Case of the Day: Maroc Fruit Board v. M/V Vinson
Posted on August 1, 2012
The case of the day, Maroc Fruit Board, S.A. v. M/V Vinson (D. Mass. 2012), is outside the Letters Blogatory scope of coverage. I’m covering it because it was decided here in Boston. According to the complaint, Maroc Fruit Board, a Moroccan firm doing business in Casablanca, delivered thousands of boxes of fruit to Agder Ocean Shipping AS, agent for Agder Ocean Reefer III, owner of the M/V Vinson, at the port of Agidar, Morocco, for shipment to New Bedford, familiar to readers of Moby Dick as one of the world’s great seaports. The goods were to be delivered to the order of the Fruit Board’s consignee, under the terms of bills of lading issued by Navimar, the voyage charter, acting on behalf of the master of the Vinson. The allegation was that the fruit was moldy when delivered.
Each bill of lading stated that it was “to be used with charter-parties” and “Freight payable as per Charty-Party dated Lysaker 19th January 2010.” The incorporated “conditions of carriage” also incorporated “all terms and conditions, liberties and exceptions of the Charter Party … including the Law and Arbitration Clause.” The arbitration clause in the charter party, which was between Navimar and Agder, provided for arbitration of “any dispute arising under this Charter Party” in London, under English law.
The Fruit Board and its insurer sued for $2 million in damages, asserting claims for breach of contract and tort. The defendants sought to dismiss or stay the case, citing the arbitration clause. The question was whether the arbitration agreement was, in the terms of Article II, § 2 of the New York Convention, “an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.” If so, then it would be enforceable. If not, not.
How should the Convention be read? There are two live possibilities. First, maybe the Convention requires either (1) “an arbitral clause in a contract” or (2) “an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.” Second, maybe the Convention requires both (1) “an arbitral clause in a contract or an arbitration agreement” and (2) that the contract or agreement “be signed by the parties or contained in an exchange of letters or telegrams.” In other words, it is unclear whether an arbitration clause that appears in a contract needs to be signed. Talk about the need for more precise comma use!
Judge Tauro followed Judge Parker’s excellent decision in Kahn Lucas Lancaster Inc. v. Lark International Ltd., 186 F.3d 210 (2d Cir. 1999). One key to the decision is the application of the rules of construction to ambiguous statutes or treaties. As Judge Parker put it: “When a modifier is set off from a series of antecedents by a comma, the modifier should be read to apply to each of those antecedents.” This rule of construction leads to the conclusion that both contracts and arbitration agreements must be “signed by the parties or contained in an exchange of letters or telegrams.” Notably, Judge Parker went on to examine this conclusion by referring to the text of the Convention in two of the other official versions, the French and the Spanish. In both cases, the word for “signed”—“signes” in French and “firmados” in Spanish—is plural in form. If these words were meant to refer only to agreements to arbitrate and not to contracts, they would have been singular in form—“signe” or “firmado.” The legislative history supported this interpretation as well.
The Fruit Board did not sign the bill of lading, and according to Judge Tauro, the bill of lading did “not amount to an exchange of letters or telegrams.” Therefore, the Fruit Board was not bound to arbitrate.