U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd.

241 F.3d 135, 2001 A.M.C. 2080, 2001 U.S. App. LEXIS 2247
CourtCourt of Appeals for the Second Circuit
DecidedFebruary 15, 2001
Docket1998
StatusPublished
Cited by142 cases

This text of 241 F.3d 135 (U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., Ltd., 241 F.3d 135, 2001 A.M.C. 2080, 2001 U.S. App. LEXIS 2247 (2d Cir. 2001).

Opinion

PARKER, Circuit Judge:

Respondent-Appellant Guangzhou Zhen Hua Shipping Co., Ltd. (“Zhen Hua”) appeals from a judgment of the United States District Court for the Southern District of New York (William C. Conner, *138 Judge), entered October 7, 1998, upon an August 5, 1998 opinion and order, as amended September 25, 1998, granting the motion of Petitioner-Appellee to compel arbitration in London and denying the motion of Respondent-Appellant to dismiss on the grounds of lack of subject-matter jurisdiction, lack of personal jurisdiction, and improper venue, see U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 16 F.Supp.2d 326 (S.D.N.Y.1998), (“Titan I), and upon a September 29, 1998 opinion and order, clarifying the scope of arbitration, see U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 182 F.R.D. 97 (S.D.N.Y.1998), (“Titan II”).

On appeal, Zhen Hua contends principally that the district court exceeded the scope of its jurisdiction under the Federal Arbitration Act, 9 U.S.C. §§ 1-16, (the “FAA”) by compelling arbitration of the parties’ dispute pursuant to a charter party 1 allegedly negotiated by the parties in September 1995. More specifically, Zhen Hua argues that the court should not have determined whether the parties had formed a charter party because the parties had allegedly negotiated an “ad hoc” agreement to arbitrate that issue and that the court erred in finding that no such “ad hoc” agreement existed. In addition, Zhen Hua asserts that the district court lacked subject-matter jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1603-1611, that the district court lacked personal jurisdiction over Zhen Hua, and that venue in the Southern District of New York was improper. For the reasons set forth below, we affirm.

I. BACKGROUND

Petitioner-Appellee U.S. Titan, Inc. (“Titan”) is a corporation organized under the laws of Texas, with its principal place of business in Pelham, New York. Zhen Hua is a state-owned corporation organized under the laws of the People’s Republic of China, engaged primarily in the shipping industry, with its principal place of business in Guangzhou (also known as Canton), China.

A. The Negotiations

In August 1995, Titan and Zhen Hua began negotiating a time charter 2 of the M/T BIN HE (the “BIN HE”), a ship owned by Zhen Hua. The parties conducted negotiations through two shipbrokers in Connecticut, Seabrokers (representing Titan) and Seagos (representing Zhen Hua). The two Connecticut brokers served as conduits for the transmission of many of the communications from one party to the other. Most of the parties’ communications during the negotiations are memorialized in writings transmitted via facsimile or telex between and among the brokers and the parties. These communications establish the following chronology of the negotiations.

On September 22, 1995, Zhen Hua offered to charter the BIN HE to Titan for 12 months at $15,250 per day, with an option for an additional 12 months at $15,750 per day. The parties proceeded to negotiate different time periods and rates, as well as several other terms, the details of which are not relevant to the issues before us. On September 26, 1995, Zhen Hua sent Titan a “firm counter [offer]”:

Aeeept/Except:
Period— 6 mos. plus/minus 30 days at CHOPT
CHOPT next 12 mos.
Rates— $15,250 first period
Optional $15,750 second period.

*139 Upon receipt of this telex, Titan informed its broker, Seabrokers, that “Charterers are in agreement and accept Owner[’]s last offer.” Seabrokers then sent via fax to Seagos and Titan a fixture “recap,” confirming the “Owners and Charterers’ agreement.” The agreement was based on the “Shelltime 4 Time Charter,” a standard time charter, see Michael Wilford et. al., Time Charters 28-36 (4th ed.1995), containing an arbitration clause that provides for arbitration in London at the election of either party. 3 The recap from Sea-brokers to Seagos and Titan contained, in part, the following language:

WE ARE PLEASED TO RECAP OWNER[’]S AND CHARTERERS’ AGREEMENT AS FOLLOWS, FOR THE TIMECHARTER OF: VESSEL:
MT BIN HE ...
PERIOD— 6 MOS. PLUS/MINUS 30 DAYS AT CHOPT CHOPT NEXT 12 MOS. UNDERSTOOD e=/30 DAYS ONLY TO BE USED ONCE, DURING THE FINAL PERIOD.
RATES— $15,250 FIRST PERIOD. $15,750 FOR OPTIONAL PERIOD!.]
SUBJECTS— CP DET’LS, SATISFACTORY INSPECTION OF THE VSL AT DD, RELEASE BY OWNERS FROM CAMARO TC, THENCE U.S. TITAN BOD APPROVAL WITHIN 3 DAYS FOLLOWING RECEIPT OF THEIR DEN-HOLM INSPECTION REPORT. 4

After Zhen Hua dry-docked the BIN HE in Hong Kong, Denholm Ship Management (Overseas) Ltd. (“Denholm”)' conducted the inspection contemplated by the parties. Following a preliminary inspection, which revealed several problems with the ship, Zhen Hua apparently began considering a sale of the BIN HE.

On October 19, 1995, Titan received from Denholm an initial summary report on the drydock inspection. On October 23, Titan informed Seabrokers that it had concerns about the seaworthiness of the BIN HE, but would await Denholm’s final report. Titan indicated also that it was interested in a “purchase option” and “would like to know what steps the Owner intends to take to bring the vessel up to an acceptable trading standard.” Seabrokers relayed this message to Seagos, which, acting through Henry Chen, responded later that day:

NOW OWNERS HAVE DECIDED TO SELL THE VESSEL ON CASH BASIS. THEY ARE ASKING $27 MILLION ON THE MARKET. BUT I RECKON WILL GO AT $26 MILLIONS [sic]. PROSPECTIVE BUYERS WILL BE INSPECTING THIS WEEK WHILE THE VSL IS STILL IN THE YARD.
OWNERS THANK TITAN’S INTEREST AND ADVICE. THEY ASK U.S. TO CONVEY THEIR WILLINGNESS TO ENTERTAIN FUTURE BUSINESS PROPOSALS AND LOOK FOR *140 WARD TO POSSIBLE COOPERATION.

On October 24, Titan faxed a message to Seabrokers, noting that the final inspection had not yet arrived and remarking:

It is encouraging that [Zhen Hua is] now in a position to sell the vessel if we do not exercise our option for the time charter. We assume therefore that the vessel has been successfully withdrawn from Camaro. We await Owners [sic] confirmation of this withdrawl [sic] per our % Agreement, so we can begin marketing the vessel for voyage and/or consecutive voyage charter.

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Bluebook (online)
241 F.3d 135, 2001 A.M.C. 2080, 2001 U.S. App. LEXIS 2247, Counsel Stack Legal Research, https://law.counselstack.com/opinion/us-titan-inc-v-guangzhou-zhen-hua-shipping-co-ltd-ca2-2001.