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A bill of lading between two parties that incorporates the terms of a charter agreement between one party to the bill and a third party is sufficient to bind both parties to the bill to the terms of the charter agreement, the Second Circuit Court of Appeals held.
In Ibeto Petrochemical Industries Ltd v. M/T Beffen, No. 05-6610 CV, 2007 WL 106165 (2d Cir. Jan. 17, 2007), Ibeto brought an action against the Beffen and Bryggen Shipping, claiming that a shipment of oil was contaminated with seawater. Bryggen Shipping shipped the oil on the Beffen to Ibeto in Nigeria.
Ibeto brought claims in a Nigerian court and a federal court in New York. Additionally, Ibeto commenced an arbitration proceeding in London, but later closed the arbitration. The district court in New York held that the parties' dispute should be resolved in arbitration, pursuant to an arbitration agreement, and issued an anti-foreign suit injunction.
Ibeto appealed to this Court, arguing that the anti-foreign suit injunction should be lifted because Ibeto was not a party to the arbitration agreement. However, this Court found that Ibeto was a party to the arbitration agreement and affirmed the district court's ruling.
The arbitration agreement appeared in a document that was incorporated into the Charter Fixture Agreement between Bryggen Shipping, and Chemlube, the shipper. The Charter Fixture Agreement did not name Ibeto. However, the bill of lading between Ibeto and Bryggen Shipping incorporated this Charter Fixture Agreement.
Noting the general rule that "[w]here terms of the Charter Party are specifically incorporated by reference in the bill of lading, the Charter Party terms alone are to be looked to for the contract of the parties," the Court held that the terms of the agreement between Bryggen Shipping and Chemlube formed the terms of the agreement between Ibeto and Bryggen Shipping. Therefore, Ibeto was subject to the arbitration agreement.
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