Spielthoff Transport B.V. v. Phyto-Charter Inc.

The court first denied the motion to dismiss for lack of subject matter jurisdiction because the movant had conceded that the dispute was an admiralty dispute that the court would have jurisdiction pursuant to 28 U.S.C. Section 1333, and 9 U.S.C. Section 4 of the Federal Arbitration Act (FAA) specifically states that a party seeking to enforce an arbitration agreement may petition a district court that would have jurisdiction under title 28 to enforce arbitration.  While the respondent contended the petitioner had not shown it was aggrieved by failure to adhere to a written arbitration agreement because it argued there was no arbitration agreement, the court noted that Section 4 of the FAA did not suggest that absence of an arbitration agreement vitiated the court’s ability to hear a case that was otherwise within its jurisdiction.  Rather, the court explained, Section 4 of the FAA empowers the courts to hear petitions to compel arbitration notwithstanding the existence of an arbitration agreement.

The court likewise dismissed the motion to dismiss for failure to state a claim because it construed the effect of the contract language as forming an agreement to arbitrate.  While the language was sparse – “US/NY law to apply with ga/arbitration to be in NY, small claims procedure to apply for claims usd 100,000 or less” – the court found that the Second Circuit had enforced similarly minimal language in Ibeto Petrochemical Industries Ltd. v. M/T Beffen, 475 F.3d 56 (2d Cir. 2007).  As such the court found the agreement to arbitrate was enforceable as written, and ultimately granted the petition for enforcement.

Notably, the court went so far as to order the respondent to designate its arbitrator or agree to the petitioner’s arbitrator within 14 days, or the court would appoint an arbitrator pursuant to Section 5 of the FAA.

Read the full decision here.