Coastal Cargo Company, LLC was contracted by Tenaris Global Services, Inc. to unload steel pipe from a ship and load it onto trucks and railcars for carriage from New Orleans to Canada. Coastal Cargo filed a lawsuit against Tenaris for failing to pay $146,970.32 for the contracted work.
In response, Tenaris moved the court to compel arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Tenaris asserted that a binding arbitration agreement existed between the parties. Coastal Cargo opposed the motion.
The Fifth Circuit considers a four-element test when deciding whether to compel arbitration under the Convention:
if there is an agreement in writing to arbitrate the dispute,
if the agreement provides for arbitration in the territory of a Convention signatory,
if the agreement arises out of a commercial legal relationship, and
if a party to the agreement is not an American citizen.
All four elements must be met to compel arbitration.
Coastal Cargo argued element one was not satisfied because there was no agreement in writing between the parties to arbitrate the dispute.
Tenaris disagreed arguing the agreement was memorialized in a Framework Agreement that was forwarded to Coastal Cargo by email. Tenaris emphasized that whether or not the agreement was signed is immaterial, it alleged that Coastal Cargo received the Framework Agreement, and then performed on the contract between the parties, thus acceding to the Framework Agreement by performance of the services in question.
Coastal Cargo responded by claiming it never agreed to the Framework Agreement, never received it, and was in fact unaware of it until receipt of Tenaris’s motion to compel arbitration.
The court refused to compel arbitration.
While Louisiana law does recognize methods of contract formation which do not necessarily require both parties’ signatures, the court found that Tenaris did not carry its burden of showing that Coast Cargo actually assented to the Framework Agreement or even received it. The only evidence Tenaris presented to support its motion was an email thread between itself and Coastal Cargo to which Tenaris attached the Framework Agreement. The court held:
This [email thread] is insufficient to convince the Court that Coastal Cargo received and agreed to the Framework Agreement. In the email, Tenaris writes that “a copy of the purchase document” is attached. But the record doesn’t make clear whether the referenced purchase document is in fact the Framework Agreement. There is also no evidence to show that Coastal Cargo received or read this email and the attachment, if the Framework Agreement was in fact attached. Additionally, as Plaintiff points out, the contact email for Coastal Cargo which is listed on the Framework Agreement is not the email address for anyone at Coastal Cargo. The record does not reveal any other discussion or mention of the Framework Agreement by either party.
Based on the above, Tenaris lost its motion to compel arbitration.
A publicly available copy of the decision can be accessed through the following link: https://www.govinfo.gov/content/pkg/USCOURTS-laed-2_22-cv-04622/pdf/USCOURTS-laed-2_22-cv-04622-0.pdf
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