The parties to an agreement for arbitration of disputes arising
out of a charter party cannot, by stipulation, make unavailable the
right of the aggrieved party under § 8 of the United States
Arbitration Act to begin his proceeding by "libel and seizure of
the vessel . . . according to the usual course of admiralty
proceedings." P. 322 U. S.
138 F.2d 765 affirmed.
Certiorari, 321 U.S. 758, to review the reversal of a judgment,
48 F. Supp. 385, dismissing a libel in admiralty.
Page 322 U. S. 43
MR. JUSTICE ROBERTS delivered the opinion of the Court.
We granted certiorari because this case poses an important
question arising under the United States Arbitration Act. [Footnote 1
] The question arises in
these circumstances. The petitioner Smith-Rowland Company, Inc., as
owner, chartered to the respondent, American Sugar Refining
Company, the barge "Anaconda" for a voyage from Havana, Cuba, to
Port Everglades, Florida. After arrival at the latter port, the
respondent filed in a federal district court a libel in
against the petitioner with a prayer for process of
foreign attachment, and in rem
against the vessel, which
was seized by the marshal.
Smith-Rowland Company, Inc., appearing specially, excepted to
the jurisdiction of the court, relying on a provision of the
charter party which was:
"Any and all differences and disputes of whatsoever nature
arising out of this charter shall be put to arbitration at the
final place of discharge . . . pursuant to the provisions of the
United States Arbitration Act . . . except that the provisions
of Section 8 thereof shall not apply to any arbitration
Section 8 of the Act is:
"If the basis of jurisdiction be a cause of action otherwise
justiciable in admiralty, then, notwithstanding anything herein to
the contrary, the party claiming to be aggrieved may begin his
proceeding hereunder by libel and seizure of the vessel . . .
according to the usual course of admiralty proceedings, and the
court shall then have jurisdiction to direct the parties to proceed
with the arbitration and shall retain jurisdiction to enter its
decree upon the award."
The court treated the petitioner's exception as a motion to
dismiss, and ordered dismissal [Footnote 2
] on the ground that it was competent to the
parties, while availing themselves of the
Page 322 U. S. 44
provisions of the Act rendering arbitration agreements
enforceable in courts of admiralty, to preclude resort to the usual
process of seizure as security for compliance with any arbitral
award. The respondent appealed from the order, and the parties
entered a stipulation for value pursuant to which the barge was
released from the marshal's custody. The Circuit Court of Appeals
reversed the judgment. [Footnote
] We hold its action was right.
Within the spheres of its operation -- maritime transactions and
transactions in commerce, interstate and with foreign nations --
the Arbitration Act rendered a written provision in a contract by
the parties to such a transaction, to arbitrate controversies
arising thereout, specifically enforceable. Thereby Congress
overturned the existing rule that performance of such agreements
could not be compelled by resort to courts of equity or admiralty.
After declaring (§ 2) [Footnote
] such agreements to be enforceable, Congress, in succeeding
sections, implemented the declared policy. By § 3, it provided
"if any suit or proceeding be brought in any of the courts of
the United States upon any issue referable to arbitration under an
agreement in writing for such arbitration, the court . . . shall on
application of one of the parties stay the trial . . . until such
arbitration has been had"
if the applicant is not in default in proceeding with such
arbitration. The section obviously envisages action in a court on a
cause of action, and does not oust the court's jurisdiction of the
action, though the parties have agreed to arbitrate. And it would
seem there is nothing to prevent the plaintiff from commencing the
action by attachment if such procedure is available
Page 322 U. S. 45
under the applicable law. This section deals with suits at law
or in equity. The concept seems to be that a power to grant a stay
is enough without the power to order that the arbitration proceed,
for, if a stay be granted, the plaintiff can never get relief
unless he proceeds to arbitration.
Section 8, that with which we are especially concerned, deals
with the admiralty jurisdiction. It has already been quoted. If the
cause of action is one cognizable in admiralty, then, though the
parties have agreed to arbitrate, "notwithstanding anything
in the Act] to the contrary,
the party claiming to be aggrieved may begin "his proceeding
hereunder by libel and seizure," "according to the usual course of
admiralty proceedings," and the court may direct the parties to
proceed with arbitration and retain jurisdiction to enter its
decree on the award. Here again, the Act plainly contemplates that
one who has agreed to arbitrate may nevertheless prosecute his
cause of action in admiralty, and protects his opponent's right to
arbitration by court order. Far from ousting or permitting the
parties to the agreement to oust the court of jurisdiction of the
cause of action, the statute recognizes the jurisdiction, and saves
the right of an aggrieved party to invoke it.
Finally, we turn to Section 4, which permits "a party aggrieved
by the alleged failure" of his opponent to arbitrate as agreed to
petition any federal court of appropriate jurisdiction at law, in
equity, or in admiralty for an order directing that arbitration
proceed. Provision is made for framing an issue and trying it as to
whether the parties are bound to arbitrate and the entry of an
order accordingly. From this provision it is clear that the parties
may proceed in an admiralty case without the customary libel and
seizure. And it has been so held. [Footnote 6
Page 322 U. S. 46
Section 8 says the aggrieved party "notwithstanding" the right
granted by Section 4, may begin a suit in admiralty by libel and
seizure. Our question is whether the Act contemplates or permits
consensual elimination of the procedure thus saved by the Act and
contractual confinement of the aggrieved party's resort to a court
to a petition for an order to arbitrate under Section 4. We think
the answer must be in the negative. Congress may have thought it
wise not to raise doubts under the admiralty clause of the
constitution. It may have thought that in many causes in admiralty
if the aggrieved party could not seize the ship of his opponent, an
arbitral award would be wholly unenforceable as the vessel might
seldom or never again be within the jurisdiction of our courts.
But, whatever its reasons, Congress plainly and emphatically
declared that, although the parties had agreed to arbitrate, the
traditional admiralty procedure with its concomitant security
should be available to the aggrieved party without in any way
lessening his obligation to arbitrate his grievance, rather than
litigate the merits in court.
It is enough that Congress has so declared. We think a party
cannot stipulate away such a jurisdiction which the legislation
declares open as heretofore.
The judgment is
Act of February 12, 1925, c. 213, 43 Stat. 883, Title 9
48 F. Supp. 385.
138 F.2d 765.
See Red Cross Line v. Atlantic Fruit Co., 264 U.
, 264 U. S.
-121, 264 U. S.
The sections have the same section numbers in Title 9 of the
United States Code.
21 F. Supp. 540.