Glencore Ltd. v. Degussa Engineered Carbons L.P.
848 F. Supp. 2d 410
S.D.N.Y.2012Background
- Glencore seeks to compel arbitration of claims Evonik and its insurer HDI brought over No. 6 fuel oil shipments in 2010.
- Evonik allegedly contracted for oil deliveries under quarterly terms, with disputes over quality and losses.
- Glencore attached its GTCs containing an arbitration clause and sought incorporation by reference into the contracts.
- Evonik contends no binding arbitration agreement existed because it did not adopt the GTCs.
- The court must decide (i) whether a binding arbitration agreement exists under state contract law and the FAA, and (ii) whether the agreement is enforceable under the New York Convention; the court also considers personal jurisdiction over Evonik.
- The court ultimately grants Glencore’s petition to compel arbitration and holds the court has personal jurisdiction over Evonik.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a binding arbitration agreement exists. | Glencore contends Evonik assented to GTCs incorporated by reference. | Evonik argues no binding arbitration formed; terms material alteration not accepted. | Yes; there is a binding arbitration agreement. |
| Whether the arbitration clause is enforceable under the New York Convention (Chapter 2). | Agreement signed or contained in exchange of letters/telegrams; exchange of communications suffices. | No valid “agreement in writing” under Convention. | Enforceable under the New York Convention. |
| What law governs formation of the arbitration agreement (New York vs Texas/UCC). | New York law governs due to choice-of-law clause. | Texas law governs as the parties’ conduct occurred there. | Texas and New York UCC provisions are aligned for this dispute; contract formation analyzed under UCC with New York influence. |
| Does Evonik have personal jurisdiction over Evonik for enforcing arbitration? | Existence of binding arbitration clause justifies New York jurisdiction. | Jurisdiction lacking if Evonik not bound by GTCs. | Yes; court has personal jurisdiction because Evonik bound by the arbitration clause. |
Key Cases Cited
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (contract formation governs arbitrability under FAA)
- Granite Rock Co. v. International Bhd. of Teamsters, 563 U.S. 287 (2010) (scope of arbitration and presumption principles under FAA)
- Applied Energetics, Inc. v. NewOak Capital Mkts., LLC, 645 F.3d 522 (2d Cir. 2011) (summary-judgment-like standard in FAA arbitrability disputes)
- Kahn Lucas Lancaster, Inc. v. Lark Int’l Ltd., 186 F.3d 210 (2d Cir. 1999) (arbitration agreement “contained in exchange of letters and telegrams” requirement under Convention)
- Aceros Prefabricados, S.A. v. Tradearbed, Inc., 282 F.3d 92 (2d Cir. 2002) (materiality of additional terms under U.C.C. § 2-207(2) and absence of surprise)
- Kelso Enterprises Ltd. v. A.P. Moller-Maersk A/S, 375 Fed.Appx. 48 (2d Cir. 2010) (forum/arb clause interactions; arbitration prevails unless clearly precluded)
- Smith/Enron Cogeneration Ltd. P’ship, Inc. v. Smith Cogeneration Int'l, Inc., 198 F.3d 88 (2d Cir. 1999) (Convention applicability to international contracts)