under the Federal Arbitration Act (FAA). p. 5
2. All four jurisdictional prerequisites of the Convention are met. The agreements are signed writings containing an arbitration clause. Norway is a Contracting State. The yacht charter is a commercial relationship. Performance was to take place abroad (Monaco and Italy), so the relationship has a reasonable relation with foreign states, even though the plaintiff's citizenship was not established. pp. 5–7
3. The plaintiff raised no defence under Article II. He did not allege fraud, duress, mistake or waiver, and he did not attack the arbitration clause itself. His challenge to the validity of the agreements as a whole, based on unmet conditions precedent, is for the arbitrators to decide, because an arbitration clause is severable from the contract. pp. 7–9
4. The clause covers "all disputes arising out of or in connection with" the agreements. Under this broad wording and the presumption in favour of arbitration, the plaintiff's claims and his validity challenges fall within the clause. p. 9
5. Dismissal rather than a stay was proper, because all issues are arbitrable and neither party asked for a stay. p. 10
6. Whether SeaDream Yacht Club, Inc. is a proper party is for the arbitral tribunal to decide. The agreements refer to SeaDream Yacht Club Limited Corporation acting "through its parent and affiliates". The court therefore denied that defendant's motion to dismiss or for summary judgment. pp. 10–11

Procedural history

1. 2019Complaint filed in the U.S. District Court, Southern District of Florida.
2. Defendants file their Motion to Dismiss and to Compel Arbitration (ECF No. 13), and later a Motion to Stay Discovery (ECF No. 25).
3. 22 October 2020Order: the plaintiff is compelled to arbitrate under Section 14 of the agreements; the motion to stay discovery is denied as moot; the case is dismissed without prejudice and closed.

Tribunal, counsel and experts

Decided by

• Darrin P. Gayles Judge, U.S. District Court, Southern District of Florida

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Keywords

• New York Convention Article II
• motion to compel arbitration
• null and void
• conditions precedent
• severability
• separability
• yacht charter
• SeaDream
• Norwegian Arbitration Act
• Oslo seat
• Federal Arbitration Act Chapter 2
• 9 U.S.C. § 202
• dismissal versus stay
• non-signatory
• improper party
• Bautista v. Star Cruises
• Rent-A-Center

Summary generated with AI from the published documents — refer to the award for the authoritative text.