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In re Arbitration Between Karavos Compania Naviera S.A.

decided: November 15, 1978.

IN THE MATTER OF THE ARBITRATION BETWEEN KARAVOS COMPANIA NAVIERA S.A., DISPONENT OWNER OF THE M/V SWEDE TONIA, PETITIONER-APPELLEE,
v.
ATLANTICA EXPORT CORPORATION, CHARTERERS OF THE M/V SWEDE TONIA, RESPONDENT-APPELLANT.



Appeal from an order of the District Court for the Southern District of New York, Robert J. Ward, Judge, directing respondent-appellant to arbitrate its alleged breach of a charter party with petitioner-appellee.

Before Waterman, Friendly and Mulligan, Circuit Judges.

Author: Friendly

This is an appeal from an order of the District Court for the Southern District of New York under §§ 4 and 5 of the Federal Arbitration Act, 9 U.S.C. §§ 4, 5 (1976), directing Atlantica Export Corporation to submit to arbitration of a claim by Karavos Compania Naviera, S.A. (Karavos), for breach of an alleged agreement to charter its vessel M/V Swede Tonia. The agreement, never signed but alleged to have resulted from telephone and telex exchanges by various ship brokers described below, would have incorporated the New York Produce Exchange Form Time Charter which provides for arbitration of disputes between "Owners and Charterers." Atlantica's defense was that it had not authorized anyone to charter the Swede Tonia on its behalf and hence was not a "party" to any written agreement to arbitrate within § 4. It is agreed that this issue was one for determination by the court.

The Dramatis personae, in addition to the petitioner Karavos, are as follows:

1) Atlantica Export Corporation (Atlantica), a "branch" of a Philippine corporation called Atlantica Corporation, is a California corporation headquartered in San Francisco. It is a trading company owned by John Lim, its president, and his family.

2) Atlantica Export Suppliers Corporation (Suppliers), with an office in New York City, is a sales affiliate of Atlantica whose prime function is to take care of the Middle East market. Half its stock is owned by Jose Grajo, Jr., its president, Jessie Coronel, its executive vice-president, and Luis Uranza, Jr., a vice-president and director; the other half is owned by John Lim, Domingo Yao and Carlos Tejuco, the last being vice-president and secretary-treasurer of Atlantica.

3) International Resources Exchange, Inc. (Resources), a New York corporation, also with an office in New York City. It is a trading company represented in the transaction here at issue by Raymond Kenard and Alfred Repetti.

4) Ottar Grundvig, president of Grundvig Chartering, Inc., a New York ship broker, alleged by petitioner to have been acting on behalf of Atlantica.

5) Edward Licho, an employee of Federal Motorship Corporation, also a New York ship broker, who fixed the charter with the agent of the shipowner upon instruction from Grundvig.*fn1

6) John Vatis, an employee of Trans-Ocean Steamship Agency, Inc., a New York ship broker acting on behalf of the shipowner.

The line of authority relied on by Karavos runs:

The dispute is over the existence of the link between Atlantica and Resources (or Repetti) necessary to bind Atlantica.

The case was presented in a manner that must have been most confusing to the district judge. One would have supposed that, when the trial began on April 21, 1977, Karavos' first witness would have been Repetti, if his testimony would have been favorable, or, if not, Grundvig, who had been in direct touch with him. Instead it was Licho who, as the diagram indicates and his testimony was to show, knew little about Repetti's status save what Grundvig had told him. When Licho's testimony was concluded, Atlantica's counsel, a San Francisco lawyer, asked whether ...


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