## Facts

- Charles and Clara Jones, U.S. citizens, jointly owned the MISS JADE II, a 33-foot pleasure craft home-ported in Freeport, New York.
- During a trip on August 20, 1991, the vessel was hit by a wave, rolled over, and became stranded on Atlantic Beach, New York.
- The U.S. Coast Guard contacted Sea Tow Services Freeport NY, Inc., a U.S. salvage/towing company, to assist.
- Before refloating the vessel, Sea Tow required execution of a Lloyd’s Open Form salvage agreement (LOF) providing for arbitration in London under English salvage law.
- Clara Jones signed the LOF after indicating difficulty understanding its terms; Sea Tow then successfully refloated and salvaged the vessel.
- Sea Tow sought more than $15,000 as salvage compensation and pursued security through the Joneses’ marine insurer.
- The Joneses disputed the salvage claim and the LOF’s enforceability, particularly the London arbitration provision.

## Issues

1. Whether the New York Convention (9 U.S.C. §§ 201–208) applies to an LOF between U.S. citizens arising from a wholly domestic salvage incident, based solely on a contractual selection of London arbitration and English law.
2. If the Convention does not apply, whether the district court had authority under Chapter 2 of the Federal Arbitration Act to stay the action and direct arbitration to proceed abroad.

## Decision

- The Second Circuit held the New York Convention did not apply because the parties were U.S. citizens and the dispute was purely domestic.
- The LOF’s London seat and English-law clause, without other international elements, did not supply the required connection to a foreign state.
- The court ruled the district court exceeded its jurisdiction by staying the case and directing arbitration in England.
- The court vacated the stay order and remanded for further proceedings in the Eastern District of New York.

## Legal Principles

- The New York Convention requires a genuine international element; a “reasonable relation with a foreign state” is not satisfied merely by a contractual choice of foreign arbitration and foreign substantive law in an otherwise domestic dispute.
- Chapter 2 of the Federal Arbitration Act does not confer jurisdiction to compel or channel a purely domestic controversy into foreign arbitration based only on forum- and law-selection clauses.
- In domestic maritime salvage disputes between U.S. parties, challenges to the validity and effect of a salvage agreement may be litigated in a U.S. forum absent an adequate Convention nexus.

## Conclusion

The Second Circuit limited the reach of the New York Convention by holding that a domestic salvage dispute between U.S. parties could not be sent to London arbitration solely because the contract selected a foreign forum and foreign law, and it vacated the district court’s stay pending foreign arbitration.


Jones v. Sea Tow Servs. Freeport NY, Inc., 30 F.3d 360 (2d Cir. 1994)