The opinion of the court was delivered by: GOETTEL
This case provides a textbook example of the difference in approach in an arbitration proceeding between the commercial arbitrators and the legal arbitrator. The parties have cross-moved with respect to the arbitration award, the defendant (the prevailing party) seeking to confirm the award, and the plaintiff seeking to correct it.
Defendant was the voyage charterer of the plaintiff's vessel ANTONIOS DEMADES. While carrying a cargo of scrap metal from the United States to Japan it was lost at sea in heavy weather in February, 1970. The charter party provided that "ninety percent (90%) of freight to be prepaid within seven days after surrender of signed Bills of Lading, . . . discountless and non-returnable, vessel and/or cargo lost or not lost. Balance payable on completion of discharge."
After the sinking of the vessel, the plaintiff, as owner, was sued by the cargo interests. This suit was successfully defended. Yawata Iron & Steel Co. v. Anthony Shipping Co., 396 F. Supp. 619 (S.D.N.Y.1975), Aff'd, 538 F.2d 317 (2d Cir. 1976). After the litigation, the plaintiff pressed the demand for payment of the retained ten percent of the freight. After the defendant's refusal to pay, and some seven years and three months after the casualty, plaintiff demanded arbitration. The defenses were two-fold:
1. Under the provisions of the charter, the final ten percent of freight had not been earned since the voyage was not completed and the cargo not discharged.
2. The claim was barred by laches.
There were three arbitrators. Two were commercial men and the third was an admiralty lawyer selected by the two commercial men. All of the arbitrators found for the defendant, but the two commercial men found for the defendant only on the grounds of laches, and the lawyer found for the defendant only on the ground that the freight had not been earned. The plaintiff says that the decision of the two commercial arbitrators on the laches issue was manifest disregard of the applicable law. It seeks to set it alone aside, which, if the other aspect of their decision concerning freight is upheld, would entitle the plaintiff to judgment in the amount of $ 30,450, plus interest.
The arbitrators rendered a very lucid decision in which the differing approaches are quite clearly stated. The pertinent portion of the decision reads as follows:
"The Panel unanimously hold that the Owner's claim should be disallowed in its entirety, but for different reasons.
The Reasons of the Commercial Arbitrators
"The two commercial arbitrators rest their decision on the Owner's delay in bringing its claim against the Charterer. They consider the delay of over seven (7) years from the date of the Vessel's loss to be inexcusable and in such circumstances that there need not be a showing of prejudice by the Charterer in order to sustain the laches defense.
"They view the Owner's lack of action in pursuing the claim and the unfounded pursuit of the wrong party over a substantial period of time to be wholly inconsistent with sound commercial practice and consequently the Owner must bear the consequences for its lack of diligence.
"Although the Commercial Arbitrators, in view of their decision on the time bar issue, did not need to consider the merits of the freight clause controversy, it is their view that, had the claim been asserted in a timely fashion, the freight clause should be interpreted as providing that 100% Of the freight was earned on cargo being loaded. They are of the opinion that failure to include the language "discountless and non-returnable' with respect to the 10% Portion of the freight was due to oversight and that the ...