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Federal Commerce & Navigation Co. v. Kanematsu-Gosho Ltd.

decided: March 17, 1972.

FEDERAL COMMERCE & NAVIGATION COMPANY, LIMITED, PLAINTIFF-APPELLANT,
v.
KANEMATSU-GOSHO, LIMITED, DEFENDANT-APPELLANT



Lumbard, Hays and Mansfield, Circuit Judges. Hays, Circuit Judge (dissenting).

Author: Lumbard

LUMBARD, Circuit Judge:

Federal Commerce and Navigation Company Limited (Federal) and Kanematsu-Gosho, Ltd. (Kanematsu) have brought cross-appeals from Judge Metzner's decision in the Southern District denying their cross-motions to modify an arbitration award on the grounds that the award exceeded the scope of the submission agreement. We affirm.

Federal, which charters ocean-going vessels, and Kanematsu, an importer of grain to Japan, executed a master charter on June 8, 1970 for the shipment of nine cargoes of grain products from the United States to Japan. The master charter provided that the first shipment was to be made between October 16 and December 15, 1970 and thereafter one shipment would be made in each quarter of 1971 and 1972 at intervals not shorter than 50 days nor longer than 100 days. The charter further provided, "should any dispute arise between [Federal] and [Kanematsu], the matter in dispute shall be referred to the [arbitrators] . . . their decision . . . shall be final, and . . . may be made a rule of court."

After the master charter had been agreed upon, an individual charter agreement covering the first of the nine shipments was executed. This agreement provided that if Federal did not provide a vessel for the first shipment by December 15, 1970, Kanematsu had the option to cancel this voyage without penalty.

Federal designated the Martha Envoy to carry the first shipment, but the vessel did not arrive in port by December 15 and this voyage was eventually cancelled by Kanematsu.

Federal nominated the Rolwi on December 29 to perform the second charter, but Kanematsu refused to accept the Rolwi on the ground that the 50-day provision had not been met.

Federal then demanded arbitration over the refusal of the Rolwi and, on January 28, 1971 a panel of three arbitrators met. At the hearing Kanematsu's attorney indicated that he was prepared to arbitrate the validity of the entire master charter. Federal's attorney argued that the arbitration should be limited to the dispute regarding the refusal of the Rolwi and Federal sought an order to this effect in the Southern District. On March 2, 1971, Judge Frankel ordered "that either party may arbitrate all claims under the Master Charter," but by agreement of the parties, the pending arbitration was withdrawn.

Federal and Kanematsu then agreed, on April 8, 1971, to arbitrate

"certain disputes [which] have arisen under the charter party, to wit:

Charterer's [Kanematsu] Claims

Charterer claims that the master charter dated June 8, 1970 is void by reason of various actions taken by Owner [Federal].

Owner's Claims

Owner claims that the master charter dated June 8, 1970 is a valid, existing agreement which has not been voided by ...


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