Internaves de Mexico s.a. de C.V. v. Andromeda Steamship Corporation, American Navigation, Inc., Pegasus Lines Ltd. S.A., Panama, and James Karathanos

At a glance

Parties

Internaves de Mexico s.a. de C.V. (Mexico) v. Andromeda Steamship Corporation, American Navigation, Inc., Pegasus Lines, Ltd. S.A., Panama, and James Karathanos

Case no.

U.S. Court of Appeals, Eleventh Circuit, No. 17-12164 (D.C. Docket No. 9:16-cv-81719-DMM)

Court

U.S. District Court, Southern District of Florida (Judge Donald M. Middlebrooks); U.S. Court of Appeals, Eleventh Circuit (Circuit Judges Marcus, Fay and Hull; opinion by Marcus)

Forum and rules

Motion to compel arbitration under the New York Convention and Chapter 2 of the Federal Arbitration Act (9 U.S.C. §§ 201 et seq.)

Treaty

New York Convention 1958; arbitration clause in a charter party (Box 25 and Clause 19)

Sector

Maritime shipping; charter party

Outcome

The District Court compelled arbitration but found the place of arbitration ambiguous and ordered AAA arbitration in Miami if the parties could not agree. The Eleventh Circuit reversed and remanded with instructions to compel arbitration in London under English law.

The dispute

In June 2016 Andromeda Steamship Corporation and Internaves de Mexico, a Mexican company, signed a charter party. Under it Andromeda was to supply a vessel to carry an electrical transformer from Brazil to Mexico. Internaves said it prepaid but Andromeda did not tender the vessel on the agreed date. Andromeda said Internaves never delivered the transformer. In October 2016 Internaves sued Andromeda and the other defendants in the Southern District of Florida for breach of contract, conversion and fraud. The defendants moved to compel arbitration in London under English law. Internaves argued that it was fraudulently induced to agree to the arbitration clause, and that the contract was unclear on where arbitration was to take place: Box 25 of Part I read "London arbitration, English Law", while Part II struck out every alternative except Clause 19(b), which provided for arbitration in New York.

Key holdings

1. The four jurisdictional prerequisites for compelling arbitration under the Convention were met. Internaves's public policy and unconscionability defenses are not recognised under the Convention. District Court Order, pp. 3–5 and n. 4
2. Under the severability doctrine, only fraud directed at the arbitration clause itself can keep a dispute out of arbitration. Internaves's allegations went to the inducement of the contract as a whole, so the fraud claim is for the arbitrator to decide. District Court Order, pp. 5–8
3. The District Court found the charter party ambiguous on the place of arbitration. Relying on Bauhinia, it held that it could not compel arbitration in New York or London. The parties were to choose a forum by agreement, failing which arbitration would take place before the AAA in Miami. District Court Order, pp. 8–11
4. Reversed on the forum. The Conflict Clause makes Part I prevail over Part II. Box 25 is the authoritative forum-selection clause. The specific handwritten words "London arbitration, English Law" prevail over boilerplate left unstruck. The parties therefore "provided for" London within the meaning of 9 U.S.C. § 206. Eleventh Circuit, pp. 11–13
5. Striking Clause 19(c) did not undermine the primacy of Part I, because 19(c) only offered a write-in forum option. Bauhinia does not apply: that contract named no forum, while this one contained a mechanism for resolving the conflict. Eleventh Circuit, pp. 14–16
6. The argument that Box 22 (general average adjusted in New York) conflicts with Box 25 was raised for the first time on appeal, and it fails in any event: the two boxes can be read together. Only "London arbitration, English Law" binds the parties; the supplemental conditions of Clause 19(a) do not apply, and any gaps are to be filled by English arbitration rules. Eleventh Circuit, pp. 16–20

Procedural history

1. June 2016Andromeda and Internaves sign the charter party.
2. 12 October 2016Internaves files its complaint in the Southern District of Florida.
3. 13 January 2017The defendants move to compel arbitration or, in the alternative, to dismiss.
4. 24 February 2017The District Court stays proceedings until it decides the motion.
5. 28 March 2017District Court Order: arbitration is compelled but not in London; the parties are to agree on a forum, failing which arbitration will be held before the AAA in Miami.
6. 1 August 2018Eleventh Circuit reverses and remands with instructions to compel arbitration in London under English law.

Tribunal, counsel and experts

Decided by

• Donald M. Middlebrooks Judge, U.S. District Court, Southern District of Florida

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Keywords

• motion to compel arbitration
• New York Convention
• 9 U.S.C. § 206
• 9 U.S.C. § 4
• charter party
• place of arbitration
• forum selection
• conflicting arbitration clauses
• London arbitration
• English law
• fraudulent inducement
• severability doctrine
• Bauhinia
• maritime contract
• general average
• York-Antwerp Rules
• contract interpretation

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