The opinion of the court was delivered by: SAND
MCT Shipping Corporation ("MCT"), the disponent owner of the M/V KOH EUN ("Koh Eun"), seeks in this action to confirm an arbitration award against the charterer of its vessel, Iran Ocean Shipping Company, Ltd. ("IROSCO"), to enforce maritime liens on Koh Eun subfreights, and to hold IROSCO, as well as certain of its agents, representatives, officers and directors, liable in personam for repudiation of the charter and abandonment of the loaded vessel in the middle of the voyage. Currently before the Court are the following motions: 1) plaintiff's motion for an order confirming its arbitration award against IROSCO pursuant to 9 U.S.C. § 9 (1970) and entering final judgment thereon pursuant to F.R.Civ.P. 54(b); 2) plaintiff's motion for an order enforcing its claimed maritime lien and directing payment of the funds currently held in escrow according to its directions in partial satisfaction of the judgment resulting from its arbitration award against IROSCO; 3) plaintiff's "conditional cross-motion", in the event that any of the escrowed funds arrested as subfreights are found not to constitute subfreights, for an attachment of such funds pursuant to F.R.Civ.P. 64 and CPLR § 6201(3) (McKinney 1980), to take effect nunc pro tunc as of December 13, 1977; 4) plaintiff's motion for leave to file an amended complaint; 5) a motion by defendant Peralta Shipping Corporation ("Peralta") for summary judgment and for an order dismissing plaintiff's claims of maritime liens; 6) a motion by defendants Erik Murrer, John Batson and International Maritime Planning and Commercial Technology, Inc. ("Impact") (collectively referred to herein as the "Impact defendants"), for an order vacating the arrest and attachment by garnishment of funds now held in escrow either as Koh Eun subfreights or assets of IROSCO previously held by Impact; 7) a motion by the same defendants for an order dismissing the complaint for lack of jurisdiction pursuant to F.R.Civ.P. 12(b) (1), for failure to state a claim pursuant to F.R.Civ.P. 12(b)(6) or, in the alternative, for summary judgment pursuant to F.R.Civ.P. 56(b); 8) a motion by defendants Hormoz Sabet, Paolo G. Mizeo, Ali Kashfi and Serge Bezroukeh (referred to collectively herein as the "Iranian defendants"), for an order dismissing the complaint for lack of personal jurisdiction pursuant to F.R.Civ.P. 12(b)(1), for failure to state a claim pursuant to F.R.Civ.P. 12(b) (6), or in the alternative, for summary judgment pursuant to F.R.Civ.P. 56(b). After a brief description of the relevant facts and identity of the parties, we deal first with plaintiff's arbitration award and then with the fate of the funds currently held in the escrow account. We then turn to plaintiff's motion to amend the complaint and to defendants' motions in the order listed.
I. The Factual and Procedural Background.
On October 11, 1977, MCT and IROSCO apparently entered into a standard New York Produce Exchange Time Charter Party providing, inter alia, for arbitration in New York of all disputes between owner and charterer (clause 17) giving MCT a maritime lien on all cargo and subfreights for any amounts due under the charter (clause 18), and prohibiting IROSCO from creating or allowing to persist any maritime liens arising from its operation and use of the vessel (Id.). Although the charter form was never signed by either party, no question as to its validity has been raised and plaintiff claims that the terms of the charter were fixed in telex exchanges between brokers for the respective parties. In addition, the arbitrator found that IROSCO "tacitly confirmed (the charter party's) ... authenticity by accepting delivery on October 18, 1977 at Norfolk and paying two installments of hire through December 17, 1977 ....". (Cohen Affidavit, Ex. 111).
The arbitrator found that during October and November of 1977, IROSCO loaded cargoes aboard the Koh Eun at Sept Iles, Montreal, Baltimore and Norfolk, and issued Koh Eun bills of lading for discharge of these cargoes at various Middle Eastern and Far Eastern ports. On or about December 5, 1977, after IROSCO's local agent in Norfolk brought suit to foreclose a maritime lien on the Koh Eun for certain stevedoring and port services, IROSCO advised MCT that it was abandoning the voyage at Norfolk and was redelivering the vessel back to the disponent owners. Plaintiff thereafter bonded the ship out and completed the voyage delivering all cargoes to proper destinations until redelivery to the vessel owners at Karachi on March 6, 1978.
Reserving its right to arbitrate under the charter party, plaintiff subsequently brought suit for breach of charter against IROSCO, and for "conspiracy" and fraud against Peralta, IROSCO's North American general agent, Impact, IROSCO's North American "representative", and all of the individual defendants, who were officers or directors of either IROSCO and/or Impact. Motions by the defendants to dismiss and for summary judgment were continued in July of 1978 pending completion of discovery. On July 5, 1978, after IROSCO failed to respond to plaintiff's demands for arbitration, this Court, after IROSCO's default, granted a motion to compel arbitration of the MCT/IROSCO dispute and designated an arbitrator to serve on IROSCO's behalf should it fail to make an appointment of its own by July 26, 1978. IROSCO again defaulted and the arbitration proceeded in its absence. The arbitrator's decision describes in detail the numerous, unsuccessful attempts to contact and elicit some response from IROSCO. At the arbitration proceeding, at which IROSCO never appeared, plaintiff sought to recover port charges, stevedoring expenses, fuel costs and miscellaneous related expenses incurred in completing the voyage which would have been paid by IROSCO if it had fulfilled its obligations under the charter. MCT also sought the balance of hire and crew overtime unpaid by IROSCO from December 17, 1977 thru March 6, 1978. On September 24, 1979, the arbitrators unanimously awarded plaintiff $ 574,709.99 plus various costs and interest at 10% per annum from the date of the award until the date of payment or judgment, whichever occurs first. (Cohen Aff., Ex. 111). Plaintiff now seeks a confirmation and a Rule 54(b) "certification" of this award.
Prior to proceeding to arbitration, plaintiff sought to exercise its maritime lien on Koh Eun cargoes and subfreights by giving notice to various shippers, freight forwarders and agents. Plaintiff foreclosed on the lien by arresting, inter alia, alleged subfreights in the hands of Peralta and funds on deposit in Impact accounts at the Chemical Bank of New York. At a hearing before Honorable Robert E. Ward of this Court on January 10, 1978, Peralta conceded that it held $ 79,386.25 in money paid to it as Koh Eun subfreights and consented to an order requiring deposit of that amount into the registry of the Court. At the same hearing, Impact moved to vacate the arrest of its bank accounts at the Chemical Bank. Judge Ward ruled that $ 1,737.95 in those accounts were paid to Impact as Koh Eun subfreights, and that $ 25,000 were other funds belonging to IROSCO. The Court thus vacated the arrest of the Chemical Bank accounts except for the $ 1,737.95 in subfreights, but simultaneously granted plaintiff a civil attachment of the $ 25,000 constituting other IROSCO funds. By consent of the parties, all of these funds which were arrested or attached, as well as $ 3,353.94 of subfreights apparently collected by plaintiff from a Canadian shipper, were deposited in an interest bearing escrow account. After $ 3,375 was paid out of the funds in Impact seized Chemical Bank accounts in settlement of a claim by IROSCO's broker for commissions in connection with the charter of the Koh Eun, the total escrow fund amounted to $ 106,103.14 which breaks down as follows:
$ 79,386.25 in Koh Eun subfreights arrested
while in the hands of Peralta
1,737.95 in Koh Eun subfreights arrested
while in the hands of Impact.
21,625.00 in IROSCO funds in the hands of
Impact subject to civil attachment.
3,353.94 in Koh Eun subfreights collected
by plaintiff from the Canadian
These funds are the subject of plaintiff's motion for an order directing payment in partial satisfaction of the judgment it seeks in its motion for confirmation and certification of its arbitration award.
II. The Arbitration Award.
The Court's role in a confirmation proceeding under 9 U.S.C. § 9 is a limited one. Where an arbitration award has a basis which can be rationally inferred, the award must be upheld unless a statutory ground for vacating the award under 9 U.S.C. § 10 (1970) exists. See Kurt Orban Co. v. Angeles Metal Systems, 573 F.2d 739, 740 (2d Cir. 1978); Sobel v. Hertz, Warner & Co., 469 F.2d 1211 (2d Cir. 1972). Absent a showing of "manifest disregard of the law", an award must be upheld even if the arbitrator misinterpreted the law or the facts. Maidman v. O'Brien, 473 F. Supp. 25 (S.D.N.Y.1979).
In this case, the arbitrator's opinion, which carefully outlines the attempts made to contact IROSCO, demonstrates no such disregard, and no showing of a statutory ground for vacating the award has been made. In the absence of an appearance by IROSCO, plaintiff's version of the essential facts in the arbitration was uncontested. No party to the arbitration has raised any objection to the award since IROSCO has yet to appear before this Court. However, while none of the remaining defendants were parties to, or sought to participate in the arbitration proceeding, Peralta now seeks to "reserve" the right to object to the portion of the award which reimburses plaintiff for legal expenses incurred in connection with a variety of matters stemming from IROSCO's breach of the charter party. In addition, the Impact defendants argue in their most recent papers that MCT, rather than IROSCO, breached the charter.
We reject both of these contentions and conclude that the arbitration award should be confirmed. Whatever the standing of Peralta or the Impact defendants as non-parties to the arbitration proceeding to object to the arbitration award, the arguments they raise are without merit. Peralta offers no reason for subjecting the arbitrators' decision concerning plaintiff's attorneys' fees to a standard of review different from the standard applied to the arbitrator's award of damages for other expenses incurred by plaintiff as a result of IROSCO's breach, nor has Peralta demonstrated why its objection should be preserved. The award is not concerned with plaintiff's legal fees in connection with either this confirmation proceeding or the arbitration proceeding itself. See, e.g., General Drivers, Helpers and Truck Emp. Local No. 120 v. Sears Roebuck & Co., 535 F.2d 1072 (7th Cir. 1976). Finally, we are not at this point inclined, at the behest of Impact, to conduct a de novo review of the question of who breached the charter party. Such a review could not be conducted without undermining the role of the arbitrator envisioned by the case law interpreting 9 U.S.C. § 9.
Plaintiff's arbitration award is ...