E.A.S.T., Inc. of Stamford, Connecticut v. M/V Alaia

E.A.S.T., Inc. (plaintiff) entered into a contract to charter a ship owned by Advance Company, Inc. (defendant), a Liberian corporation. The contract included an arbitration clause requiring disputes to be arbitrated in London under English law. The ship was intended to be used by E.A.S.T. to transport cargo, including milk cartons, wood pulp, and soda ash. Upon delivery of the ship, the ship was surveyed and rendered unseaworthy in violation of the contract’s warranty. E.A.S.T. initiated an in rem lawsuit in federal district court, seeking to compel arbitration under the contract, and requested seizure of the ship as security for the arbitration award. Advance filed a counterclaim to vacate seizure of its ship. Advance argued that the contract was invalid, that a maritime lien was unavailable because no cargo was loaded onto the ship, and that the district court lacked authority to compel arbitration. The district court held that the contract was valid, ordered seizure of the ship, and ordered the parties to arbitrate in London under the Federal Arbitration Act (FAA). Advance appealed, arguing that prejudgment seizure was prohibited under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. §§ 201–208 (convention), because it violated the arbitration agreement. E.A.S.T. countered, asserting that because Advance was a Liberian company and Liberia was not a signatory to the convention, Advance therefore could not assert its defense.