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NATIONAL UNION FIRE INSURANCE CO. v. STOLT-NIELSEN PHILIPPINES

FACTS:

On January 9, 1985, a shipment of distilled C6-C18 fatty acid was transported by United Coconut Chemicals, Inc. (SHIPPER) on board MT "Stolt Sceptre," a tanker owned by Stolt-Nielsen Philippines Inc. (CARRIER), from Bauan, Batangas, Philippines, to Rotterdam, Netherlands. The Bill of Lading issued by the CARRIER incorporated the terms of a Charter Party between the SHIPPER and Parcel Tankers, Inc. The shipment was found to be discolored and contaminated upon receipt, leading the SHIPPER to file a claim with the CARRIER, which was denied. The SHIPPER was indemnified by Petitioner National Union Fire Insurance Company of Pittsburg (INSURER), through its settling agent in the Philippines, American International Underwriters (Philippines), Inc. The INSURER filed a suit against the CARRIER to recover the amount paid to the SHIPPER. The CARRIER sought to dismiss/suspend the proceedings on the ground that the claim is arbitrable and subject to the provisions of the Charter Party, which includes an arbitration clause. The INSURER opposed, arguing that it is not bound by the Charter Party as the arbitration clause was not incorporated in the Bill of Lading. The RTC denied the CARRIER's motion initially but deferred resolution until trial. The CARRIER filed a petition for certiorari and prohibition with the Court of Appeals, which ruled in favor of the CARRIER and ordered the INSURER to refer its claims for arbitration. The INSURER now seeks the reversal of the appellate court's decision.

ISSUES:

  1. Whether the claim or dispute in this case is arbitrable.

  2. Whether the terms of the Charter Party, particularly the provision on arbitration, are binding on the INSURER.

RULING:

  1. The claim or dispute in this case is arbitrable.

    • The Court upholds the ruling of the Court of Appeals that the claim or dispute in this case is arbitrable. The RTC was directed to suspend the proceedings pending the return of the corresponding arbitral award.

  3. The terms of the Charter Party, particularly the provision on arbitration, are binding on the INSURER.

    • The INSURER argued that it cannot be bound by the Charter Party because it is only a subrogee with respect to the Bill of Lading. However, the court ruled against this submission and held that the arbitral clause in the Charter Party is binding on the INSURER. The Court found that the Bill of Lading incorporated the terms of the Charter Party, including the arbitration provision.

PRINCIPLES:

  • The court has jurisdiction to determine whether a claim or dispute is arbitrable.

  • A Court Order deferring action on a motion to dismiss may be challenged through a special civil action of certiorari and prohibition if the court is proceeding in excess or outside of its jurisdiction.

  • The terms of a Charter Party, including the provision on arbitration, may be binding on parties, including subrogees, if incorporated into the Bill of Lading.