Spliethoff Transport B.V. v. Phyto-Charter Inc.
- James Oetken
- 1:20-cv-03283
- U.S. District Court · Southern District of New York
- 6
In Spliethoff v. Phyto-Charter, Judge Oetken compelled New York arbitration, denied dismissal, deferred appointing an arbitrator, and denied fees.
Spliethoff Transport B.V. may compel Phyto-Charter Inc. to participate in New York arbitration. Phyto-Charter was given 14 days to appoint a second arbitrator or accept Thomas Fox as the sole arbitrator; otherwise, the court stated it would appoint one.
What happened
Spliethoff Transport B.V. asked the court to require Phyto-Charter Inc. to arbitrate a $500,000 dispute in New York and to appoint an arbitrator for Phyto-Charter. Phyto-Charter asked the court to dismiss the case for lack of jurisdiction and argued that the parties had no arbitration agreement.
The dispute centered on contract language stating that New York law would apply, arbitration would be in New York, and a small-claims procedure would apply to claims of $100,000 or less. Phyto-Charter argued that this was only a choice-of-law and forum-selection provision, not an agreement to arbitrate.
Judge J. Paul Oetken denied Phyto-Charter’s motion to dismiss and granted Spliethoff’s petition to the extent that he required the parties to arbitrate in New York. He deferred appointing an arbitrator, gave Phyto-Charter 14 days to appoint one or accept Spliethoff’s arbitrator, and denied Spliethoff’s request for fees and costs.
The detailed version
- Spliethoff Transport B.V. v. Phyto-Charter Inc. · No. 1:20-cv-03283
- James Oetken
- May 13, 2021
Background
Spliethoff Transport B.V. petitioned under the Federal Arbitration Act for an order requiring Phyto-Charter Inc. to participate in arbitration in New York and for appointment of an arbitrator on Phyto-Charter’s behalf. The underlying dispute was valued at $500,000. Phyto-Charter had refused to arbitrate.
The contract included this provision: “US/NY law to apply with ga/arbitration to be in NY, small claims procedure to apply for claims usd 100,000 or less.”
Arguments and Jurisdiction
Phyto-Charter moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), arguing that the court lacked subject-matter jurisdiction because Spliethoff could not show that it had been aggrieved by a failure to follow a written arbitration agreement. Phyto-Charter conceded that the underlying dispute was an admiralty matter over which the court could have jurisdiction.
The court rejected Phyto-Charter’s jurisdictional argument. It explained that an arbitration agreement does not create federal subject-matter jurisdiction and that the absence of an arbitration agreement does not eliminate the court’s jurisdiction over an underlying dispute that otherwise falls within federal jurisdiction.
Existence of an Arbitration Agreement
Phyto-Charter also argued that Spliethoff had failed to state a claim because the contract language did not create an arbitration agreement. The court treated that argument as opposition to the petition because it addressed the merits of whether the parties had agreed to arbitrate.
The court rejected Phyto-Charter’s interpretation of the provision as merely a choice-of-law and forum-selection clause. Relying on similar language addressed in earlier decisions, the court concluded that the reference to arbitration in New York, together with the specified small-claims procedure for claims of $100,000 or less, set out procedures for resolving both large and small disputes. The court held that Phyto-Charter and Spliethoff had agreed to arbitrate the $500,000 dispute in New York.
Rulings
The court denied Phyto-Charter’s motion to dismiss. It granted Spliethoff’s petition to the extent that it compelled Phyto-Charter’s participation in arbitration.
The court deferred decision on Spliethoff’s request that it appoint an arbitrator for Phyto-Charter. Spliethoff had already selected Thomas Fox, a member of the Society of Maritime Arbitrators, expecting Phyto-Charter to select a second arbitrator and for the two arbitrators to select a third neutral arbitrator. The court gave Phyto-Charter until May 27, 2021, to either appoint a second arbitrator or agree to Spliethoff’s selection of Thomas Fox, in which case the arbitration would proceed with one arbitrator. If Phyto-Charter did neither, the court stated that it would appoint one arbitrator from the Society of Maritime Arbitrators.
The court also denied Spliethoff’s request for the costs and attorneys’ fees associated with the petition because Spliethoff had not cited authority supporting such an award in this case. The court directed the Clerk of Court to close the motion at Docket Number 13.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.