## Facts

- Chemical-trading shippers (JLM and affiliates) purchased parcel-tanker transportation from major ocean carriers through individual voyage charters using the standardized ASBATANKVOY form.
- Each charter party contained a broad arbitration clause requiring arbitration in New York or London for disputes “arising out of” the charter.
- JLM filed a putative class action alleging the carriers conspired to fix and stabilize freight rates, coordinate bids, allocate customers and routes, and suppress competition in violation of the Sherman Act, a state antitrust statute, and related state-law theories.
- JLM claimed injury from paying supracompetitive freight charges on charters executed under the ASBATANKVOY form.
- Several charters were executed by subsidiaries or affiliates, while JLM sued parent companies and related entities as part of a unified carrier group.

## Issues

1. Whether the broad “arising out of” arbitration clause in the ASBATANKVOY form covers federal antitrust price-fixing claims and overlapping state-law claims based on alleged overcharges under the charters.
2. Whether parent companies and affiliated entities that did not sign every charter party may compel arbitration of claims tied to the charter parties.
3. Whether Congress intended Sherman Act horizontal price-fixing claims to be nonarbitrable, including where the chosen forum may be international and foreign law might be implicated.
4. Whether claims that the standardized charter is a contract of adhesion (and the arbitration provision is unconscionable) are for the court or the arbitrator.

## Decision

- The Second Circuit reversed the district court’s denial of the motions to compel arbitration and remanded with instructions to compel arbitration and stay the litigation.
- The court held the arbitration clause’s breadth created a strong presumption of arbitrability, and the antitrust and related claims had a significant relationship to the charter parties because the alleged injury consisted of overcharges paid under those contracts.
- The court held Sherman Act claims, including horizontal price-fixing claims, are not categorically exempt from arbitration; concerns about foreign forums or foreign law were speculative at the contract-enforcement stage.
- The court permitted certain nonsignatory parents and affiliates to enforce arbitration under principles including equitable estoppel and agency where the claims treated the defendants as a coordinated enterprise and were intertwined with the charter relationships.
- The court held that a general challenge that the standardized charter is a contract of adhesion was for the arbitrator under the separability doctrine because it was not directed specifically at the arbitration clause.

## Legal Principles

- A broadly worded arbitration clause covering disputes “arising out of” a contract is construed with a strong presumption in favor of arbitrability; claims need not sound in contract if they bear a significant relationship to the contractual relationship.
- Federal antitrust claims, including horizontal price-fixing claims, are arbitrable absent clear congressional intent to preclude arbitration; complexity or class allegations do not alone defeat arbitration.
- Potential application of foreign law or a foreign arbitral seat generally does not bar compelling arbitration at the outset; statutory-rights concerns may be addressed at award enforcement if they materialize.
- Nonsignatories may compel arbitration where the claims are intertwined with contracts containing arbitration clauses and the plaintiff’s allegations and conduct make it inequitable to avoid arbitration (including through estoppel and agency-based theories).
- Under separability, a challenge to the contract as a whole (including adhesion allegations) is for the arbitrator unless the challenge is specifically directed to the arbitration agreement.

## Conclusion

The Second Circuit required arbitration of alleged parcel-tanker cartel overcharge claims because the broad charter-party arbitration clauses encompassed disputes tied to the contracts, Sherman Act claims were not exempt from arbitration, related nonsignatory entities could enforce arbitration due to the intertwined allegations, and generalized adhesion challenges were for the arbitrator rather than the court.


JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163 (2d Cir. 2004)