Vimar Seguros Y Reaseguros, S. A., Petitioner v. M/V Sky Reefer

515 U.S. 528 (1995)

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Nature of the Case

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Facts

Bacchus Associates (Bacchus) dealt with Galaxie Negoce, S. A. (Galaxie), a Moroccan fruit supplier. Bacchus contracted to purchase a shipload of fruit and chartered a ship to transport it from Morocco to Massachusetts. The ship was the M/V Sky Reefer, a refrigerated cargo ship owned by M. H. Maritima, S. A., a Panamanian company, and time-chartered to Nichiro Gyogyo Kaisha, Ltd., a Japanese company. Stevedores hired by Galaxie loaded and stowed the cargo. When it received the cargo from Galaxie, Nichiro as carrier issued a form bill of lading to Galaxie as shipper and consignee. Once the ship set sail from Morocco, Galaxie tendered the bill of lading to Bacchus. The bill of lading contained arbitration and choice-of-law clauses. The contract was to be governed by Japanese law. Any dispute was to be referred to arbitration in Tokyo by the Tokyo Maritime Arbitration Commission (TOMAC) of The Japan Shipping Exchange, Inc., in accordance with the rules of TOMAC and any amendment thereto, and the award given by the arbitrators shall be final and binding on both parties. Upon arrival in Massachusetts, Bacchus discovered that thousands of boxes of oranges had shifted in the cargo holds, resulting in over $1 million in damage. Bacchus received $ 733,442.90 compensation from P. P and Bacchus then brought suit against Ds in rem in the District Court for the District of Massachusetts under the bill of lading. Ds moved to stay the action and compel arbitration in Tokyo under the bill of lading and § 3 of the FAA, which requires courts to stay proceedings and enforce arbitration agreements covered by the Act. P and Bacchus opposed the motion, arguing the arbitration clause was unenforceable under the FAA both because it was a contract of adhesion and because it violated COGSA § 3(8) in that the inconvenience and costs of proceeding in Japan would 'lessen . . . liability' as those terms are used in COGSA. The District Court held Congress defined the arbitration agreements enforceable under the FAA to include maritime bills of lading, 9 U.S.C. § 1, and that P was a sophisticated party familiar with the negotiation of maritime shipping transactions. The District Court held Congress defined the arbitration agreements enforceable under the FAA to include maritime bills of lading, 9 U.S.C. § 1, and that P was a sophisticated party familiar with the negotiation of maritime shipping transactions. It rejected the argument that requiring the parties to submit to arbitration would lessen respondents' liability under COGSA § 3(8). It then certified for interlocutory appeal under 28 U.S.C. § 1292(b) its ruling to compel arbitration, stating that the controlling question of law was 'whether [COGSA § 3(8)] nullifies an arbitration clause contained in a bill of lading governed by COGSA.' The appeals court affirmed the order to arbitrate. The Court of Appeals assumed the clause was invalid under COGSA and resolved the conflict between the statutes in favor of the FAA, which it considered to be the later enacted and more specific statute. P appealed.