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AMOCO OVERSEAS OIL CO. v. ASTIR NAVIGATION CO.

December 19, 1979

AMOCO OVERSEAS OIL COMPANY and AMOCO TRANSPORT COMPANY, Plaintiffs, against ASTIR NAVIGATION COMPANY, LTD., Defendant.


The opinion of the court was delivered by: CONNER

OPINION AND ORDER

Plaintiffs Amoco Overseas Oil Company and Amoco Transport Company ("Amoco" or "Charterer") move to vacate an arbitration award pursuant to 9 U.S.C. §§ 4 and 10. Defendant Astir Navigation Company, Ltd. ("Astir" or "Owner"), owner of the M/T ANSON ("ANSON") cross-moves to confirm the award under 9 U.S.C. § 207. For reasons stated below, the Court confirms the award of the arbitration panel.

Background

 This action arises out of a charter party dated January 28, 1977 between Amoco and Astir under which Astir was to deliver a cargo of Amoco crude oil from Trinidad to Texas City, Texas. On arrival at Texas City, Astir's vessel, the ANSON, was denied permission to enter the port by the United States Coast Guard after the ship was found to be in violation of several applicable pollution regulations; defendant was thus unable to deliver the cargo to the agreed destination. At that point, defendant entered into discussions with the plaintiffs concerning an alternative disposition of the cargo, and plaintiffs directed that the ANSON proceed to South Riding Point, Grand Bahama Island, so that the cargo could be transferred to another vessel chartered by Amoco to carry the cargo to Texas City. Defendant's vessel proceeded to South Riding Point, but defendant demanded that Amoco pay the full freight for a voyage from Trinidad to Texas City before defendant would unload the cargo at South Riding Point for transshipment to plaintiffs' alternative vessel. Plaintiffs agreed to pay this sum without waiving their right to litigate whether defendant had any right to payment of this "freight" under the charter party.

 The cargo was transferred to the alternative vessel on the same day plaintiffs tendered their check for the "freight" money; plaintiffs immediately attached the tendered check pursuant to an ex parte order issued by this Court. Defendant promptly moved to vacate the attachment. On March 15, 1977, at the request of the parties, the action was transferred to the Court's suspense docket pending submission of the underlying dispute to arbitration in accordance with the terms of the charter party. Pursuant to a subsequent agreement between the parties, the attached funds were placed in an escrow account pending arbitration.

 The arbitration panel handed down a decision on September 14, 1979, awarding defendant the sum of $ 29,990.95 after finding that (1) owner Astir had breached its charter party obligations, and was liable "for those monetary damages incurred by charterer"; (2) owner did not, however, abandon the voyage, so that owner was entitled to a pro-rata portion of the freight based on the benefit conferred on charterer as a result of the delivery which Astir actually made (which sum exceeded the damages that Astir owed to Amoco as a result of the breach); and (3) owner acted improperly in demanding payment of full freight as a precondition for unloading the cargo, so that charterer's attachment of the tendered "freight" money was proper, and that as a result of this incident, charterer would be awarded "an allowance of $ 3,000 toward counsel fees incurred in the attachment proceeding" as part of its overall damages. Arbitrators' opinion at 13-14.

 Contentions of the Parties

 Plaintiffs contend that the arbitrators either failed to decide or failed to indicate in their opinion whether or not they had decided an issue submitted for the panel's consideration, namely, plaintiffs' claim for interest on the attached funds as damages for defendant's alleged conversion of plaintiffs' cargo. Plaintiffs therefore contend that the award is not "final" and that the case must be remanded to the panel so that the arbitrators can either consider the issue or indicate that the claim was considered and rejected by the panel in its decision. Defendant argues that a party opposing confirmation of an arbitration award is limited in its opposition to the narrow grounds listed under 9 U.S.C. § 207 and Article V of the Convention on Foreign Arbitral Awards ("Convention") or, alternatively, under 9 U.S.C. § 10 of the Federal Arbitration Act ("Act"); that under the decisions interpreting those sections, a court must confirm even a "clearly erroneous" decision by the arbitrators, and arbitrators are not required to specify the grounds for rejection of any particular claim as long as the damages they award can be computed with certainty; and that, finally, the arbitrators' opinion in this case did in fact consider the conversion theory raised by plaintiffs, rejected this theory by implication, and expressly rejected Amoco's claim for interest on the attached sum as an element of Amoco's demand for restitution of the entire amount attached plus interest as damages for breach of the charter party.

 Analysis

 1. Applicable law

 As a preliminary matter, the Court notes that it is unclear whether this case properly falls under the Federal Arbitration Act, 9 U.S.C. §§ 1-14, or under the Convention, implemented at 9 U.S.C. §§ 201-208. It is clear that the case meets the jurisdictional requirements of the Act, since it involves a maritime contract and since the charter party contains an arbitration clause providing for arbitration in New York, with awards to be confirmable by a court with maritime jurisdiction in New York; therefore, defendant has made the showing required under 9 U.S.C. § 9 for an application for an order confirming the arbitration award, and plaintiffs would have to meet the standards laid down in 9 U.S.C. § 10 in order to vacate the award. Defendant contends that pursuant to 9 U.S.C. § 202 *fn1" , the award is governed by the Convention rather than the Act, since the underlying relationship between the parties is commercial and since one of the parties is a foreign corporation. See Antco Shipping Co. v. Siderman S.p.A., 417 F. Supp. 207 (S.D.N.Y.1976), aff'd in open court, 553 F.2d 94 (2d Cir. 1977) (holding Convention applicable in pre-arbitration dispute between two foreign corporations where the arbitration was to take place in New York). The Second Circuit has more recently noted, however, that the text of the Convention itself *fn2" could also be interpreted to indicate that awards rendered within the territory of the country where enforcement is sought do not fall under the Convention, Andros Compania Maritima v. Marc Rich & Co., A. G., 579 F.2d 691, 699 at n. 11 (2d Cir. 1978) (noting also that the Antco affirmance was without precedential value), but the court declined to rule on this controversy in Andros. Id. As in Andros, supra, the dispute need not be resolved here, since the standards for confirming the award under 9 U.S.C. § 207 and the standards for vacating the award under Article V of the Convention are equivalent in this case to the corresponding standards under §§ 9 and 10 of the Act. See Andros, supra, at 579 F.2d at 699, n. 11 ("Certainly the Convention is no more liberal than 9 U.S.C. § 10 on the manner of vacating awards"); Molino Fratelli Pardini, S.p.A. v. Louis Dreyfus Corporation, No. 78-3549 (Conner, J.) (slip op., May 16, 1979) at 7-8.

 2. The Arbitration Award

 Next, it should be noted that, contrary to plaintiffs' position, it appears from the arbitrators' opinion that the panel did in fact both consider and reject plaintiffs' claim for damages for defendant's alleged conversion of plaintiffs' cargo. The arbitrators' opinion notes at page 7 that a claim for conversion damages was included among plaintiffs' contentions. The opinion further notes, however, that defendant asserted that its demand for full freight payment was made in the belief that surrender of the cargo without receipt of freight payment would cause defendant to lose the lien for freight which defendant believed it possessed on the cargo; that defendant did turn the cargo over to plaintiffs when the freight payment was tendered; that the panel questioned "whether the manner in which (the attachment of freight funds) was effected permits us to conclude that the funds ever came into Owner's possession and, therefore, ever constituted payment to Owner," Arbitrators' opinion at 12; and that the incident occurred in the context of Charterer's assumption of what should properly have been Owner's obligation to transship the cargo without giving Owner an opportunity to arrange for such transshipment, id. In this context, the opinion then holds that, while owner's refusal to discharge the cargo without payment of full freight was improper and in violation of defendant's obligations under the charter party, such conduct was neither "an abandonment of the vessel or so unconscionable a course of conduct as to preclude (defendant) from entitlement to an equitable remedy and a pro-rata portion of the freight," id. at 11, and awards plaintiffs $ 3,000 damages for counsel fees incurred in the attachment proceeding as one item in plaintiffs' overall damages. Id. at 13-14. The opinion thus treats the refusal to deliver the cargo as a violation of the charter party, ...


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