In re the Arbitration between Rederi & Dow Chemical Co.

McNally, J. On December 1, 1964, petitioner and respondents entered into a written agreement whereby petitioner agreed to furnish tankers for the carriage of chemicals. The contract provides petitioner shall be entitled to the privileges, rights and immunities contained in sections 3 (subd. [6]), 4 and 11 of the Carriage of Goods by Sea Act (“ Act ”). (U. S. Code, tit. 46, § 1300 et seq.) The Act provides the carrier shall be discharged from all liability unless suit is brought within one year after delivery of the goods. The contract also provides for arbitration of any dispute arising during the execution of the charter party. Respondents assert claims in regard to various shipments allegedly delivered more than one year prior to the [373] making of the claims. Petitioner contested the claims and respondents demanded arbitration. Thereupon petitioner instituted this proceeding for a stay of arbitration under CPLR 7502 (subd. [b]) on the ground that the claims were untimely. CPLR 7502 (subd. [b]) provides: “ If, at the time that a demand for arbitration was made or a notice of intention to arbitrate was served, the claim sought to be arbitrated would have been barred by limitation of time had it been asserted in a court of the state, a party may assert the limitation as a bar to the arbitration ”. Respondents contend for the application of the Federal Arbitration Act (U. S. Code tit. 9, § 4), which provides: “ A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. * * * The court shall hear the parties, and upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. ’ ’ CPLR 7502 (subd. [b]) enables the court to pass on the alleged time limitation. However, the Federal Arbitration Act limits the court to the issues of the making of the agreement and the failure, to comply with it. (Prima Paint v. Flood & Conklin, 388 U. S. 395, 404; United States of America, etc. v. CIA Naviera Continental, SA, 202 F. Supp. 698, 700.) If the Federal Arbitration Act controls, we do not reach the issue of time limitation. It cannot be gainsaid that the agreement and the provision for arbitration are maritime contracts. The Federal Arbitration Act applies to “ any maritime transaction or * * * a transaction involving commerce”. (U. S. Code, tit. 9, § 2.) The Act is based on the exclusive Federal power over interstate commerce and over admiralty. (Prima Paint v. Flood & Conklin, supra, p. 405.) It has been held that the Federal Arbitration Act creates national substantive rights governed by Federal and not State law. (Robert Lawrence Co. v. Devonshire Fabrics, 271 F. 2d 402, 409, cert. granted 362 U. S. 909, cert. dsmd. 364 U. S. 801.) It therefore follows that the Federal Arbitration Act controls, and the issue of time limitation is to be decided in arbitration. [374] Accordingly, the order denying a stay of arbitration should be affirmed, with costs.