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A/S SILJESTAD v. HIDECA TRADING

December 18, 1981

In the Matter of the Arbitration between A/S SILJESTAD, Petitioner, and HIDECA TRADING, INC., Respondent and Cross-Petitioner


The opinion of the court was delivered by: CONNER

OPINION AND ORDER

Petitioner A/S Siljestad ("Siljestad") is the owner of the vessel "M. S. Solstad." By a tanker voyage charter party dated September 8, 1978, Siljestad chartered the Solstad to respondent Hideca Trading, Inc. ("Hideca") for consecutive voyages. The charter party provided for the arbitration of disputes in New York, and for the entry of judgment by any court within the state on any arbitration award. Pursuant to this provision, the parties proceeded to arbitration to resolve certain disputes, specifically Siljestad's claims (1) for damages for wrongful cancellation of the third voyage of the charter party, plus interest thereon, (2) for interest on the late payment of a demurrage claim in connection with the first voyage under the charter party, and (3) for unpaid demurrage in connection with the second voyage under the charter party, plus interest thereon.

By decision dated July 23, 1981, the arbitrators (1) awarded Siljestad $ 245,733.51 on the first claim, the entire amount representing damages, (2) awarded Siljestad $ 27,438.35 on the second claim (representing interest at 14% on $ 75,273.08), (3) awarded Siljestad $ 4,188.90 on the third claim (representing $ 3,110.95 in demurrage and $ 1,077.95 in interest thereon at 14%), (4) awarded Siljestad $ 10,000 as attorneys' fees and costs, and (5) provided that the Panel fees and costs, totaling $ 8,785.90, should be borne 75% by Hideca and 25% by Siljestad. Because of an oversight by the arbitrators, Siljestad's claim for interest on the first claim was not considered. *fn1"

 Immediately after the Panel issued its decision, counsel for Siljestad telephoned the Chairman of the Panel and inquired as to whether the arbitrators had considered Siljestad's claim for interest on the first claim. Realizing their oversight, the arbitrators immediately issued "Appendix B" to the decision on July 27, 1981, which awarded Siljestad $ 85,429.82, representing interest at 14% on the damage award on the first claim.

 To date, Siljestad has not been paid by Hideca in accordance with the Panel's decision. Accordingly, on October 20, 1981, Siljestad filed a petition to confirm the arbitration award in this Court pursuant to 9 U.S.C. § 9. Hideca has cross-petitioned for an order vacating in part the award pursuant to 9 U.S.C. § 10. Three issues are presented:

 (1) whether the award of damages on the first claim was founded upon the Panel's manifest disregard of the law of damages;

 (2) whether the award of interest on the first claim in Appendix B was a nullity because issued by a panel that was functus officio; and

 (3) whether Siljestad is entitled to interest from the date of the award to the date of judgment.

 Each of these will be addressed in turn.

 I. The Damage Award

 Before the Panel, Hideca urged the position that any award of damages to Siljestad for wrongful cancellation of the third voyage should be offset by profits gained and expenses avoided as a result of Hideca's breach after the time when Hideca would have completed the voyage. Hideca contended that, if it had performed the voyage, the Solstad would have been returned to Siljestad in the Caribbean, there would have been no commercially acceptable cargoes for the Solstad in that area at that time and thus a ballast voyage back to the U. K.-Mediterranean loading range would have been necessary.

 The Panel rejected Hideca's argument as follows:

 
"The Panel considers this line of reasoning to be tendentious, and holds instead to the view expressed in Owners' brief as "well-settled,' even at the time of LeBlond v. McNear, 104 F. 826, 830-31 (N.D.Cal.1900), aff'd, 123 F. 384 (9th Cir. 1903):
 
"... In an action against the Charterer of a ship for a total breach of his contract, the measure of damages is the net amount that would have been earned by the vessel under the charter sued on, less the net amount earned, or which might with reasonable diligence have been earned, by the vessel during the time ...

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