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IN RE INTERNATIONAL PRODUCE

April 16, 1980

In the Matter of the Arbitration between INTERNATIONAL PRODUCE, INC., Petitioner and Cross-Respondent, and A/S ROSSHAVET, Owners of the S. S. ROSS ISLE, Respondent and Cross-Petitioner


The opinion of the court was delivered by: BRODERICK

MEMORANDUM ORDER

I.

 This case is before me on a petition to vacate a maritime arbitration award and a cross-petition to confirm.

 The only issue raised concerns the propriety of an arbitrator's refusal to disqualify himself when he acquires an active interest as a businessman in another arbitration in which

 a) his side is represented by counsel to one of the parties in the arbitration before him;

 b) the opposing side is represented by counsel to the other party in the arbitration before him; and

 c) the arbitrator is expected to testify as a witness and be examined and cross-examined by the law firms who represent the parties in the arbitration before him.

 For the reasons which follow the petition to vacate is granted and the petition to confirm is denied.

 II.

 This action arises out of a charter party between petitioner International Produce, Inc. ("charterer") and A/S Rosshavet ("owner") for the hire of the S.S. Ross Isle. When a dispute arose between the parties, they submitted it to arbitration as provided by the agreement. Pursuant to the Rules of the Society of Maritime Arbitrators, the charterer chose one arbitrator, the owner chose another, and the two arbitrators then chose a third, Mr. Hammond L. Cederholm, the controversial figure in this action. Mr. Cederholm is, and was at the time of his selection, a vice president of James W. Elwell & Co., Inc. ("Elwell"), a firm which renders management services for the owners of commercial vessels.

 The first hearing was held on September 8, 1977 at which time counsel for both parties made opening arguments. The owner was represented by the law firm of Haight, Gardner, Poor & Havens ("Haight Gardner") and Hill, Rivkins, Carey, Loesberg & O'Brien ("Hill Rivkins") represented the charterer. No witnesses were called. Mr. Cederholm at that time disclosed that Haight Gardner was "handling one P&I* case of ours."

 At the time he made his disclosure, Mr. Cederholm invited further inquiry by Mr. Carey of Hill Rivkins, counsel to the charterer. Mr. Carey declined the invitation and stated that the panel was acceptable to the charterer. Had Mr. Carey inquired further, he would have learned that a vessel called the "Mary S", managed by the Elwell firm, was involved in the "P&I case" to which Mr. Cederholm referred.

 On December 6, a second hearing was held. The arbitrator chosen by the owner had become ill and was unable to attend. Because the owner's two scheduled witnesses had travelled from Norway and Louisiana to give testimony, the parties agreed to proceed with the hearing, on the understanding that the missing arbitrator would read the transcript. At the hearing the master and the pilot of the Ross Isle testified on behalf of the owner.

 Two days later, on December 8, another incident occurred involving the Mary S. Mr. Cederholm on behalf of the Elwell firm was personally involved in the negotiations and activities of December 8 and 9 which led to a dispute between the owner of the Mary S and its charterer. The charterer retained Hill Rivkins to represent them in taking that claim to arbitration. The owner's P&I club retained Haight Gardner. Although neither of the individual attorneys representing the parties to the Mary S arbitration, Francis O'Brien of Hill Rivkins and Thomas Howarth of Haight Gardner, was involved in the Ross Isle arbitration, one Haight Gardner associate, Howard Miller, worked on both arbitrations. From the ...


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