KAUFMAN, Circuit Judge:
These consolidated appeals have their source in actions brought to recover damages for injuries allegedly suffered by longshoremen while loading or discharging cargo from vessels time-chartered by Cunard Steamship Company, Ltd. (Cunard), from the owners, the appellees here. The longshoremen sued the owners, who in turn filed third-party complaints against Cunard. Judge Cannella, S.D.N.Y., denied Cunard's motions to stay the third-party actions pending arbitration, on the ground that Cunard, by its participation in pre-trial proceedings and because of its delay in moving for the stays, waived whatever right to arbitration might have existed under the charter parties between Cunard and the appellees. The district court
Our ratio decidendi requires an elucidation of the litigation background. Plaintiff Carcich was allegedly injured on January 28, 1963, while working aboard the SS Nordic, which was then owned by Rederei A/B Nordic (but sued as Rederi A/B Nordie) and under time charter to Cunard. He filed his complaint on February 4, 1964, naming both the shipowner and Cunard as defendants. The shipowner's answer contained a cross-complaint against Cunard, which Cunard answered on July 15, 1964, alleging that the claim was one which should be submitted to arbitration in accordance with the terms of the charter party.
The procedural history of the suit instituted by Calderon is somewhat more complex. The alleged injury to Calderon occurred on October 1, 1963, while he was working on the M/S Crux, then under time charter to Cunard from Det. Bergenske Dampskibsselskab, the owner and one of the appellees. He sued only the shipowner, who, on June 2, 1964, served Cunard with a third-party complaint alleging two causes of action — (1) for indemnity because of a breach of warranty of workmanlike service (in Cunard's capacity as stevedore
Before we discuss the merits of the appeal we must determine whether we have jurisdiction. It is well settled that a denial of a stay pending arbitration is not appealable as a final order under 28 U.S.C. § 1291. Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 75 S.Ct. 249, 99 L.Ed. 233 (1955). But under some circumstances, the stay
The leading case in this Circuit is Kulukundis Shipping Co. v. Amtorg Trading Corp., 126 F.2d 978 (2d Cir. 1942), in which libel had been filed for breach of a charter party, and the defendant's answer made no mention whatsoever of an arbitration clause in the charter party. In fact, the defendant contended that it was not bound by the charter party because it had been improperly executed. Five months later a pre-trial order was filed, which stated that "Both sides will be ready when reached." The first mention of arbitration came ten months after the libel was filed when defendant sought to amend its answer and the case was already on the ready day calendar. This Court reversed the district court's finding that defendant had waived its right to arbitrate by its participation in the litigation and because of its delay in moving for a stay. It would appear that Kulukundis makes the present cases a fortiori. Here, arbitration was raised by Cunard at an early date and continuously asserted.
Appellees argue that Cunard should have moved earlier for the stay, and that it delayed for two years in order to be "in on" the longshoreman's suit. They insist that Cunard has acted inconsistently — it cannot "have it both ways." But this argument misses the mark. It is not "inconsistency," but the presence or absence of prejudice which is determinative of the issue. As an abstract exercise in logic it may appear that it is inconsistent for a party to participate in a lawsuit for breach of a contract, and later to ask the court to stay that litigation pending arbitration. Yet the law is clear that such participation, standing alone, does not constitute a waiver, Chatham Shipping Co. v. Fertex Steamship Corp., 352 F.2d 291, 293 (2d Cir. 1965) (filing complaint not waiver); Reynolds Jamaica Mines, Ltd. v. La Societe Navale Caennaise, 239 F.2d 689 (4th Cir. 1956) (asserting counterclaim not waiver); Rootes Motors, Inc. v. SS Carina, 1964 A.M.C. 2754 (S.D.N.Y.1964) (filing answer without mentioning arbitration not waiver), for there is an overriding federal policy favoring arbitration. Waiver, therefore, is not to be lightly inferred, and mere delay in seeking a stay of the proceedings without some resultant prejudice to a party,
Accordingly, we conclude that the district court erred in finding that Cunard waived whatever right of arbitration it possessed under the charter parties. The cases, therefore, must be reversed and remanded for the purpose of determining whether the third-party claims are subject to arbitration under the charter parties.
Reversed and remanded.
In Calderon, the court found waiver because Cunard (1) filed an answer to the third-party complaint containing a general denial and did not assert failure to arbitrate as an affirmative defense to the third-party's first cause of action seeking indemnity for Cunard's alleged breach of warranty of workman-like service; (2) supplied certain items to plaintiff as a result of a discovery order; (3) failed to object to the longshoreman's note of issue; (4) attended three pre-trial conferences; and (5) permitted the case to proceed to the pre-trial order stage before serving notice of motion for a stay.