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Veerji Exports v. Carlos St Mary, Inc., No. 22 Civ. 3661 (LGS) (S.D.N.Y. Dec. 5, 2022)[1]
Factual Background

Plaintiff Veerji Exports (“Veerji”) contracted with BVC Brink’s Diamond and Jewellery Services LLP (“BVC”), the designated agent of Defendant Brink’s Global Services, Inc. (“Brink’s”), to ship diamonds from Surat, India to Defendants Carlos St. Mary and Carlos St. Mary, Inc. (collectively, “St. Mary”) in Houston, Texas. Pursuant to the contract, BVC issued a house airway bill (“HAWB”), which contained an arbitration clause providing that “any dispute arising out of or in connection with” the Brink’s Global Services Valuable Transport Contract (“VTC”) is subject to arbitration, with the exception of “claim[s] relating to a Shipment originating within the United States.” The arbitration clause further provided that “any dispute arising out of or in connection with this Contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce [(‘ICC’)].”
On June 15, 2021, Veerji sent a letter to BVC requesting that, once the diamonds arrived in Houston, the “shipment will remain in the possession and custody of Brink’s and will be released to the consignee [St. Mary] only upon [Veerji’s] instruction to [Brink’s] to release the shipment.” Veerji did not want the diamonds released to St. Mary until Veerji received payment. St. Mary asked for an opportunity to inspect the diamonds, but there was no place to do so at the Brink’s facility in Houston. Veerji accordingly consented to St. Mary’s request to view the diamonds at the Brink’s facility in New York, provided that St. Mary cover all applicable costs.
After the diamonds arrived in Houston from India, BVC issued a second HAWB, incorporating the terms and conditions of the VTC, for shipment of the diamonds from Houston to New York for inspection by St. Mary. St. Mary ultimately took the diamonds from BVC’s New York office without paying for them. In response, Veerji brought claims against Brink’s for gross negligence and negligent mishandling of a bailment and against St. Mary for breach of contract and fraud. Default judgment was entered against St. Mary, and Brink’s subsequently moved to dismiss and compel arbitration.

The District Court Decision
In considering Brink’s motion, the district court first found that the question of arbitrability was within the district court’s jurisdiction. The court reasoned that, while the arbitration clause provided that some disputes were subject to arbitration (i.e., those relating to the VTC), it also provided that other disputes were to be decided by the courts (i.e., those relating to a Shipment originating within the United States). Accordingly, the arbitration clause’s incorporation of the ICC Rules—which provide that questions regarding the “scope of the arbitration agreement” would be decided by the arbitral tribunal—did not alone suffice to evidence an agreement between the parties that questions of arbitrability must be decided by the arbitrator.
Finding that the issue of arbitrability was for the court, the court next considered whether the VTC required arbitration of the parties’ dispute. The court held that it did. In coming to its decision, the court explained that the dispute must be arbitrated if the “Shipment” originated outside the U.S. Parsing the language of the VTC, the court explained that the Shipment could not have originated in Houston because the Shipment that originated in India never reached its “completion point” until the Consignee, St. Mary, took possession of the diamonds in New York. The court credited Brink’s argument that it simply redirected the Shipment, at St. Mary’s expense but consistent with Veerji’s request and consent. The Shipment thus originated outside of the United States.
Accordingly, Veerji’s case did not fall within the arbitration clause’s exception and its claims were subject to arbitration.

This Article was originally published in the North America Newsletter.

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David Zaslowsky has been practicing international litigation and international arbitration for almost 40 years. He has been Chambers-ranked in international arbitration and also sits as an arbitrator. He specializes in technology cases and is the editor of the Firm's Blockchain Blog and its International Litigation & Arbitration Newsletter.


Desirée Hunter-Reay is an Associate in the North America Litigation & Government Enforcement Practice Group in Baker McKenzie's San Francisco office. She is a member of the Firm's North America Trade Secrets Practice Group. Desirée focuses on complex commercial litigation for large corporate clients. She handles many disputes, specifically involving breach of contract. Desirée can be reached at and +1 415 591 3225.