## Facts

- Hoogovens Ijmuiden Verkoopkantoor B.V., a Dutch seller/shipper, arranged carriage of steel coils from the Netherlands to Bridgeport, Connecticut aboard the M/V *Sea Cattleya*.
- On January 12, 1989, Hoogovens and Van Ommeren Bulk Shipping B.V. entered into a charter party governing the carriage.
- The charter party included a clause stating: “General Average and arbitration to be settled in the Netherlands.”
- The coils were allegedly damaged during the voyage, and Hoogovens filed an admiralty cargo-damage action in the Southern District of New York.
- Van Ommeren moved to stay the claims against it pending arbitration in the Netherlands under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (9 U.S.C. § 201 et seq.).
- Hoogovens argued the clause was, at most, a location designation for arbitration (if otherwise required) or limited arbitration to general average matters, not cargo-damage claims.
- Sanko Steamship Co., Ltd. sought leave to amend its answer to assert a cross-claim against Van Ommeren for indemnity and contribution.

## Issues

1. Whether the charter party clause “General Average and arbitration to be settled in the Netherlands” is a written, enforceable agreement requiring arbitration of Hoogovens’s cargo-damage claim, thereby mandating a stay under the New York Convention.
2. Whether Sanko should be granted leave under Federal Rule of Civil Procedure 15(a) to amend its answer to assert a cross-claim for indemnity and contribution against Van Ommeren.

## Decision

- The court denied Van Ommeren’s motion to stay the action pending arbitration.
- The court held the clause was grammatically and substantively ambiguous and did not clearly obligate the parties to arbitrate cargo-damage disputes.
- The court granted Sanko leave to amend its answer to add a cross-claim for indemnity and contribution against Van Ommeren.

## Legal Principles

- A stay or referral to arbitration under the New York Convention requires a written agreement to arbitrate the dispute at issue; the federal policy favoring arbitration presupposes such an agreement.
- The presumption favoring arbitration concerns the scope of an arbitration agreement once an agreement is established; it does not permit a court to treat unclear language as creating a mandatory arbitration obligation.
- Contract language that can reasonably be read as designating a place for potential arbitration, or as limited to specific categories of disputes (such as general average), is insufficient to compel arbitration of other disputes absent clear agreement.
- Leave to amend under Fed. R. Civ. P. 15(a) should be freely given when justice requires, particularly where the amendment arises from the same transaction and does not cause undue delay, bad faith, or prejudice.

## Conclusion

The court refused to stay an admiralty cargo-damage suit under the New York Convention because the charter party’s “General Average and arbitration to be settled in the Netherlands” clause did not clearly constitute a binding agreement to arbitrate cargo claims, and it permitted a co-defendant to amend its pleading to assert related indemnity and contribution claims.


Hoogovens Ijmuiden Verkoopkantoor B.V. v. M/V Sea Cattleya, 852 F. Supp. 6 (S.D.N.Y. 1994)