Milestones: FR 8 Singapore Pte. Ltd. v. Albacore Mar., Inc., 754 F.Supp.2d 628 (S.D.N.Y. 2010)

Summary:

Plaintiff is a Singaporean corporation. Defendant Albacore Maritime, Inc. ("Albacore") is a Marshall Islands corporation, which is in turn owned by Prime Marine Corp. ("Prime"), also a Marshall Islands corporation. Albacore contracted to purchase a ship from plaintiff, and reneged on the contract due to the financial crisis of 2008-09. The contract had a clause that it "shall be governed by and construed in accordance with English law and any dispute arising out of this Agreement shall be referred to arbitration in London". Plaintiff began arbitration against Albacore, and sought to compel Prime into arbitration based on the allegation of veil-piercing between Prime and Albacore.

The court first found that it had subject matter jurisdiction under Section 4 of the Federal Arbitration Act, notwithstanding the fact that two foreign parties are involved. (Section 4 provides: "A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28 . . . , for an order directing that such arbitration proceed in the manner provided for in such agreement.") 

The court then had to make a choice-of-law determination to decide the law to apply on plaintiff's veil-piercing claim. After noting that "[w]here the choice of law in a Convention case is between the law specified by the choice-of-law clause and federal common law, Second Circuit precedent has been less than crystal clear[,]" the court found that the law specified in the forum selection clause (i.e. English law) controls. The court then ordered the parties to further brief on the veil-piercing implications under English law.

Takeaway:

This is about as complicated as an arbitration-related case can get. First significant point is the extraordinary jurisdiction under Section 4 of the FAA, which essentially opens up the U.S. court to any arbitration dispute anywhere in the world with any parties--an indicator of just how pro-arbitration U.S. law is. Another significant point is the choice-of-law jurisprudence, which is always a complicated puzzle when a choice-of-law clause is litigated in a forum that does not use the law designated by the clause.