been reached by federal courts in cases involving
agents, assignees, and third party beneficiaries. See, e.g., In re
Oil Spill by the AMOCO CADIZ off Coast of France, 659 F.2d at 794;
Interpool Ltd., 635 F. Supp. at 1504-05; Banque de Paris et des
Pays-Bas, 573 F. Supp. at 1469 ("[C]ase law supports the basic
principle that an assignee or other party whose rights are
premised on a contract is bound by the remedial provisions
bargained for between the original parties to the contract.").
The cases Federico cites to support his claim that he is not bound
by the mandatory arbitration agreement are easily distinguishable.
First, unlike in this case where Federico's claim is based
exclusively on the insurance contract, in Ocean Eagle Limitations
Proceedings, the plaintiff's cause of action was based on Puerto
Rico's direct action statute. See Ocean Eagle Limitations
Proceedings, 1974 AMC 1629 (D.P.R.). Similarly, in In re Talbott
Big Foot, Inc., the plaintiff's cause of action was based on
Louisiana's direct action statute. See In Re Talbott Big Foot,
Inc., 887 F.2d 611 (5th Cir. 1989).
Under English law, I would reach the same result. See Aasma, 95
F.3d at 405 (citing England's Third Party Act of 1930; Firma
C-Trade S.A. v. Newcastle Prot. and Indem. Ass'n (The FANTI);
Socony Mobile Oil Co., Inc. v. West of England Shipowners Mutual
Ins. Ass'n (London) Ltd. (The PADRE ISLAND), 2 All E.R. 705
Finally, Federico claims that Charterers has waived its right to
compel arbitration. See Pl.'s Mem. 13-14. Specifically, Federico
contends that Charterers waived its right to compel arbitration by
failing to attempt to compel arbitration during the litigation
between Federico and Gulf & Orient. See id. As a result of
Charterers' failure to invoke its right to compel arbitration at
that time, Federico argues that he was forced to expend
considerable time and expense obtaining a judgment against Gulf &
Orient. See id. at 13.
"Consistent with the strong preference for arbitration in federal
courts, waiver `is not to be lightly inferred.'" PaineWebber Inc.
v. Faragalli, 61 F.3d 1063, 1068 (quoting Gavlik Const. Co. v.
H.F. Campbell Co., 526 F.2d 777, 783 (3d Cir. 1975)). Generally,
waiver will only be found when 1) "the demand for arbitration came
long after the suit commenced," 2) "both parties ha[ve] engaged in
extensive discovery," and 3) the party alleging waiver has been
prejudiced by the delay. Id. at 1068-69 (quotation omitted). Given
the strong federal policy in favor of arbitration, any doubts
concerning an allegation of waiver should be resolved in favor of
arbitration. See Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24-25 (1983).
The fact that Charterers participated in the underlying lawsuit is
irrelevant to the question of waiver because Charterers was not a
party to that litigation and, moreover, Federico has failed to
establish that the underlying lawsuit involved an arbitrable
issue. See Seguros Banvenez, S.A. v. S/S Oliver Drescher,
761 F.2d 855, 862 (2d Cir. 1985) ("Waiver may not be inferred on the basis
of conduct relating to non-arbitrable issues."); Dickinson v.
Heinold Sec., Inc., 661 F.2d 638, 642 (7th Cir. 1981) ("[N]o waiver
of the right to arbitrate can occur from conducting discovery on
non-arbitrable claims."); Central Jersey Freightliner, Inc. v.
Freightliner Corp., 987 F. Supp. 289, 301 (D.N.J. 1997) ("Waiver
cannot be inferred from conduct relating to non-arbitrable
issues."). As a result, Federico has failed to
convince the court
that any of the three circumstances necessary to show waiver is
present in this case. First, process was served upon Charterers on
September 18, 2000, and Charterers filed its motion to compel
arbitration approximately one month later, on October 26, 2000.
See Aff. of Patricia Kane (Doc. No. 5); Mot. to Dismiss. Second,
although free to do so, the parties have apparently chosen not to
engage in extensive discovery pending disposition of this motion.
Third, the only allegation of prejudice Federico has made involves
his lawsuit against Gulf & Orient. There can be no claim of
prejudice in this case because Charterers has almost immediately
sought to compel arbitration. Because Federico has failed to show
unnecessary delay, extensive discovery, or any prejudice
whatsoever, a finding that Charterers has waived its right to
compel arbitration is clearly unwarranted.
For the above stated reasons, I will order the action stayed*fn4
pending the outcome of arbitration in, as Rule 43 specifies,
Motion to Dismiss
Because I have found that the mandatory arbitration clause is
applicable to the current proceedings, I will not address the
question of whether this court has personal jurisdiction over
Charterers or whether service of process was sufficient.
Because Federico's third party cause of action is based
exclusively on the marine protection and indemnity insurance
contract between Charterers and Gulf & Orient, the mandatory
arbitration clause in that contract is applicable to these
proceedings. Having concluded that Charterers has not waived its
right to compel arbitration, I will order the action stayed
pending the outcome of arbitration in England.
AND NOW, this day of June, 2001, upon consideration of Charterers'
motion to dismiss the amended complaint (treated as a motion to
compel arbitration and stay proceedings pending arbitration or, in
the alternative, to dismiss), Federico's response in opposition,
Charterers' reply thereto, and various supplementary filings, IT
IS HEREBY ORDERED that:
(1) Charterers' motion to dismiss (treated as a
motion to compel arbitration and stay proceedings
pending arbitration) is GRANTED, and
(2) the action is stayed pending arbitration,
under Rule 43 of the 1996 Rules, in England.