## Facts

- Chas. Kurz & Co., Inc. owned the U.S.-flag tanker *Valley Forge* and operated it through an affiliated company, Keystone Shipping Corporation.
- Texport Oil Company chartered the vessel under a voyage charter to carry gasoline blending stocks from a U.S. Gulf port to an East Coast port.
- The charter party was executed by Kurz and Texport and contained a broad New York arbitration clause covering “any and all disputes” arising out of the charter.
- Keystone did not sign the charter party in its own name; the parties agreed Keystone acted as agent for its disclosed principal, Kurz, in connection with the charter.
- After cargo delivery, a dispute arose concerning the cargo’s condition and related responsibilities involving Texport, the petitioners, and a terminal operator that stored the cargo.
- Texport filed suit in state court against the vessel (in rem) and multiple defendants including Kurz and Keystone; the action was removed to federal court and transferred.
- Kurz and Keystone served Texport with a demand for arbitration; Texport agreed to arbitrate with Kurz but refused to arbitrate with Keystone on the ground that Keystone was not a signatory.
- Kurz and Keystone petitioned in federal court to compel arbitration between Texport and Keystone and to stay the litigation between them pending arbitration.

## Issues

1. Whether a nonsignatory vessel operator that acted as agent for a disclosed signatory principal may compel arbitration under the principal’s charter party arbitration clause.
2. Whether the court should stay the related litigation between the nonsignatory agent and the charterer pending arbitration.

## Decision

- The court granted the petition to compel arbitration between Keystone and Texport.
- The court held Keystone could invoke the charter party’s arbitration clause despite not signing the charter in its own name because Keystone acted as Kurz’s disclosed agent in the charter relationship.
- The court stayed the litigation between Keystone and Texport pending arbitration to avoid parallel proceedings and to protect the arbitration process.

## Legal Principles

- Under FAA § 4, a court may compel arbitration when (1) a written arbitration agreement exists, (2) the dispute falls within its scope, and (3) the petition does not present a formation or compliance dispute that bars enforcement.
- A broadly worded clause covering disputes “arising out of” a charter party generally encompasses performance-related cargo condition disputes.
- A nonsignatory agent acting within the scope of authority for a disclosed principal may, in appropriate circumstances, enforce the principal’s arbitration agreement against the counterparty, particularly where the dispute is rooted in the contract’s performance and the parties’ relationship arises from that contract.
- Federal arbitration policy supports enforcing arbitration commitments to prevent duplicative litigation and potentially inconsistent outcomes where claims against the principal and its agent are intertwined.

## Conclusion

The court compelled Texport to arbitrate with Keystone and stayed the related litigation, concluding that Keystone’s status as a disclosed agent operating the vessel under the charter was sufficient to allow it to enforce the charter party’s broad arbitration clause under the FAA.


Keystone Shipping Corp. v. Texport Oil Co., 782 F. Supp. 28 (S.D.N.Y. 1992)