Arbitration: agreement v. estoppel

A manufacturer of ship propulsion systems contracted with a ship operator, who in turn contracted with a shipbuilder.  The manufacturer and the operator had a sales contract (with an arbitration clause), and the operator and the shipbuilder had a separate contract.  VT Halter Marine v. Wartsila North America, No. 12-60051 (Feb. 8, 2013, unpublished).  The component manufacturer and shipbuilder had dealings as part of the overall relationship but did not have a direct contract.  The shipbuilder sued the manufacturer for supplying allegedly defective parts.  Its breach of warranty claim, derivative of the operator’s rights, was conceded to be arbitrable.  The tortious interference claim, however, could only be arbitrated under an estoppel theory since the shipbuilder was not a party to the manufacturer-shipbuilder contract.  The district court’s order was not clear about the basis for ordering arbitration of that claim, and the Fifth Circuit remanded for resolution of whether estoppel applied.  The Court reminded that while orders compelling arbitration are usually reviewed de novo, an order compelling a third party to arbitrate under an estoppel theory is reviewed for abuse of discretion (citing Noble Drilling v. Certex USA, 620 F.3d 469, 472 n.4 (5th Cir. 2010)).

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