## Facts

- Thyssen, Inc. purchased steel coils from Metalsrussia Corporation Ltd., which arranged ocean carriage to the United States on the M/V Markos N via a subcharter.
- The charter party governing the carriage contained an English-law clause and a London arbitration clause covering disputes arising under the charter party or bills of lading issued under it.
- Bills of lading issued for the shipment expressly incorporated “all terms and conditions” of the referenced charter party, including the “Law and Arbitration Clause.”
- Thyssen, as consignee/holder of the bills of lading, was not a signatory to the charter party.
- Upon arrival, the steel coils were allegedly damaged by rust.
- Thyssen timely filed an in rem/in personam cargo-damage action in federal court and obtained security for its claim through a P&I Club letter of undertaking up to $600,000, reserving defenses.
- After transfer to the Southern District of New York, vessel interests moved to stay the litigation and compel London arbitration based on the incorporated arbitration clause.
- Thyssen argued it was not bound as a non-signatory and that sending the dispute to arbitration risked impairment of rights under COGSA and the Hague Rules, including the one-year limitation for “bringing suit.”

## Issues

1. Whether the bills of lading validly incorporated the charter party’s London arbitration clause so as to bind a non-signatory consignee/holder.
2. Whether enforcing the foreign arbitration clause and staying the federal action would improperly deprive the cargo claimant of substantive rights under COGSA, including the Hague Rules one-year time bar.
3. Whether Thyssen’s timely U.S. filing and acquisition of security affected the limitation and prejudice analysis when the merits were referred to arbitration.

## Decision

- The court held that the bills of lading clearly and specifically incorporated the charter party, including the London arbitration clause.
- The court concluded that Thyssen, as holder/consignee under the bills of lading, was bound by the incorporated arbitration agreement despite not signing the charter party.
- The court granted the motion to stay the federal court action pending London arbitration pursuant to the Federal Arbitration Act.

## Legal Principles

- A bill of lading may incorporate by reference a charter party’s arbitration clause; clear language identifying incorporation of the “law and arbitration” clause is sufficient.
- Non-signatory cargo interests taking under a bill of lading can be bound to an incorporated charter party arbitration clause as part of the contract of carriage.
- Federal courts generally enforce foreign arbitration clauses in maritime contracts under the FAA, including in COGSA-governed carriage, unless enforcement would effectively negate the cargo claimant’s substantive statutory protections.
- In assessing prejudice from referral to arbitration where a one-year limitation is asserted, the court may consider that the claimant timely invoked judicial process and obtained security, reducing the risk that arbitration operates as a forfeiture of the claim.

## Conclusion

The court stayed the cargo-damage litigation and compelled London arbitration because the bills of lading unmistakably incorporated the charter party’s arbitration clause, binding the consignee/holder, and enforcement of the arbitration forum was not shown to extinguish substantive COGSA protections given the circumstances, including timely U.S. proceedings and secured recovery.


Thyssen, Inc. v. M/V Markos N, 1999 A.M.C. 2515 (S.D.N.Y. 1999)