Spliethoff Transport B.V. v. Phyto-Charter Inc., No. 20-CV-3283 (S.D.N.Y. May 13, 2021) [click for opinion]
Petitioner Spliethoff Transport B.V. (“Spliethoff”) sought an order to compel Respondent Phyto-Charter Inc. (“Phyto-Charter”) to submit to arbitration in New York an admiralty dispute valued at $500,000. Spliethoff also sought an order from the court to compel Phyto-Charter to appoint an arbitrator. In response, Phyto-Charter filed a motion to dismiss for lack of subject matter jurisdiction, adding that, on the merits, Spliethoff’s petition failed because the two parties never completed an arbitration agreement.
The court first addressed whether it was empowered to hear the petition to compel arbitration. Under the Federal Arbitration Act (the “FAA”), 9 U.S.C. § 4, “[a] party aggrieved by the alleged failure … to arbitrate under a written agreement for arbitration may [file a] petition [in] any United States district court which, save for such agreement, would have jurisdiction under title 28” with respect to the underlying dispute. Here, Spliethoff had concededly pled an admiralty dispute over which the Court would have jurisdiction pursuant to 28 U.S.C. § 1333.
On the issue of whether an arbitration agreement existed, the parties’ agreement stipulated that “US/NY law to apply with ga/arbitration to be in NY, small claims procedure to apply for claims usd 100,000 or less.” Phyto-Charter first argued that such language solely indicated a choice of law and forum, not an agreement to arbitrate. But the court found no functional difference between a forum selection clause and an agreement to arbitrate. Phyto-Charter next argued that such indeterminate language lacked legal effect. The court again disagreed, explaining that, in previous cases, it had found even less specific language to constitute an agreement to arbitrate. Thus, given the binding nature of the language, and the amount in dispute, the court held that Phyto-Charter had agreed to arbitrate the dispute in New York, and denied Phyto-Charter’s motion to dismiss Spliethoff’s petition.
Finally, the court addressed the issue of whether it had the authority to appoint an arbitrator on behalf of Phyto-Charter. FAA Section 5 authorizes the court to appoint an arbitrator where there has been “a lapse in the naming of an arbitrator.” The court recognized that Spliethoff had already appointed an arbitrator, with the expectation that Phyto-Charter would do the same, upon which both arbitrators would select a third arbitrator. In light of Phyto-Charter’s failure to appoint an arbitrator, the court ordered that Phyto-Charter either appoint its own arbitrator within 14 days or agree to Spliethoff’s appointed arbitrator as the sole arbitrator for the dispute. Should Phyto-Charter fail to do either, the court would appoint a sole arbitrator from the Society of Maritime Arbitrators.