United States District Court, D. Connecticut
NCL BAHAMAS LTD. d/b/a NORWEGIAN CRUISE LINE, Plaintiff,
O.W. BUNKER USA INC. and KELLY BEAUDIN STAPLETON, LIQUIDATING TRUSTEE OF THE OWB USA LIQUIDATING TRUST, Defendants.
CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE.
hearing will take place on September 7, 2017 at 2:00 p.m. The
principal issue on the agenda is whether Plaintiff Norwegian
Cruise Line ("NCL") is entitled to a preliminary
injunction "prohibiting" Defendants O.W. Bunker USA
Inc. ("OWB USA") and /or Kelly Beaudin Stapleton,
as Liquidating Trustee of OWB USA, "from pursuing
payment from NCL in arbitration or any other forum pending
resolution of this Declaratory Judgment action."
Complaint for Declaratory Judgment and Injunctive Relief
[Doc. 1] at ¶ 1.
case arises out of a delivery of bunker fuel to NCL's
cruise liner M/V NORWEGIAN SPIRIT ("the Vessel") at
the port of Piraeus, Greece on October 18, 2014. The physical
supplier of the bunkers was a Greek company called EKO. NCL
had contracted with OWB USA for this delivery to the Vessel.
OWB USA contracted for the delivery with a related entity,
O.W. Bunker Malta Ltd. ("OWB Malta"), which in turn
contracted with EKO. A flurry of invoices for payment for the
bunkers resulted. EKO invoiced OWB Malta. OWB Malta invoiced
OWB USA. OWB USA invoiced NCL.
invoices for this delivery had been paid when, on November
13, 2014, OWB USA filed a voluntary bankruptcy petition in
this District. This was one of a number of global O.W. Bunker
companies' failures. Judge Caproni of the Southern
District of New York has observed: "It is an
understatement to say that O.W.'s collapse caused a
significant disruption in the world of maritime
bunkers." Clearlake Shipping PTE Ltd. v. O.W. Bunker
(Switzerland) SA, 239 F.Supp.3d 674 (S.D.N.Y. 2017).
Judge Forrest, another SDNY Judge, noted in Ing Bank v.
M/V TEMARA, 203 F.Supp.3d 355, 358 (S.D.N.Y. 2016), that
"this is one of many cases in this district and around
the country and planet that has resulted from the November
2014 collapse of O.W. Bunker & Trading A/S [a Danish
company], formerly the world's largest bunker supplier,
and [many] other affiliated entities." Judge Forrest
went on to say: "The basic pattern, in both this case
and many others, is that the relevant OW Bunker entities
arranged to have bunkers provided to a ship by a physical
supplier, the bunkers were delivered, and then the OW Bunker
companies collapsed before anyone was paid."
case at bar falls within that basic pattern. EKO, the
physical supplier whose invoice for bunkering the NORWEGIAN
SPIRIT at Piraeus was unpaid, threatened to arrest the Vessel
as she lay at a French port. To prevent the disruption of the
cruise then in progress, NCL paid EKO for the bunkers EKO had
physically supplied to the Vessel. In those circumstances,
NCL was disinclined to pay OWB USA's invoice for the same
bunkers, which OWB USA presented to NCL, purportedly pursuant
to the head contract between NCL and OWB USA. The Liquidating
Trustee of OWB USA, a Defendant herein, responded to
NCL's refusal to pay that invoice by instructing
solicitors in London to commence arbitration for the purpose
of collecting the amount of OWB USA's invoice to NCL.
and NCL have appointed arbitrators in London. The arbitration
panel is completed when the two arbitrators appointed by the
parties select a third. NCL has appointed an arbitrator while
reserving its right to contend that it is not bound to
arbitrate OWB USA's claim on this invoice. The parties
have been called upon to submit their statements of claim, in
accordance with the London Maritime Arbitrators'
Association rules of practice. This is the arbitration that
NCL seeks by this action in this Court to enjoin.
action, NCL presses the contention that it is not bound to
arbitrate the underlying claim of OWB USA. This gives rise to
a threshold question which counsel should be prepared to
discuss at the preliminary injunction hearing. Specifically,
OWB USA contends that its demand for arbitration in London is
authorized by a London arbitration clause in the contract
between NCL and OWB USA, which formed a part of the
back-to-back chain of contracts leading eventually to Piraeus
and EKO's physical supplying of bunkers to the Vessel in
contends that certain provisions in the chain of contracts
have the effect of superseding the arbitration agreement in
its head contract with OWB USA, with the result that there is
no contract binding NCL to arbitrate OWB USA's claim
against it, in London or anywhere else. That proposition, if
established by NCL, would militate significantly in favor of
NCL's motion to enjoin the London arbitration, it being
well settled that "arbitration is a matter of contract
and a party cannot be required to submit to arbitration any
dispute which he has not agreed so to submit." AT
& T Techs., Inc. v. Commc'ns Workers of Am., 475
U.S. 643, 648 (1986) (citation and internal quotation marks
of this question - whether NCL is contractually bound to
arbitrate OWB USA's bunkers payment claim in London - may
be decisive of all issues posed by the declaratory judgment
action at bar. Under American law, it is for the courts,
and not arbitrators, to determine if the parties have agreed
to arbitrate a particular dispute. "Unless the parties
clearly and unmistakably provide otherwise, the question of
whether the parties agreed to arbitrate is to be decided by
the court, not the arbitrator. " AT & T
Techs., 475 U.S. at 649. "It is well settled in
both commercial and labor cases that whether parties have
agreed to submit a particular dispute to arbitration is
typically an issue for judicial determination."
Granite Rock Co. v. Int'l Bhd. of Teamsters, 561
U.S. 287, 296 (2010). That question lies at the core of
NCL's request that this Court enjoin the pending London
arbitration. NCL bases that request, inter alia,
upon the proposition that "there is no enforceable
arbitration provision to support the Liquidating
Trustee's actions and NCL did not agree to arbitrate this
dispute." Emergency Motion to Stay Arbitration [Doc. 2]
at 2. Counsel will be asked for their assistance on that
issue at the hearing.
in passing that the tidal waves emanating from the O.W.
Bunkers Group's collapse are washing up in London
arbitrations and the English courts. In May 2016, the English
Supreme Court gave its judgment in PST Energy 7 Shipping
LLC v. O.W. Bunker Malta Ltd.,  A.C. 1034. This
was another case falling within the pattern Judge Forrest
described in Temara. A vessel with the evocative
name of RES COGITANS received a delivery of bunkers at the
Russian port of Tuapse in the Black Sea on November 4, 2014.
The physical delivery was arranged by a company called RMUK,
whose affiliate had facilities in Tuapse and made the actual
delivery of the bunkers to the vessel at that port, thereby
playing the role that EKO, the supplier to the NORWEGIAN
SPIRIT at Piraeus, played in this case. To obtain these
bunkers, the Owners of the RES COGITANS had entered into a
contract with entities in the O.W. Bunker Group that mirrored
the chain of back-to-back contracts involved in the case at
bar. RMUK, the bunker supplier, sent its invoice to the O.W.
company with whom it had contracted. That invoice was not
paid because of the O.W. Bunker Group's financial
collapse. RMUK sent a "Demand for Payment" to the
vessel Owners, who disregarded it. "The Supreme Court
was given no indication that RMUK has since then taken any
formal steps to pursue this claim against the Owners." I
have quoted ¶ 9 of Lord Mance's Judgment for the
English Supreme Court. In that regard, the bunker supplier to the
RES COGITANS differs from EKO, the supplier to the NORWEGIAN
SPIRIT. EKO threatened the arrest of the NORWEGIAN SPIRIT and
her Owners (NCL) paid EKO's invoice.
to the RES COGITANS case, what the vessel Owners did next is
described by Lord Mance in ¶ 10 of his Judgment:
"By the end of November 2014, the Owners had commenced
arbitration proceedings claiming a declaration that they had
no liability to pay OWBM and/or ING for the
bunkers." The vessel Owners' likely motivation
is captured by Lord Mance in ¶ 2 of his Judgment:
The essential problem arises from the insolvency of the OW
Bunker Group and the concerns of vessel owners that they may
be exposed to paying twice over, once to their immediate
bunker supply group now insolvent, and again to the ultimate
source of the bunkers who may claim rights under a
reservation of title or maritime lien. The concerns stem from
what are understood to be fairly typical conditions on which
bunkers are supplied worldwide.
those circumstances, Lord Mance added disarmingly: "We
are told that many similar cases worldwide await our decision
with interest." Judgment ¶ 1.
vessel Owners in the RES COGITANS case argued that on a
proper construction of the bunkers supply contracts in
question and the O.W. Bunker Group's intervening
insolvency, the Owners were not required to pay the O.W.
invoice for the bunkers in question. The arbitrators
conducted a hearing and wrote an award holding that
"OWBM/ING would be entitled to payment."
Id. ¶ 10. The Owners appealed the award to the
courts, as English law allows. The High Court dismissed the
Owners' appeal, as did the Court of Appeal. The Supreme
Court granted the Owners leave to appeal, and affirmed the
judgments below. Lord Mance's Judgment concluded at
¶ 59 that "the contract between OWBM and the Owners
was not one for sale, but sui generis"; that "it
was not subject to any such implied term or terms, regarding