Andromeda Steamship Corp (Andromeda) and Internaves de Mexico SA de CV (Internaves) entered into a charterparty agreement whereby Andromeda agreed to furnish Internaves with a vessel to transport an electric transformer from Brazil to Mexico. Internaves claimed that Andromeda failed to tender the vessel on the agreed date, while Andromeda countered that Internaves never delivered the transformer to the vessel. The charterparty required the parties to submit their dispute to arbitration. The District Court could not ascertain the seat of arbitration from the agreement itself and compelled arbitration in its own district. Andromeda appealed.

On appeal, Internaves argued that the charterparty was ambiguous because it included an internal inconsistency. Internaves contended that, in Box 25 of Part I of the charterparty, labelled 'Law and Arbitration', the parties wrote 'London arbitration, English Law', which demonstrated their mutual desire to arbitrate in London. However, in Box 22 of Part I of the charterparty, labelled 'General Average to be adjusted at (Cl 12)', the parties wrote 'NEW YORK - USA'. Clause 12, in turn, labelled 'General Average and New Jason Clause', provided that 'general average shall be adjusted, stated and settled according to York-Antwerp Rules 1994 or any subsequent modification thereof'. Therefore, Internaves argued that the charterparty contained an intractable conflict between Box 25 (which called for London arbitration) and Box 22 (which provided for general average adjustment in New York).

Held: Appeal allowed.

General average disputes are often resolved under the York-Antwerp Rules 1994, which were designed to resolve issues stemming from general average adjustment. The court read Part I of the charterparty as requiring general average adjustment in New York under the York-Antwerp Rules 1994 pursuant to Box 22; whereas arbitration of all other disputes should take place in London under English law pursuant to Box 25.

The use of the two separate boxes by the parties strongly suggested that the parties sought to adjust general average in a location distinct from their arbitral forum. Those conditions were compatible and created no ambiguity. In addition, this case does not in any way relate to general average adjustment. Therefore, the parties must arbitrate in London.