STATES COURT OF APPEALS
June 24, 1999 Decided: February 15, 2001)
ZHEN HUA SHIPPING CO., LTD.,
Before: MINER, JACOBS,
and PARKER, Circuit Judges.
Appeal from a judgment
of the United States District Court for the Southern District
of New York (William C. Conner, Judge), entered October
7, 1998, upon an August 5, 1998 opinion and order, as amended
September 25, 1998, granting the motion of Petitioner-Appellee
to compel arbitration in London and denying the motion of Respondent-Appellant
to dismiss on the grounds of lack of subject-matter jurisdiction,
lack of personal jurisdiction, and improper venue, and upon a
September 29, 1998 opinion and order, clarifying the scope of
III, Piper & Marbury, L.L.P., New York, NY (Leo G. Kailis,
Of Counsel) for Petitioner-Appellee.
Lizabeth L. Burrell,
Burlingham Underwood LLP, New York, NY (Michael Marks Cohen,
Of Counsel) for Respondent-Appellant.
Guangzhou Zhen Hua Shipping Co., Ltd. ("Zhen Hua")
appeals from a judgment of the United States District Court for
the Southern District of New York (William C. Conner, Judge),
entered October 7, 1998, upon an August 5, 1998 opinion and order,
as amended September 25, 1998, granting the motion of Petitioner-Appellee
to compel arbitration in London and denying the motion of Respondent-Appellant
to dismiss on the grounds of lack of subject-matter jurisdiction,
lack of personal jurisdiction, and improper venue, see
U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 16
F. Supp. 2d 326 (S.D.N.Y. 1998), ("Titan I"),
and upon a September 29, 1998 opinion and order, clarifying the
scope of arbitration, see U.S. Titan, Inc. v. Guangzhou
Zen Hua Shipping Co., 182 F.R.D. 97 (S.D.N.Y. 1998), ("Titan
On appeal, Zhen
Hua contends principally that the district court exceeded the
scope of its jurisdiction under the Federal Arbitration Act,
9 U.S.C. §§ 1-16, (the "FAA") by compelling
arbitration of the parties' dispute pursuant to a charter party 1 allegedly negotiated by the
parties in September 1995. More specifically, Zhen Hua argues
that the court should not have determined whether the parties
had formed a charter party because the parties had allegedly
negotiated an "ad hoc" agreement to arbitrate that
issue and that the court erred in finding that no such "ad
hoc" agreement existed. In addition, Zhen Hua asserts that
the district court lacked subject-matter jurisdiction under the
Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1603-1611,
that the district court lacked personal jurisdiction over Zhen
Hua, and that venue in the Southern District of New York was
improper. For the reasons set forth below, we affirm.
U.S. Titan, Inc. ("Titan") is a corporation organized
under the laws of Texas, with its principal place of business
in Pelham, New York. Zhen Hua is a state-owned corporation organized
under the laws of the People's Republic of China, engaged primarily
in the shipping industry, with its principal place of business
in Guangzhou (also known as Canton), China.
A. The Negotiations
In August 1995,
Titan and Zhen Hua began negotiating a time charter 2 of the M/T BIN HE (the "BIN
HE"), a ship owned by Zhen Hua. The parties conducted negotiations
through two shipbrokers in Connecticut, Seabrokers (representing
Titan) and Seagos (representing Zhen Hua). The two Connecticut
brokers served as conduits for the transmission of many of the
communications from one party to the other. Most of the parties'
communications during the negotiations are memorialized in writings
transmitted via facsimile or telex between and among the brokers
and the parties. These communications establish the following
chronology of the negotiations.
On September 22,
1995, Zhen Hua offered to charter the BIN HE to Titan for 12
months at $15,250 per day, with an option for an additional 12
months at $15,750 per day. The parties proceeded to negotiate
different time periods and rates, as well as several other terms,
the details of which are not relevant to the issues before us.
On September 26, 1995, Zhen Hua sent Titan a "firm counter
Period - 6 mos.
plus/minus 30 days at CHOPT
CHOPT next 12 mos.
Rates - $15,250
Upon receipt of
this telex, Titan informed its broker, Seabrokers, that "Charterers
are in agreement and accept Owner[']s last offer." Seabrokers
then sent via fax to Seagos and Titan a fixture "recap,"
confirming the "Owners and Charterers' agreement."
The agreement was based on the "Shelltime 4 Time Charter,"
a standard time charter, see Michael Wilford et. al.,
Time Charters 28-36 (4th ed. 1995), containing an arbitration
clause that provides for arbitration in London at the election
of either party. 3
The recap from Seabrokers to Seagos and Titan contained, in part,
the following language:
WE ARE PLEASED TO
RECAP OWNER[']S AND CHARTERERS' AGREEMENT AS FOLLOWS, FOR THE
MT BIN HE . . .
. . .
PERIOD- 6 MOS. PLUS/MINUS
30 DAYS AT CHOPT
CHOPT NEXT 12 MOS.
UNDERSTOOD +/- 30
DAYS ONLY TO BE
USED ONCE, DURING
THE FINAL PERIOD.
RATES- $15,250 FIRST
$15,750 FOR OPTIONAL
. . .
CP DET'LS, SATISFACTORY
INSPECTION OF THE VSL AT DD, RELEASE BY OWNERS FROM CAMARO TC,
THENCE US TITAN BOD APPROVAL WITHIN 3 DAYS FOLLOWING RECEIPT
OF THEIR DENHOLM INSPECTION REPORT.4
After Zhen Hua dry-docked
the BIN HE in Hong Kong, Denholm Ship Management (Overseas) Ltd.
("Denholm") conducted the inspection contemplated by
the parties. Following a preliminary inspection, which revealed
several problems with the ship, Zhen Hua apparently began considering
a sale of the BIN HE.
On October 19, 1995,
Titan received from Denholm an initial summary report on the
drydock inspection. On October 23, Titan informed Seabrokers
that it had concerns about the seaworthiness of the BIN HE, but
would await Denholm's final report. Titan indicated also that
it was interested in a "purchase option" and "would
like to know what steps the Owner intends to take to bring the
vessel up to an acceptable trading standard." Seabrokers
relayed this message to Seagos, which, acting through Henry Chen,
responded later that day:
NOW OWNERS HAVE
DECIDED TO SELL THE VESSEL ON CASH BASIS. THEY ARE ASKING $27
MILLION ON THE MARKET. BUT I RECKON WILL GO AT $26 MILLIONS [sic].
PROSPECTIVE BUYERS WILL BE INSPECTING THIS WEEK WHILE THE VSL
IS STILL IN THE YARD.
OWNERS THANK TITAN'S
INTEREST AND ADVICE. THEY ASK US TO CONVEY THEIR WILLINGNESS
TO ENTERTAIN FUTURE BUSINESS PROPOSALS AND LOOK FORWARD TO POSSIBLE
On October 24, Titan
faxed a message to Seabrokers, noting that the final inspection
had not yet arrived and remarking:
It is encouraging
that [Zhen Hua is] now in a position to sell the vessel if we
do not exercise our option for the time charter. We assume therefore
that the vessel has been successfully withdrawn from Camaro.
We await Owners [sic] confirmation of this withdrawl [sic] per
our 9/26 Agreement, so we can begin marketing the vessel for
voyage and/or consecutive voyage charter.
Titan also asked
Seabrokers to determine whether Zhen Hua would "provide
a purchase option throughout the period of [its] charter."
On October 25, 1995,
Seagos, through Chen, faxed Seabrokers, stating in relevant part:
WE KNOW THAT AFTER
THE VSL FAILED THE SUB WITH U.S. TITAN ON MONDAY, [ZHEN HUA'S]
PREFERENCE IS TO DO A STRAIGHT SALE . . ., AND NOT TO GIVE PURCHASE
OPTIONS. IF YOU THINK [TITAN] IS STILL INTERESTED IN THE TIME
CHARTER OF THE VSL, PLEASE ASCERTAIN IF U.S. TITAN CAN TAKE [DELIVERY]
OF THE VSL UPON OWNERS LIFT [sic] THEIR SUBJECT.
On the same day,
Titan apparently became concerned that a misunderstanding might
have developed between the parties. Consequently, Titan wrote
again to Seabrokers, 5
which, in relevant part, states:
FIRST, LET ME BE
PERFECTLY CLEAR WITH HENRY/OWNERS, MY FAX OF OCTOBER 23 WAS NOT
A REJECTION OF THE VESSEL. IT IS DIFFICULT TO SEE HOW THIS
COULD BE SO INTERPRETED. IN FACT IT WAS CLEARLY STATED THAT THE
INSPECTION REPORT WAS DUE WEDNESDAY (TODAY) AND "WE ARE
SERIOUS ABOUT THIS VESSEL." FRANKLY, OWNERS [sic] RECENT
LACK OF RESPONSE CONVEYS THE IMPRESSION OF A RECENT DISINTEREST
ON THEIR PART IN TRYING TO CONCLUDE THIS CHARTER. . . .
WE RECEIVED THE
FULL DENHOLM REPORT TODAY[, OCTOBER 25,] AND AFTER REVIEW AND
ASSUMING OWNERS COOPERATION PER THE AGREED ELIGIBILITY CLAUSE,
WE LIFT OUR INSPECTION SUBJECT.
WE NOW LOOK TO OWNERS
TO LIFT THEIR CAMARO WITHDRAWL [sic] SUBJECT. THE TITAN BOARD
WILL MAKE ITS DECISION WITHIN THE 3 WORKING DAYS AFTER THE LIFTING
OF THIS SUBJECT PER OU[R] 9/26 AGREEMENT. . . .
the fax to Henry Chen of Seagos.
On October 26, Chen
informed Seabrokers that the BIN HE had been "WITHDRAWN
FROM CAMARO," and stated that "[TITAN] APPROVED THE
VSL BELATEDLY. HOWEVER, IF TITAN IS STILL SERIOUS WITH [sic]
THE VSL, OWNERS CAN CONSIDER A [TIME CHARTER] ARRANGEMENT FOR
THE TIME BEING." In response, on October 26 Titan advised
Seabrokers that it was "PLEASED TO FINALLY LEARN . . . THAT
[THE] VESSEL [HAD BEEN] OFFICIALLY WITHDRAWN FROM THE CAMARO
CHARTER AND [THAT] OWNERS [HAD] LIFTED THIS SUBJECT." Titan
stated further that it would respond with its board's approval
by the close of business on October 30. In fact, Titan's board
of directors approved the charter party on October 27.
On October 30, Titan
sent a telex direct to Chen, as well as to Seabrokers, stating,
in part, as follows:
POSITION IS THAT IT HAS DONE WHAT WAS REQUIRED TO CONCLUDE THE
6 MONTH, OPTION 12 MONTH T/C CONTRACT WHICH IT HAD NEGOTIATED,
IE. THE 9/26 AGREEMENT....
REQUESTS THAT OWNERS RECONSIDER THEIR WITHDRAWAL OF THE BIN HE
AND ADVISE WHEN SHIP WILL BE AVAILABLE IN ITS NEXT POSITION.
(REPORTED TO BE HONG KONG).
In response to a
suggestion by Chen that the parties pursue expedited resolution
of the apparent dispute, Titan faxed Chen directly on November
Since we firmly
believe that we entered into a binding fixture with Owners and
therefore have a valid claim, we agree with your suggestion to
seek an expedited resolution of this claim. We would suggest
submitting this matter to three arbitrators in New York who would
have 45 days to take evidence and issue a ruling on the threshold
issue of whether the parties entered into a binding agreement
on September 26 subject to conditions that were subsequently
Chen faxed Seabrokers
on November 2:
PER OUR TELECON
THIS MORNING AND SUBSEQUENT DISCUSSION WITH SOUTHERN SHIPPING'S
CLAIM DEPT . . ., SOUTHERN WILL RESPOND TO U.S. TITAN'S COMMENCEMENT
OF ARBITRATION REQUEST. BUT PLS DO NOT DEVIATE BY INTRODUCING
NEW FORUM SELECTION. SHELL TIME 4 CAMARO PROFORMA IS VERY CLEAR
ON THE SIMPLIFIED ARBITRATION WHICH HAS BEEN AGREED BY U.S. TITAN
AND AGREEABLE TO SOUTHERN SHIPPING AS WELL. THERE IS NO NEED
FOR A SEPARATE [sic] ARBITRATION AGREEMENT AT AL [sic]
Later that day,
Titan gave Seagos "formal written notice of Arbitration
pursuant to the Shell Time 4 clause 41(c) of Camaro/Titan Charter
found the references to Southern Shipping in Seagos's November
2 fax confusing, writing on November 7:
We refer to our
fax of November 2 commencing arbitration pursuant to Clause 41(c)
of the Camaro/Titan Charter Party. We want to make clear that
Titan has agreed to arbitrate with [Zhen Hua], with whom the
Camaro/Titan fixture was negotiated, and not with any other party,
including Southern Shipping. Please therefore confirm immediately
that [Zhen Hua] has agreed to arbitrate Titan's claims against
it in accordance with Clause 41(c) of the Charter.
Replying that same
day, Chen faxed Seabrokers:
OF U.S. TITAN'S FAX OF YESTERDAY. HEREWITH CONFIRM THAT ARBITRATION
WILL BE BETWEEN . . . TITAN . . . AND . . . ZHEN HUA . . . NOT
ANY OTHER PARTY INCLUDING SOUTHERN SHIPPING. ACCORDINGLY, LONDON
ARBITRATION SHUD [sic] BE COMMENCED IN ACCORDANCE WITH CLAUSE
41(C) OF THE SHELL TIME 4 CAMARO PROFORMA.
On November 9, Titan
requested that Seagos, "FOR THE SAKE OF GOOD ORDER, . .
. CONFIRM THAT THE ARBITRATION PROCEEDINGS IN LONDON ARE
TO COMMENCE IN ACCORDANCE WITH CLAUSE 41(C) OF THE SHELL TIME
4 [ZHEN HUA]/TITAN PROFORMA, WHICH IS BASED ON THE 'CAMARO' CHARTER."
The same day, Chen responded:
THANX JOHN'S FAX
TO WHICH OWNERS REPLY THAT THEY CAN REITERATE THAT BOTH SIDES
HAVE AN AGREEMENT TO ARBITRATE IN LONDON VIA SIMPLIFIED PROCEDURE
ACCORDING TO SHELL TIME 4 CLAUSE 41(C) CAMARO PROFORMA TO ASCERTAIN
WHETHER THERE IS A CHARTER BETWEEN GUANGZHOU ZHEN HUA AND U.S.
GUANGZHOU ZHEN HUA
WILL WORK WITH U.S. TITAN IN THE ARBITRATOR NOMINATION PROCESS
TO EXPEDITE THIS ARBITRATION PROCEDURE.
Titan replied on
FAX OF 9TH NOVEMBER.
WE CONFIRM ARBITRATION
IN LONDON IS ACCEPTABLE PER THE AGREEMENT.
WE LIST BELOW OUR
NAMES OF THREE ARBITRATORS AND REMIND [ZHEN HUA THAT IT] NEED
ONLY AGREE ON ONE. SHOULD NONE BE ACCEPTABLE, PLEASE HAVE OWNERS
ADVISE US SOONEST [sic] OF THEIR LIST OF THREE ALTERNATIVES.
IF WE ARE UNABLE
TO COME UP WITH A SOLE ARBITRATOR THROUGH THIS PROCEDURE, WE
RECOMMEND THAT EACH PARTY NOMINATE A SOLE ARBITRATOR AND THEN
THEY WOULD AGREE ON A THIRD.
Titan also listed
its three nominees in the fax.
On November 24,
Zhen Hua sent a fax directly to Titan stating, "WE, AS PRIOR
DISOPPONENT OWNER OF BIN HE, HEREBY AGREE TO SUBMIT THIS MATTER
TO LONDON ARBITRATOR PURSUANT TO THE SHELL TIME 4 CLAUSE 41.
NO DOUBT THIS DISPUTE WILL BE GOVERN [sic] BY ENGLISH LAW."
Zhen Hua then listed three nominees of its own, apparently indicating
that Titan's nominees were unsatisfactory.
On November 28,
1995, Titan acknowledged that the parties had not reached agreement
on a sole arbitrator and suggested a procedure for appointing
a panel of three arbitrators. Titan added, "PLEASE ADVISE
IF THIS PROCEDURE IS AGREEABLE. WE WILL THEN NOTIFY YOU OF OUR
APPOINTED ARBITRATOR." Zhen Hua responded,
AS TO THE ARBITRATION
PROCEDURE, WE PERFER [sic] TO MAINTAIN THAT ONLY ONE LONDON ARBITRATOR
WOULD BE APPOINTED BY BOTH PARTIES ACCORDING TO THE AD HOC ARBITRATION
CLAUSE. OBVIOUSLY THIS PROCEDURE WILL SAVE YOUR AND OUR TIME
AND COST. WE THEREFORE WOULD BE GRATEFUL IF YOU COULD PROVIDE
ANOTHER LIST OF ARBITRATOR[S] FOR OUR ELECTION.
Titan never submitted
another list of arbitrators. Instead, more than two months later
on February 7, 1996, Titan sent a fax to the attention of Chen
AFTER A REVIEW OF
OUR FILE INCLUDING THE RECENT CORRESPONDENCE BETWEEN US ON THE
ISSUE OF ARBITRATION IN LONDON, IT APPEARS TO US THAT WE DO NOT
1.) YOUR CLEAR AGREEMENT
THAT [ZHEN HUA] IS THE APPROPRIATE PARTY IN DISPUTE WITH U.S.TITAN.
OTHERWISE, WHY THE CORRESPONDENCE TO US BY THE "FORMER DISPONENT
OWNERS" SOUTHERN SHIPPING WHICH IS IRRELEVANT.
2.) AN ACKNOWLEDGEMENT
BY YOU THAT WE HAVE A BINDING CHARTER PARTY AGREEMENT; RATHER,
WE HAVE OBLIQUE REFERENCES TO THE "PRO FORMA CAMARO CHARTER"
AND AN AD HOC ARBITRATION CLAUSE.
WE WILL NOT
AGREE TO ARBITRATION OUTSIDE OF THE BINDING TITAN/[ZHEN HUA]
GIVEN THE ABSENCE
OF SUCH AN ACKNOWLEDGEMENT, WE SEE NO REASON TO CONCLUDE THAT
LONDON IS THE JURISDICTION FOR THIS DISPUTE, AND WE ARE INITIATING
LITIGATION AGAINST [ZHEN HUA] IN NEW YORK COURTS.
Later that day,
Zhen Hua responded:
1. IT IS VERY CLEAR
FROM THE ALLEGED C/P AND THE CORRESPONDENCE REGARDING THE ARBITRATION
THAT THE PARTY INVOLVED ON THE PART OF "OWNER" IS [ZHEN
HUA]. PLEASE CLARIFY WHY YOU REFER TO "SOUTHERN SHIPPING"
2. YOU ARE NOT ALLOWED
TO BE IN BREACH OF THE AD HOC ARBITRATION CLAUSE WHICH IS ACTUALLY
3. WE ARE STILL
WAITING FOR YOUR ANOTHER [sic] LIST OF LONDON ARBITRATOR[S].
B. The Proceedings
On February 7, 1996,
Titan filed a petition to compel arbitration pursuant to section
4 of the FAA in the United States District Court for the Southern
District of New York. Titan requested "a summary determination
of the making of a binding charter party contract between Titan
and respondent [Zhen Hua] and to compel [Zhen Hua] to arbitrate
Titan's claim for breach of that charter party." In its
petition, Titan argued:
Since the charter
contract between [Zhen Hua] and Titan is a condition precedent
to the arbitration agreement incorporated into that contract,
the Court must determine the threshold issue whether the parties
entered into that contract. Therefore, pursuant to 9 U.S.C. §
4, Titan requests that the Court proceed summarily to try the
question of whether [Zhen Hua] and Titan agreed to a binding
charter contract. Titan further requests that the Court, upon
finding that [Zhen Hua] entered into a binding contract with
Titan, pursuant to 9 U.S.C. § 4 and §206, forthwith
direct [Zhen Hua] to arbitrate any remaining issues including
damages in accordance with the charter party arbitration agreement.
On October 29, 1996,
Zhen Hua gave notice of its motion to: (1) dismiss the petition
pursuant to Fed. R. Civ. P. 12(b)(2), based on lack of personal
jurisdiction over Zhen Hua; (2) dismiss the petition pursuant
to Fed. R. Civ. P. 12(b)(1), based on lack of subject-matter
jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C.
§§ 1603-1611, (the "FSIA"), and based on
the existence of an "ad hoc" agreement to arbitrate
whether the parties had formed a binding charter party; (3) in
the alternative, dismiss the petition pursuant to Fed. R. Civ.
P. 12(b)(3) and 28 U.S.C. § 1391(f) for improper venue;
and (4) in the alternative, stay the proceedings pursuant to
section 3 of the FAA and section 208 of the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C.
§§201-208, (the "Convention").
On August 5, 1998,
the district court issued its first of two opinions, holding
that the parties had not formed an "ad hoc"
arbitration agreement but that they had formed a binding charter
party, granting Titan's motion to compel arbitration pursuant
to the arbitration clause contained in the charter party, and
denying Zhen Hua's cross-motion to dismiss the petition. See
Titan I, 16 F. Supp.2d at 330, 340. The court also stayed
the proceedings pending arbitration in London. See id.
at 330, 330 n.1, 340.
Hua moved to alter or amend the opinion and order pursuant to
Fed. R. Civ. P. 59(e) and Local Civil Rule 6.3, on the ground
that the court's opinion "did not fully identify the issues
left open for consideration by the arbitrators in London."
Titan II, 182 F.R.D. at 99 (internal quotation marks omitted).
Zhen Hua argued that Titan I made "unclear to the
arbitrators whether they may excuse the parties' performance
under the charter if respondent can prove that the 'subjects'
or conditions were not satisfied." Id. at 101. In
opposition, Titan argued that the opinion "unambiguously
and correctly limited the scope of the arbitrators' authority."
Id. at 99.
In its second opinion,
the district court noted first that "[t]he pivotal issue
is whether the arbitrators may excuse the parties from their
obligations under the charter in the event that one of the subjects,
or conditions[,] has not been satisfied." Id. at
99-100 (internal quotation marks omitted). Id. Having
characterized the issue as such, the district court then held:
We grant respondent's
motion to the extent of specifying that the parties must arbitrate
in London all disputes arising under the charter party. Thus,
the arbitrators may determine whether the actions of either party,
subsequent to the formation of the charter party, have vitiated
the agreement. Any parts of our prior Opinion which suggested
otherwise are hereby withdrawn.
Id. at 101.6
An amended judgment
was entered on October 7, 1998. This appeal followed.
On appeal, Zhen
Hua argues that the district court erred in several regards.
First, Zhen Hua asserts that in November 1995 the parties reached
an "ad hoc" agreement, separate and distinct from the
provisions of the charter party, for the purpose of arbitrating
whether the parties had entered into a charter party. If so,
contends Zhen Hua, the FAA cloaked the district court with jurisdiction
only to order arbitration in accordance with that agreement,
leaving the issue of charter party formation to the arbitrator.
Second, Zhen Hua contends that the district court lacked subject-matter
jurisdiction under the FSIA. Third, Zhen Hua asserts that the
district court lacked personal jurisdiction over Zhen Hua because
Zhen Hua did not have "substantial" or "continuous
and systematic" contacts with the United States. Finally,
Zhen Hua claims that venue in the Southern District of New York
was improper. For the reasons stated below, we disagree with
Zhen Hua and affirm the decision of the district court.
A. The Purported
The district court
held that the parties did not enter into an "ad hoc"
agreement to arbitrate whether they had formed a charter party,
but did conclude that the parties had formed a charter party
that included an arbitration clause requiring the parties to
submit charter-related disputes to arbitration in London. As
a result, the court granted Titan's motion to compel arbitration
pursuant to the charter party and stayed the litigation pending
such arbitration. On appeal, Zhen Hua argues that, as a matter
of law, the parties' communications established an "ad hoc"
arbitration agreement that, under the FAA and the Convention,
delegated authority to an arbitrator in London to determine whether
the parties had formed a charter party. We disagree.
1. Standard of
the merits of Zhen Hua's argument, we must resolve the parties'
dispute over the standard of review applicable to the district
court's conclusions about the existence, or lack thereof, of
the two purported agreements. According to Zhen Hua, the district
court decided the contractual formation issues as a matter of
summary judgment and therefore our review is de novo. In response,
Titan contends that the district court appropriately made findings
of fact based on the parties' evidentiary submissions and that
we review such findings, including the court's factual findings
on formation, for clear error.
of whether there was a meeting of the minds sufficient to constitute
a contract is one of fact. See Interocean Shipping
Co. v. National Shipping & Trading Corp., 523 F.2d 527,
534 (2d Cir. 1975). This remains true regardless of whether the
contract at issue is an arbitration agreement, see Genesco,
Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 845 (2d Cir.
1987) ("Based on [written] exchanges and after a detailed
review of the voluminous evidentiary submissions, the district
court found that [plaintiff] had agreed to arbitrate its disputes
under both the signed and unsigned agreements with . . . defendants.
We see no reason to disturb this factual finding."), or
a charter party, see Great Circle Lines, Ltd. v. Matheson
& Co., 681 F.2d 121, 125 (2d Cir. 1982) ("Whether
there was a meeting of the minds resulting in a charter party
is a question of fact.").
When parties disagree
about whether they entered into an arbitration agreement subject
to the FAA, the FAA directs that the "court shall proceed
summarily to . . . trial" of the issue. 9 U.S.C. §4.
Contrary to Zhen Hua's characterization of the proceedings below,
the district court's opinion and the record make clear that the
district court did try the issue of whether the parties formed
an agreement to arbitrate. Although the district court did not
hold an evidentiary hearing, the parties filed multiple briefs
and extensive evidence with the court over a two-year period.
Most significantly, the parties submitted the telex and facsimile
communications that were alleged to have formed the "ad
hoc" arbitration agreement (according to Zhen Hua) and the
charter party (according to Titan). No dispute existed as to
the authenticity of these communications. Instead, the parties
disagreed over the meaning of the communications.
In addition, Zhen
Hua did not and does not now seek an evidentiary hearing. Nowhere
in its briefs does Zhen Hua assert that it requested the district
court to hold an evidentiary hearing. Furthermore, Zhen Hua does
not contest (or even address) the district court's statement
in footnote twelve of its first opinion that notwithstanding
"[s]ection 4 of the FAA . . ., no such hearing [was] required."
See Titan I, 16 F. Supp.2d at 337 n.12 (internal
citation omitted). Finally, Zhen Hua explicitly disclaims that
the case should be remanded to the district court for such a
nor Zhen Hua seeks remand for a factual trial, nor is a trial appropriate
when the sole issue is whether, as a matter of law and through
application of the presumption favoring arbitration, the parties'
communications reflect an enforceable agreement to arbitrate
the issue of charter formation.
Br. at 12-13 (emphasis added). Consequently, under the circumstances
of the matter sub judice, we hold that the district court
tried the issue of formation (of both purported agreements) on
the papers and that Zhen Hua has waived any right under the FAA
to an evidentiary hearing.
The correct standard
of review of the facts found by the trial court is contained
in Rule 52(a) of the Federal Rules of Civil Procedure: "Findings
of fact, whether based on oral or documentary evidence, shall
not be set aside unless clearly erroneous . . . ." As stated
in the rule, the "clearly erroneous" standard of review
controls our consideration of the factual findings of the district
court even though based upon a documentary record. See
Anderson v. City of Bessemer City, North Carolina, 470
U.S. 564, 574 (1985). We are not permitted to find the district
court's findings of fact to be clearly erroneous if the findings
are one of two permissible views of the evidence. See
of the Purported Agreements
Arbitration Act creates a 'body of federal substantive law of
arbitrability, applicable to any arbitration agreement within
the coverage of the Act.'" PaineWebber Inc. v. Bybyk,
81 F.3d 1193, 1198 (2d Cir. 1996) (quoting Moses H. Cone Memorial
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Arbitration
agreements subject to the Convention are enforced in accordance
with Chapter 2 of the FAA. See 9 U.S.C. §201. An
agreement to arbitrate exists within the meaning of the Convention
and the FAA if: (1) there is a written agreement; (2) the writing
provides for arbitration in the territory of a signatory of the
convention; (3) the subject matter is commercial; and (4) the
subject matter is not entirely domestic in scope. See
Smith/Enron Cogeneration Ltd. Partnership, Inc. v. Smith Cogeneration
Int'l, Inc., 198 F.3d 88, 92 (2d Cir. 1999); see also
9 U.S.C. §202. Upon finding that such an agreement exists,
a federal court must compel arbitration of any dispute falling
within the scope of the agreement pursuant to the terms of the
Zhen Hua and Titan
argue over whether the first requirement, i.e., the existence
of a written agreement to arbitrate, has been met with regard
to the "ad hoc" agreement and the charter party. Under
the Convention a written agreement "include[s] an arbitral
clause in a contract or an arbitration agreement, signed by the
parties or contained in an exchange of letters or telegrams."
9 U.S.C. §201, Convention on the Recognition and Enforcement
of Foreign Arbitrable Awards, Art. II(2). 7 Notwithstanding the strong federal policy favoring
arbitration as an alternative means of dispute resolution, see
David L. Threlkeld & Co. v. Metallgesellschaft Ltd. (London),
923 F.2d 245, 248 (2d Cir. 1991), courts must treat agreements
to arbitrate like any other contract, see Volt Info.
Sciences, Inc. v. Board of Trustees of Leland Stanford Jr. Univ.,
489 U.S. 468, 478 (1989); Prima Paint Corp. v. Flood &
Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967). A contract
is formed when there is a meeting of the minds of the parties
on the essential terms of an agreement. See Interocean
Shipping, 523 F.2d at 534. A court must therefore examine
the parties' written communications to determine whether they
have formed an agreement to arbitrate enforceable under the FAA
and the Convention.
a. The "Ad
Hoc" Arbitration Agreement
The district court
considered Zhen Hua's argument that in November 1995 the parties
reached a separate, "ad hoc" agreement to arbitrate
whether the parties had formed a binding charter party.
Preliminarily, the court noted that "the existence of an
agreement to arbitrate is a threshold question for a court to
resolve, absent a clear and unmistakable delegation of that authority
to an arbitrator." Titan I, 16 F. Supp.2d at 337
(citing First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938, 943 (1995)). The court also observed that "where
the parties contest the formation of an agreement, 'any silence
or ambiguity about whether such a question is arbitrable reverses
the usual presumption that issues should be resolved in [arbitration's]
favor.'" Id. at 338 (quoting Abram Landau Real
Estate v. Bevona, 123 F.3d 69, 72 (2d Cir. 1997) (citing
First Options, 514 U.S. at 943)). The court then found
that although the parties had begun negotiating such an "ad
hoc" agreement around November 1, Zhen Hua cut off such
negotiations on November 2 when it stated, "There is no
need for a separate arbitration agreement." Id. Therefore,
the court concluded, the parties never formed a separate agreement
to arbitrate whether they had formed a charter party.
On appeal, Zhen
Hua argues that the district court erroneously relied on First
Options to require evidence that the parties had "clear[ly]
and unmistakabl[y]" delegated authority to an arbitrator
to decide the question of charter formation. Instead,
Zhen Hua contends, the district court should have applied the
contract formation standards articulated by the Convention to
find that the parties had formed an "ad hoc" agreement
to arbitrate formation of the charter party.
In First Options,
the Supreme Court addressed, inter alia, the "narrow"
issue of the appropriate "standard of review applied to
an arbitrator's decision about arbitrability." 514 U.S.
at 942. In defining this issue, the Court delineated the three
types of disagreement between the parties: (1) whether the defendants
were liable to the plaintiffs; (2) whether the parties agreed
to arbitrate the issue of liability; and (3) whether the courts
or the arbitrators possess the primary power to decide the second
question. Seeid. The issue presented to the Supreme Court
was the third question, which the Court reformulated as "Does
that power belong primarily to the arbitrators (because the court
reviews their arbitrability decision deferentially) or to the
court (because the court makes up its mind about arbitrability
independently)?" Id. Answering this question, the
Supreme Court held that "[c]ourts should not assume that
the parties agreed to arbitrate arbitrability unless there is
'clea[r] and unmistakabl[e] evidence that they did so,'"
id. at 944 (second and third alterations in the original),
and that any silence or ambiguity about whether such a question
is arbitrable reverses the usual presumption that issues should
be resolved in favor of arbitration, seeid. at 944-45;
Abram Landau, 123 F.3d at 72-73 (citing, inter alia,
First Options, 514 U.S. at 943).
Zhen Hua is correct
that the standard articulated by the Supreme Court in First
Options is not apposite to the precise question presented
to the district court. Unlike First Options, the instant
case required the district court to determine whether the parties
formed an "ad hoc" agreement to arbitrate whether they
had formed a charter party--an issue analogous to the second
of the three disagreements between the litigants in First
Options. On appeal, neither Zhen Hua nor Titan contends that
an arbitrator should resolve this question; instead the parties
disagree as to whether the court below correctly answered this
Zhen Hua errs, however,
in asserting that the district court applied the First Options
standard in deciding whether the parties had formed an "ad
hoc" arbitration agreement. When read in context, the passage
of the district court's opinion relying on First Options
(and Abram Landau) makes clear that the district court
invoked the standard only to note preliminarily that the
dispute over formation was properly before it rather than an
arbitrator. See Titan I, 16 F. Supp.2d at 337-38.
Furthermore, the ensuing analysis by the district court reveals
that the district court correctly evaluated the written communications
under general principles of the law of contract formation (consistent
with the Convention) in finding that Zhen Hua had terminated
negotiations over an "ad hoc" arbitration agreement.
See Genesco, 815 F.2d at 845 ("[Under the
FAA] whether [a party] is bound by [an] arbitration clause .
. . is determined under federal law, which comprises generally
accepted principles of contract law.").
that the district court did not apply the First Options
standard, we conclude further that the district court did not
commit clear error in finding that the parties did not reach
a binding "ad hoc" agreement to arbitrate the issue
of formation of the charter party. On November 2, 1995, Zhen
Hua rejected Titan's proposal to arbitrate the issue of charter
formation in New York, stating:
PLS DO NOT DEVIATE
BY INTRODUCING NEW FORUM SELECTION. SHELL TIME 4 CAMARO PROFORMA
IS VERY CLEAR ON THE SIMPLIFIED ARBITRATION WHICH HAS BEEN AGREED
BY U.S. TITAN AND AGREEABLE TO SOUTHERN SHIPPING AS WELL. THERE
IS NO NEED FOR A SEPARATE [sic] ARBITRATION AGREEMENT AT AL [sic].
The district court
did not commit clear error in finding this statement to be a
rejection of the idea of an arbitration agreement extraneous
to the charter party. However, even if we were to interpret
the statement to constitute an acceptance of the offer to arbitrate
charter formation combined with a proposal that the parties employ
the procedures set forth in the form agreement serving as the
basis for the purported charter party, we could not override
the factfinder's interpretation because the November 1 communication
is certainly susceptible of both meanings.
between the parties bolster our conclusion that the district
court's findings were not clearly erroneous. The November 7 communication
from Zhen Hua acknowledged Titan's notification of arbitration
pursuant to Clause 41(c) of the charter party, and removed the
confusion over previous references to "Southern Shipping,"
but failed to specify that the parties were arbitrating the issue
of the formation of the charter. Titan then requested confirmation
that the parties were agreeing to arbitrate in accordance with
the very charter party to which Titan believed Zhen Hua was bound.
Although Zhen Hua replied that "[o]wners . . . reiterate
that both sides have an agreement to arbitrate in London via
simplified procedure according to Shell Time 4 Clause 41(c) Camaro
Proforma to ascertain whether there is a charter between Guangzhou
Zhen Hua and U.S. Titan," Titan never responded to this
suggestion that the parties were arbitrating the issue of the
existence of the charter party. Instead, Titan responded that
arbitration was acceptable "per the agreement," which
the district court reasonably construed to mean the charter party
itself. SeeTitan I, 16 F. Supp. 2d at 338 n.13. From November
1995 until February 1996, the parties dickered over arbitrators,
never clarifying what exactly they were arbitrating or which
agreement bound them to arbitrate. As a result, we hold that
the district court did not commit clear error by finding that
the negotiations never resulted in a "meeting of the minds"
sufficient to form a binding "ad hoc" agreement to
arbitrate whether they had entered into a charter party.
b. The Charter
Although the district
court determined that the parties did not form an "ad hoc"
arbitration agreement, the district court granted Titan's motion
to compel arbitration on the ground that the parties had formed
a binding charter party that included an arbitration clause.
Specifically, the court concluded that the parties formed a charter
party through their respective brokers no later than September
26, 1995, on which date Titan's broker (Seabrokers) confirmed
the agreement by faxing both parties a "recap" or "fixture."
See id. at 339. Relying on this Court's decision
in Great Circle Lines, the district observed that "[a]
'recap' communication, or 'fixture,' is recognized throughout
the shipping industry as an agreement to a charter party's essential
terms." Titan I, 16 F. Supp.2d at 339 (citing Great
Circle Lines, 681 F.2d at 125, 125 n.2). In the court's view,
the "recap" embodied the charter party's main terms
by incorporating the terms of Shell Time 4 Charter, a standard
form charter, which included an arbitration clause. See
The court then rejected
on two grounds Zhen Hua's argument that the charter party did
not come into force due to the alleged failure of one of its
"subjects"--the approval of the charter party by Titan's
board of directors upon receipt of the inspection report. First,
the court found that the weight of the evidence demonstrated
that Titan's board did approve the charter party within the agreed
time period. Seeid. Second, relying again on Great
Circle Lines, the court held that "a 'subject detail'
does not create a condition subsequent to a charter party."
Id. As a result, the court ordered that the parties arbitrate
in London pursuant to the charter party's arbitration clause
any disputes arising under the charter party. See id.
at 340. In a subsequent opinion the court clarified that the
London "arbitrators may determine whether the actions of
either party, subsequent to the formation of the charter party,
have vitiated the agreement."8 Titan II, 182 F.R.D. at 101.
On appeal, Zhen
Hua contends that the district court made an erroneous finding
as to the existence of a charter party. Zhen Hua does not contest,
however, that the district court's finding was in accordance
with the standard set forth in Great Circle Lines, which
holds that a "recap" communication, such as the one
sent on September 26, 1995 in the instant case, represents "an
agreement as to the charter party's main terms," with the
"subject details" being no more than an acknowledgment
of an intention to continue negotiations. Instead, Zhen Hua calls
for the overruling of Great Circle Lines, asserting that
its holding conflicts with the laws of the United Kingdom and
with the trade practices of the shipping industry at large. Unpopular
though it may be, Great Circle Lines is binding precedent,
and we "will not overrule a prior decision of a panel of
this Court absent a change in the law by higher authority or
by way of an in banc proceeding of this Court." Samuels
v. Mann, 13 F.3d 522, 526 (2d Cir. 1993).
Given that the district
court (as well as this Court) is bound by Great Circle Lines,
the district court correctly applied Great Circle Lines
to find that the parties had formed a charter party. Under Great
Circle Lines, the September 26, 1995 "recap" constituted
proof of a binding agreement or "fixture," which is
"a commitment that a voyage will be performed," and
one which "presupposes a final contract, with main terms
set, and final details to be resolved subsequently." 681
F.2d at 125 n.2. As explicated in Great Circle Lines,
are formed in two stages. First, significant "main"
terms are negotiated through brokers. These terms usually include
the name of the charterer, name of owner, ship, and its characteristics,
time and place of delivery, duration of charter, place of redelivery,
hire rate,printed form upon which the contract is based, and
any other term that a party deems important. These are considered
the "bare- bones" of the contract. The "main"
terms when agreed upon are entitled a "fixture." Second,
after a "fixture" has been reached, the parties continue
to negotiate "details" amending the form contract specified
in the "fixture." These minor or side issues "flesh-out"
the original agreement or fixture. The "details" include
a wide variety of matters, for example: fuel used, speed of vessel,
condition of ship's holds, exact time of ship's delivery to charterer,
brokerage, breakdown, bunkering, option to extend charter, cargo
capacity, demurrage and whatever else is deemed by the parties
to be of minor importance.
Id. at 25 (footnote omitted).
In other words, Titan and Zhen Hua formed an enforceable agreement
to charter the BIN HE, subject to certain conditions, including:
(1) "CP Details," i.e., future agreement between the
parties about charter party terms other than those enumerated
in the broker's recap; (2) a satisfactory inspection of the ship
in drydock; (3) the ship's release from a time charter to a company
called Camaro, to which it was still chartered at the time; and
(4) approval by Titan's board of directors of the proposed charter
within 3 days of receipt of the drydock inspection report. Consequently,
even if Titan's board did fail to timely approve the charter,
such failure would not prevent or undo formation of the charter
party. Instead, the failure (if any occurred) would constitute
a breach of the charter party for which the London arbitrator
may impose a remedy consistent with the terms of the charter
party and English law (which, under the charter party, controls
the interpretation of the agreement).9
B. Subject Matter
Jurisdiction under the FSIA
Zhen Hua moved the
trial court to dismiss Titan's petition for lack of subject matter
jurisdiction on the ground Zhen Hua was immune from suit under
the FSIA. The district court agreed with Zhen Hua, and no dispute
exists here, that Zhen Hua qualifies as a "foreign state"
under the FSIA because it is a
by the People's Republic of China. 10 See Titan I, 16 F. Supp.2d at
333. Nevertheless, the district court held that Zhen Hua fell
within two exceptions to the FSIA's grant of jurisdictional immunity
to foreign states: (1) the arbitration exception, see
28 U.S.C. §1605(a)(6)(B); and (2) the commercial activities
exception, see id. § 1605(a)(2). 11 SeeTitan I, 16 F.
Supp.2d at 334, 335. Because we hold the former exception applicable,
we do not address the latter.
The standard of
review applicable to district court decisions regarding subject
matter jurisdiction under the FSIA is clear error for factual
findings and de novo for legal conclusions. See Filetech
S.A. v. France Telecom S.A., 157 F.3d 922, 930 (2d Cir. 1998).
The so-called arbitration
exception to the FSIA provides in pertinent part:
A foreign state
shall not be immune from the jurisdiction of courts of the United
States or of the States in any case-
. . .
(6) in which the
action is brought, either to enforce an agreement made by the
foreign state with or for the benefit of a private party to submit
to arbitration all or any differences which have arisen or which
may arise between the parties with respect to a defined legal
relationship, whether contractual or not, concerning a subject
matter capable of settlement by arbitration under the laws of
the United States, or to confirm an award made pursuant to such
an agreement to arbitrate, if . . . (B) the agreement or award
is or may be governed by a treaty or other international agreement
in force for the United States calling for the recognition and
enforcement of arbitral awards. . .
28 U.S.C. §1605(a).
The district court found that, because China and the United States
were both signatories to the Convention, and because Titan alleged
that the parties had entered into a charter party containing
an arbitration clause, it had jurisdiction to determine whether
the parties formed an agreement to arbitrate so as to vitiate
Zhen Hua's immunity under the FSIA. See Titan I,
16 F. Supp. 2d at 334.
On appeal, Zhen
Hua contends that, because there was an "ad hoc" agreement
to arbitrate the issue of whether a charter party existed, the
arbitration clause in the "alleged charter" could not
form the basis for waiver of immunity by Zhen Hua under §1605(a)(6)(B).
Zhen Hua further asserts that the exception "might have
applied if Titan had sought to enforce the 'ad hoc'
agreement and to compel [Zhen Hua] to arbitrate in London
the question of whether a binding charter had been concluded
[but that] Titan . . . never asked for such relief, nor did [Zhen
Hua], who raised the 'ad hoc' agreement only defensively in seeking
dismissal or a stay of the suit." Appellant's Brf. at 20.
In light of our
ruling above that the district court did not commit clear error
in finding that parties did not form an "ad hoc"
arbitration agreement, we need not further address Zhen Hua's
argument. Instead, we hold simply that the arbitration clause
contained in the charter party satisfies the requirements of
arbitration exception to the FSIA.
C. Personal Jurisdiction
Zhen Hua also moved
the district court to dismiss for lack of personal jurisdiction.
After noting that subject matter jurisdiction and personal jurisdiction
over foreign sovereigns are nearly coextensive, the court determined
that Zhen Hua's contractual negotiations with Titan satisfied
constitutional due process requirements. See Titan
I, 16 F. Supp. 2d at 335-36. On appeal, Zhen Hua attacks
the latter conclusion, arguing that (1) its contacts with the
United States were not substantial, continuous and systematic,
or purposeful in the sense required to satisfy due process concerns,
and (2) the actions of Seagos cannot be imputed to Zhen Hua because
Seagos served as a broker rather than an agent. We disagree.
The standard of
review applicable to district court decisions regarding personal
jurisdiction is clear error for factual findings and de novo
for legal conclusions. SeeShapiro v. Republic of Bolivia,
930 F.2d 1013, 1016 (2d Cir. 1991).
In general, "subject
matter jurisdiction plus service of process equals personal jurisdiction"
under the FSIA. Texas Trading & Milling Corp. v. Federal
Republic of Nigeria, 647 F.2d 300, 308 (2d Cir. 1981). Zhen
Hua does not contend that service of process was improper. However,
the exercise of personal jurisdiction under the FSIA must also
comport with the Due Process Clause, see id. at
313, which permits a forum to exercise personal jurisdiction
over a non?resident defendant who has "certain minimum contacts
[with the forum] . . . such that the maintenance of the suit
does not offend 'traditional notions of fair play and substantial
justice,'" Calder v. Jones, 465 U.S. 783, 788 (1984)
(quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940),
and International Shoe Co. v. Washington, 326 U.S. 310,
In invoking the
"continuous and systematic" contacts test of Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1983),
Zhen Hua fails to distinguish between "general personal
jurisdiction" and "limited" or "specific"
personal jurisdiction. General personal jurisdiction, which does
require a finding of "continuous and systematic" contacts,
is only necessary when the cause of action does not arise from
the defendant's contacts with the forum state. See Chaiken
v. VV Publ'g Corp., 119 F.3d 1018, 1027-28 (2d Cir. 1997).
Where, as here, the claim arises out of, or relates to, the defendant's
contacts with the forum, i.e., the negotiation of the charter
party with an American corporation located in New York and the
use of brokers in Connecticut, 12 the defendant need only prove "limited"
or "specific" jurisdiction. See id. at
1028. In such a case, the required minimum contacts exist where
the defendant "purposefully availed" itself of the
privilege of doing business in the forum and could foresee being
"haled into court" there. See Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985); World?Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
In addition, a court
must determine whether the assertion of personal jurisdiction
"comports with 'traditional notions of fair play and substantial
justice'??that is, whether it is reasonable under the circumstances
of a particular case." Metropolitan Life Ins. Co. v.
Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir. 1996) (quoting
International Shoe, 326 U.S. at 316).
Whether it is "reasonable"
to exercise jurisdiction in a particular case depends on "(1)
the burden that the exercise of jurisdiction will impose on the
defendant; (2) the interests of the forum state in adjudicating
the case; (3) the plaintiff's interest in obtaining convenient
and effective relief; (4) the interstate judicial system's interest
in obtaining the most efficient resolution of the controversy;
and (5) the shared interest of the states in furthering substantive
Chaiken, 119 F.3d at 1028 (quoting
Metropolitan Life, 84 F.3d at 568).
Here, the record
establishes that Zhen Hua "purposely availed itself"
of the United States forum by negotiating and forming a contract
with an American corporation located in New York. To facilitate
the negotiations Zhen Hua utilized a broker located in Connecticut,
which communicated with Titan personnel in New York via telex
and/or facsimile to Titan's broker in Connecticut. 13 Having engaged in this commercial
conduct, 14 Zhen Hua
should have foreseen the possibility of being "haled into
[an American] court" if a dispute were to arise out of the
negotiations. Furthermore, Zhen Hua proffers no reason to believe
that litigating in New York for the sole purpose of referring
this matter to arbitration in London will impose or has imposed
any undue hardship. Given the conduct of Zhen Hua, the nature
and purpose of the litigation, and Titan's interest in obtaining
an efficient referral to arbitration, the district court's exercise
of personal jurisdiction was reasonable. Accordingly, the district
court correctly concluded that it possessed personal jurisdiction
over Zhen Hua.
Finally, Zhen Hua
moved the district court to dismiss the action for improper venue.
The district court denied the motion, holding that the facsimile
and telephone communications between Titan's offices in Pelham,
New York and the brokers' offices in Connecticut constituted
a substantial part of the events giving rise to the action. See
Titan I, 16 F. Supp.2d at 336-37. On appeal, Zhen Hua
argues that the court erred by relying on an inapplicable subsection
of the venue statute and grounding its conclusion upon the fact
that Titan and its broker sent communications between New York
We have not previously
decided whether we review a district court's determination of
venue for abuse of discretion or de novo, but we need not resolve
the issue here because the district court's decision would be
entitled to affirmance under either standard.
Zhen Hua correctly
argues that the apposite venue provision is 28 U.S.C. §
1391(f) (concerning civil actions against foreign states) rather
than 28 U.S.C. § 1391(b) (concerning civil actions not founded
solely on diversity of citizenship). The district court's mis-citation
does not, however, vitiate its analysis. The language upon which
the district court relied is common to both subsection (b) and
subsection (f) of §1391. Compare 28 U.S.C. §1391(b)(2)
("A civil action wherein jurisdiction is not founded solely
on diversity of citizenship may be brought . . . in any judicial
district in which a substantial part of the events or omissions
giving rise to the claim occurred . . . .") with
id. §1391(f)(1) ("A civil action against a foreign
state as defined in [the FSIA] may be brought . . . in any judicial
district in which a substantial part of the events or omissions
giving rise to the claim occurred . . . .").
As held by the district
court, the charter party giving rise to Titan's claim and the
purported "ad hoc" arbitration agreement giving rise
to Zhen Hua's defense were negotiated between China and Pelham,
New York via Connecticut. That many of Zhen Hua's communications
reached Titan's offices in New York through the Connecticut brokers
does not alter the fact that Zhen Hua directed communications
to New York. Accordingly, venue in the Southern District of New
York was proper. Cf.Bates v. C & S Adjusters, Inc.,
980 F.2d 865, 868 (2d Cir. 1992) ("We conclude that receipt
[within the district] of a collection notice is a substantial
part of the events giving rise to a claim under the Fair Debt
Collection Practices Act [to establish venue within that district
pursuant to §1391(b)(2)]."); Sacody Techs., Inc.
v. Avant, Inc., 862 F. Supp. 1152, 1157 (S.D.N.Y. 1994) ("The
standard set forth in §1391(a)(2)[, which employs the 'substantial
part' language,] may be satisfied by a communication transmitted
to or from the district in which the cause of action was filed,
given a sufficient relationship between the communication and
the cause of action.").
For the foregoing
reasons, we affirm the judgment of the district court. The parties
should proceed to arbitration in London pursuant to the district
court's August 5, 1998 opinion and order (as amended September
25, 1998) and September 29, 1998 opinion and order.
1 A charter party is a contract
by which an entire ship or some principal part thereof is let
to a merchant. The term "charter party" actually refers
to the document in which the terms and conditions of the lease
of a vessel by an owner to a charterer are set out.
Lines, Ltd. v. Matheson & Co., 681 F.2d 121, 124 (2d Cir. 1982) (internal
quotation marks and citations omitted).
2 A time charter is one of
three principal forms of a charter party and constitutes a contract
under which "the charterer engages for a fixed period of
time a vessel, which remains manned and navigated by the vessel
owner, to carry cargo wherever the charterer instructs."
2 Thomas J. Schoenbaum, Admiralty and Maritime Law §
11-1, at 169 (2d ed. 1994).
3 Clause 41 of the Shell
Time 4 Charter reads:
41. (a) This charter
shall be construed and the relations between the parties determined
in accordance with the laws of England.
(b) Any dispute
arising under this charter shall be decided by the English Courts
to whose jurisdiction the parties hereby agree, provided that
London arbitration is understood and agreed to be the first form
of dispute resolution.
the foregoing, but without prejudice to any party's right to
arrest or maintain the arrest of any maritime property, either
party may, by giving written notice of election to the other
party, elect to have any such dispute referred to arbitration
of a single arbitrator in London in accordance with the provisions
of the Arbitration Act of 1950, or any statutory modification
or re-enactment thereof for the time being in force.
4 At the time of the negotiations,
the BIN HE was chartered to another party, Camaro. Consequently,
Zhen Hua was required to obtain a release of the BIN HE from
the "Camaro TC" in order to transfer possession to
5 The order of the two faxed
communications of October 25, 1995, can not be discerned from
6 Because the judgment had
not yet been entered pursuant to the August 5 opinion, the court
found Rule 59(e) to be inapplicable and instead treated Zhen
Hua's motion as an attempt to obtain "clarification"
of the opinion under Local Rule 6.3. See id. at 100-01.
7 The text of the Convention
is found immediately following 9 U.S.C. § 201.
8 In so holding, the court
withdrew inconsistent portions of its previous opinion, which
would appear to include its factual finding that Titan's board
satisfied the post-inspection approval "subject." See
Titan II, 182 F.R.D. at 102 ("Accordingly, a factual
dispute as to whether one of the stated conditions has been satisfied,
and the effect of such failure, are issues for the arbitrators,
not the Court.")
9 Furthermore, although Zhen
Hua does not raise the issue, we note that the district court
was required under the FAA and the Convention to determine whether
the parties had formed the charter party, as a whole, rather
than ordering arbitration under the charter party's arbitration
clause on the ground that it was separable from the charter party.
Although a sufficiently broad arbitration clause may be separated
from the contract in which it is embedded to permit arbitration
of the enforceability of the contract itself, see Prima
Paint Corp., 388 U.S. at 403-05 (1967); Genesco, 815
F.2d at 845 (compelling arbitration of fraudulent inducement
claim pursuant to clause providing for arbitration of "[a]ll
claims and disputes of whatever nature arising under this
contract") (emphasis added), the instant clause--covering
"[a]ny dispute arising under this charter"--does not
rise to the required level of expansiveness, see In
re Kinoshita & Co., 287 F.2d 951, 953 (2d Cir. 1961)
(holding clause that provided for arbitration "[i]f any
dispute or difference should arise under this Charter" too
narrow to include arbitration of fraudulent inducement claim).
10 The FSIA provides that
"[s]ubject to existing international agreements to which
the United States is a party at the time of enactment of this
Act a foreign state shall be immune from the jurisdiction of
the courts of the United States and of the States except as provided
in sections 1605 to 1607 of this chapter." 28 U.S.C. §
1604. Under the FSIA a "'foreign state' . . . includes .
. . an agency or instrumentality of a foreign state," which,
in turn, is defined to include "any entity . . . which is
a separate legal person, corporate or otherwise, and . . . a
majority of whose shares or other ownership interest is owned
by a foreign state." 28 U.S.C. § 1603(a), (b).
11 District courts have
without regard to amount in controversy of any nonjury civil
action against a foreign state as defined in section 1603(a)
of [Title 28] as to any claim for relief in personam with respect
to which the foreign state is not entitled to immunity either
under sections 1605-1607 of [Title 28] or under any applicable
28 U.S.C. §
12 In determining whether
personal jurisdiction exists over a foreign defendant who, like
Zhen Hua, has been served under a federal service of process
provision, see Titan I, 16 F. Supp.2d at 335 (noting
absence of "dispute that [Zhen Hua] was properly served
pursuant to 28 U.S.C. § 1608), a court should consider the
defendant's contacts throughout the United States and not just
those contacts with the forum. SeeChew v. Dietrich, 143
F.3d 24, 27-28, 30 (2d Cir. 1998) (holding in maritime action
that German defendant's contacts with the United States were
sufficient to establish personal jurisdiction); Go-Video,
Inc. v. Akai Elec. Co., 885 F.2d 1406, 1414-15 (9th Cir.
1989); see also Max Daetwyler Corp. v. R. Meyer,
762 F.2d 290, 293 (3d Cir. 1985).
13 The record also reveals
that Zhen Hua sent telex or facsimile communications directly
to Titan concerning arbitration.
14 Whether Seagos served as
Zhen Hua's agent for all purposes is immaterial. Zhen Hua engaged
in commercial negotiations with Titan through Seagos, which served
as Zhen Hua's agent for the exchange of communications.