Article

Note: Commercial Metals Company (Buyer), contracted to purchase 19,825 MT of steel beams from, Compania Espanoal de Laminacion, S.L. (Seller). To make the payment, Buyer's bank issued a command letter of credit in favor of Seller, which required presentation of clean bills of lading. The Seller hired Barna Shipping S.L. (Freight Forwarder) to arrange for shipment to U.S. ports and it chartered MV SATURNUS from Oldendorff (Vessel Owner) to carry the cargo.

Due to a pre-loading damage to the goods, the Master directed the Vessel Owner to issue claused bills of lading. However, Freight Forwarder made a request to the Vessel Owner to issue the clean bills of lading instead of the claused bills of lading, which it did and the Issuer honored the letter of credit. On the arrival of the goods, Buyer/Assignee refused to accept the cargo or make arrangements for discharge since it was damaged. A series of actions followed including arrest of the vessel and an in rem action against the goods in which Buyer/Assignee sought relief. The Vessel Owner sought to compel arbitration, which was included in the charter agreement between Vessel Owner and Freight Forwarder.

The United States District Court, Southern District of Texas, Ewing Werlein, JR. ordered a stay of the proceeding pending arbitration in London, reasoning that there was a valid arbitration agreement between the parties and that the arbitration agreement controls the dispute. On appeal, the United States Court of Appeals, Fifth Circuit affirmed in a per curiam opinion.

[JEB/ly]

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