The opinion of the court was delivered by: GASCH
On January 4, 1987, a train controlled by the Consolidated Rail Corporation ("Conrail"), petitioner, failed to heed a series of slow and stop signals and consequently entered the path of a high speed passenger train operated by the National Railroad Passenger Corporation ("Amtrak"), respondent. At the track juncture near Chase, Maryland, a collision ensued, resulting in 16 deaths, several hundred injuries and millions of dollars in property damage. Since the accident, a number of lawsuits have been filed against both Conrail and Amtrak alleging negligence, gross negligence, and wanton and willful misconduct. The redress sought by these lawsuits includes punitive damages.
Conrail and Amtrak are parties to a contract which arguably bears upon liability apportionment for the aforementioned accident. In the Second Amended and Restated Northeast Corridor Freight Operating Agreement ("Freight Operating Agreement" or "Agreement") of October 1, 1986, Amtrak agreed, inter alia, to indemnify Conrail for injuries to Amtrak passengers. Section 5.6 of the Agreement states as follows:
Amtrak agrees to indemnify and save harmless Conrail and Conrail Employees, irrespective of any negligence or fault of Conrail or Conrail Employees, or howsoever the same shall occur or be caused, from any and all liability for injuries to or death of any Amtrak Passenger and for loss of, damage to, or destruction of any property of any such passenger.
On the basis of this provision, Conrail seeks indemnification from Amtrak for all the injuries arising from the accident at Chase, Maryland.
Despite the obvious breadth of the Agreement's indemnification provision, Amtrak claims that it is not obligated to defend or otherwise reimburse Conrail for any damages. Amtrak maintains that it need not indemnify Conrail because the conduct which caused the accident was reckless, wanton, willful, or grossly negligent. Amtrak contends that an indemnification agreement embracing any such conduct is unenforceable as against public policy. Similarly, Amtrak argues that there can be no indemnification for punitive damages. See National Railroad Passenger Corp. v. Consolidated Rail Corp., 670 F. Supp. 424 (D.D.C. 1987) (pending complaint for declaratory judgment).
Pursuant to the Federal Arbitration Act ("the Act"), Conrail filed this petition to compel arbitration in response to Amtrak's motion for a declaratory judgment on the indemnification issue. See 9 U.S.C. § 3. Conrail bases its petition on section 4.3 of the Freight Operating Agreement, stating that,
except as otherwise provided in this Agreement, any claim or controversy between Amtrak and Conrail concerning the interpretation, application or implementation of this Agreement shall be submitted to binding arbitration in accordance with the provisions of the Arbitration Agreement dated April 16, 1971, among Amtrak and certain other railroads. As between the parties hereto, the term of said Arbitration Agreement shall be deemed to continue during the term hereof and this Agreement shall be deemed to be a "Basic Agreement" under section 4.5 of said Arbitration Agreement.
Resolution of the present controversy requires the Court to consider the scope of the Federal Arbitration Act. See 9 U.S.C. § 2. The Act was passed in an effort to make agreements to arbitrate valid and enforceable in the federal courts. Congress noted that in the past, courts had "in the main . . . denied relief to the parties seeking to compel the performance of executory agreements to settle and determine disputes by arbitration." S. Rep. No. 536, 68th Cong., 1st Sess. 2 (1924). Since the Act's promulgation, the Supreme Court has liberally endorsed agreements to arbitrate. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S. Ct. 3346, 3353, 87 L. Ed. 2d 444 (1985). This strong federal policy has given rise to a presumption in favor of arbitration. The Supreme Court has ...