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STOLT-NIELSEN PHILIPPINES, INC. and COURT OF APPEALS, respondents. United Coconut Chemicals, Inc. (SHIPPER) shipped 404.774 metric tons of distilled C6-C18 fatty acid on board MT "Stolt Sceptre," a tanker owned by Stolt-Nielsen Philippines Inc. (CARRIER), from Bauan, Batangas, Philippines, consigned to "Nieuwe Matex" at Rotterdam, Netherlands, covered by a Tanker Bill of Lading. The shipment was insured under a marine cargo policy with Petitioner National Union Fire Insurance Company of Pittsburg (INSURER), through its settling agent in the Philippines, the American International Underwriters (Philippines), Inc. It appears that the Bill of Lading issued by the CARRIER contained a general statement of incorporation of the terms of a Charter Party between the SHIPPER and Parcel Tankers, Inc., entered into in Greenwich, Connecticut, USA. Upon receipt of the cargo by the CONSIGNEE in the Netherlands, it was found to be discolored and totally contaminated. The claim filed by the SHIPPER-ASSURED having been denied, the INSURER indemnified the SHIPPER and thereafter proceeded with its claim against the CARRIER. Before the trial court, the CARRIER moved to dismiss or suspend the proceedings on the ground that the RTC had no jurisdiction over the claim the same being an arbitrable one. It further claimed that as subrogee of the SHIPPER-ASSURED, the INSURER is subject to the provisions of the BIll of Lading, which includes a provision that the shipment is carried pursuant to the terms of the Charter Party between the SHIPPER-ASSURED and Parcel Tankers, Inc. providing for arbitrator. The INSURER opposed the dismissal/suspension on the ground that it was not legally bound to submit the claim for arbitration inasmuch as the arbitration clause provided in the Charter Party was not incorporated into the Bill of Lading, and that the it is only RTC initially denied the Motion but subsequently reconsidered and suspended the proceedings. On appeal before the CA, the said court set aside the ruling of RTC and ordered the INSURER to refer its claim for arbitration. Hence, this petition. ISSUE: Whether the the terms Charter Party, particularly the provision on arbitration, are binding on the INSURER HELD:
inoperative. which includes by reference the terms of the Charter Party. has long been recognized and accepted in our jurisdiction. it became privy to the Charter Party as fully as the SHIPPER before the latter was indemnified.Petition DENIED. Nor has any conflict been pointed out between the Charter Party and the Bill of Lading. As the respondent Appellate Court found. In fine. 876 (The Arbitration Law) also expressly authorizes arbitration of domestic disputes. pending the return of the arbitral award. Since the right of action of the SHIPPER-ASSURED is governed by the provisions of the Bill of Lading. It has not been shown that the arbitral clause in question is null and void. It can recover only the amount that is recoverable by the assured. giving reciprocal recognition and allowing enforcement of international arbitration agreements between parties of different nationalities within a contracting state. Republic Act No. and the suspension of the proceedings. And since the right of action of the SHIPPER-ASSURED is governed by the provisions of the Bill of Lading. that the INSURER cannot avoid the binding effect of the arbitration clause. The entire contract must be read together and its clauses interpreted in relation to one another and not by parts. the INSURER "cannot feign ignorance of the arbitration clause since it was already charged with notice of the existence of the charter party due to an appropriate reference thereof in the bill of lading and. it stepped into the shoes of the SHIPPER-ASSURED and is surrogated merely to the latter's rights. necessarily a suit by the INSURER is subject to the same agreements It is settled law that the charter may be made part of the contract under which the goods are carried by an appropriate reference in the Bill of Lading. which includes by reference the terms of the Charter Party. Arbitration. or incapable of being performed. necessarily a suit by the INSURER is subject to the same agreements. by the exercise of ordinary diligence. By subrogation. This should include the provision on arbitration even without a specific stipulation to that effect." We hold. is indeed called for. therefore. it could have easily obtained a copy thereof either from the shipper or the charterer. . 71 of the Philippine Senate. Foreign arbitration is a system of settling commercial disputes of an international character was likewise recognized when the Philippines adhered to the United Nations "Convention on the Recognition and the Enforcement of Foreign Arbitral Awards of 1958" under the Resolution No. as an alternative mode of settling disputes. because as subrogee. referral to arbitration in New York pursuant to the arbitration clause.