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April 24, 1998


The opinion of the court was delivered by: HART




 DATED: April 24, 1998

 I. Introduction

 In this action, plaintiff Touton, S.A. ("Touton"), a French corporation dealing in cocoa, seeks to recover from Latif Maritime, Ltd. ("Latif"), owner of the ship M.V. Rizcun Trader, and from Defendant Winston Shipping Corporation ("Winston"), the charterer of that ship, damages incurred in connection with a shipment of cocoa from the Ivory Coast to Philadelphia.

 Winston has moved to stay this action pending arbitration, pursuant to a provision contained in a Liner Booking Note between Touton and Winston. For the reasons set forth below, the Court will grant Winston's motion, and order this proceeding stayed.

 II. Factual Background

 In February, 1997, a cargo of bagged cocoa was loaded aboard the Rizcun Trader in Abidjan in the Ivory Coast. While the ship was being loaded, a number of stowaways boarded and hid in her hold. After the loading was completed, the cargo was fumigated to kill insects. Tragically, several of the stowaways were killed by the fumigation process. Both the living stowaways and the bodies were removed from the ship before she left port. The Rizcun Trader then sailed from the Ivory Coast to Philadelphia with its cargo.

 When the Rizcun Trader reached Philadelphia, the United States Food and Drug Administration ordered that the cargo be detained pending inspection and clearance, due to its having been in contact with dead bodies. Several weeks later, after the segregation and destruction of 199 bags of cocoa which had been stored in the holds where the stowaways were found, the remaining cargo was cleared for release.

 Phibro Commodities, which had contracted to purchase the cargo from Touton, filed this action on March 21, 1997, and moved for expedited discovery to preserve certain evidence which was likely to be unavailable later, including the depositions of members of the Rizcun Trader crew. Phibro named Touton as a defendant, as well as Latif and Winston. (Later, Touton and Phibro agreed that Touton would retain title to the cargo, and then realign itself as the plaintiff in this action).

 On March 24, 1997, Judge Marjorie O. Rendell heard argument on Phibro's motion for expedited discovery, which was joined by Touton. Latif opposed the motion and moved to dismiss the action on the basis that any claims against it could be heard only in London, and only under English law.

 By order dated March 26, 1997, Judge Rendell granted the expedited discovery, and refused to dismiss the action, but only as it related to the ordered discovery. She offered no opinion on any of the forum issues raised by Latif's motion, limiting her ruling instead to the sole issue of whether limited discovery was necessary to perpetuate testimony. Specifically, she permitted the deposition of six members of the ship's crew and also permitted the inspection of certain documents, as well as the vessel. During oral argument on the present stay motion, counsel confirmed that this is the only discovery that has been taken to date.

 Touton, by now the plaintiff in this case, filed an amended complaint on April 10, 1997, which was served upon Latif and Winston. Latif filed an Answer and a Cross claim against Winston on April 29, 1997, in which it again raised, as its Twentieth Separate Defense, that the action should be "stayed and/or dismissed pursuant to the applicable forum selection and/or arbitration clauses" in force between the parties. Winston did not answer Touton's complaint until October 29, 1997. In the intervening months, Touton proceeded with the depositions allowed by Judge Rendell, and informally exchanged documents with Latif.

 In its Answer, Winston stated in its first numbered paragraph that "this lawsuit should be dismissed or stayed pursuant to the applicable forum selection clause(s) and arbitration clauses contained in the governing contract(s)." On December 11, 1997, Winston filed the present Motion to Stay Proceedings Pending Arbitration. Touton opposes the stay, arguing (1) that this dispute is not subject to London arbitration; and (2) that, even if it is, Winston has waived its right to arbitration. Latif, which moved for dismissal before Judge Rendell, has now withdrawn that motion and has joined Touton in opposing Winston's motion.

 III. Discussion

 A. The Parties Contracted for London Arbitration

 1. The Parties Agreed to Arbitrate This Dispute

 Under the Federal Arbitration Act, a written arbitration provision in a maritime transaction such as this is valid and enforceable, except upon such grounds as would invalidate any contract. 9 U.S.C. § 2. If an action is brought in a United States court regarding an issue covered by a written arbitration agreement, the court must stay the trial of the action upon application of one of the parties, until arbitration has taken place, except in the case of default. 9 U.S.C. § 3. Initially, therefore, the Court must decide whether the parties before it have agreed to arbitrate their dispute. See, Century Steel Erectors v. Aetna Casualty & Surety, 757 F. Supp. 659 (W.D. Pa. 1990).

 Despite never having raised the issue in its Answer to Winston's Stay Motion, or in any of its memoranda filed with this Court in opposition to that Motion, Touton took the position at oral argument that it never agreed to arbitrate this dispute. Touton invited the Court to compare the language of the marked-up bill of lading that is attached to the Liner Booking Note with the actual bills of lading for the cargo, issued by Winston after it completed loading the Rizcun Trader at Abidjan.

 Touton admits, as it must, that the bill of lading attached to the Liner Booking Note provides that disputes between the parties will be settled by London arbitration. Specifically, paragraph 3 of the bill *fn1" is modified to direct the reader to "Box 13" of the Liner Booking Note itself, which states "Arbitration, General Average London/English law to apply, Hague and Visby rules applicable." However, Touton argues that once the loading was completed and the voyage began, the Liner Booking Note no longer governed the relationship between Touton and Winston. Rather, that relationship was governed solely by the 22 actual bills of lading tendered by Winston to Touton. Unlike the version of the bill of lading attached to the note, the actual bills contained no modifications of any sort. *fn2"

 Touton conceded that Winston's failure to conform the actual bills of lading to the version attached to the Liner Booking Note may have been mere oversight. It argues, however, that since the bills themselves are negotiable instruments, their ...

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