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UCO TERMINALS, INC. v. APEX OIL CO.

March 1, 1984

In the Matter of the Petition of UCO TERMINALS, INC.
v.
APEX OIL COMPANY



The opinion of the court was delivered by: WARD

WARD, J.

On September 16, 1983, an arbitration panel entered an award in favor of petitioner, UCO Terminals, Inc. ("UCO") against respondent, Apex Oil Co. ("Apex"). That award was in the amount of $154,977.47, which consisted of $117,607,89 plus $37,369.58 in pre-award interest. Petitioner has moved before this Court for an order confirming the arbitration award, with post-award interest, costs and fees, pursuant to section 9 of the United States Arbitration Act of 1925 ("the Act"), 9 U.S.C. § 9. Respondent has cross-moved to have the arbitration award vacated pursuant to section 10 of the Act, 9 U.S.C. § 10, on the ground that one member of the three-member arbitration panel failed to disclose certain business dealings with respondents. In the alternative, respondent moves to have the arbitration award modified pursuant to section 11 of the Act, 9 U.S.C. § 11, on the ground that certain calculations of interest were incorrect or unauthorized. For the reasons hereinafter stated, the Court reserves decision on the question of the method to be employed in calculating post-award interest. In all other respects, petitioner's motion is granted and respondent's cross-motion is denied.

 I. THE IMPARTIALITY OF THE PANEL

 Apex" motion to vacate the arbitration award is based on its contention that one of the arbitrators, Alexis Nichols, failed to adequately disclose and/or affirmatively misrepresented some of his business dealings. In large part, these omissions are alleged to have occurred at a hearing held on October 25, 1982 to enable the parties to evaluate the three then-nominees to the arbitration panel. In addition, Apex alleges that Mr. Nichols improperly failed to disclose a charter party that was entered into while the arbitration was pending.

 Alexis Nichols is the president of Brokerage and Management Corp., an operator of tankers and dry cargo ships. Apex has alleged, in a description not disputed by UCO, that Brokerage and Management Corp. is the exclusive agent for numerous tankers and cargo ships owned by Trade & Transport Group, and that both of the latter two enterprises are "controlled" by the same individual. Apex charges that Mr. Nichols failed to disclose:

 a) the relationship between Brokerage and Management Corp. and Trade & Transport Group;

 b) the true nature of the business engaged in by Brokerage and Management Corp.;

 c) the existence of a charter party, signed in April 1982 by Mr. Nichols, between Trade & Transport, Inc. and Apex; and

 d) the signing during the pendency of the instant arbitration, again by Mr. Nichols, of a charter party between Trade & Transport, Inc. and Apex.

 With the exception of the fourth allegation, all of these omissions or misrepresentations are said to have occurred at the hearing of October 25, 1982.

 The legal principles that govern a challenge to the impartiality of an arbitration panel under section 10 of the Act are well settled. The burden of proof rests upon Apex, as the party asserting bias. See Andros Compania Maritima v. Marc Rich & Co., A.G., 579 F.2d 691, 700 (2d Cir. 1978); Reed & Martin, Inc. v. Westinghouse Elec. Corp., 439 F.2d 1268, 1275 (2d Cir. 1971). Apex must show "evident partiality," rather than merely the "appearance of bias." See International Produce, Inc. v. A/S Rosshavet, 638 F.2d 548, 551 (2d Cir.), cert. denied, 451 U.S. 1017, 69 L. Ed. 2d 389, 101 S. Ct. 3006 (1981).

 An analysis of Apex" claims must begin with an examination of Apex" assertion that Mr. Nichols failed adequately to disclose the relationship between Brokerage and Management Corp. and the Trade & Transport Group. A reading of the transcript of the October 25, 1982 hearing shows that Mr. Nichols made no attempt whatever to conceal his relationship with Trade & Transport. He mentioned Trade & Transport no fewer than nine times at the hearing, and gave every indication that the business affairs of Trade & Transport were one of his primary responsibilities as president of Brokerage and Management Corp. Mr. Nichols treated the business dealings of Trade & Transport as a matter relevant to his own impartiality, and one which should be disclosed and explored at the hearing.

 No other inference could be reasonably drawn from Mr. Nichols' testimony than that he considered himself to represent the interests of Trade & Transport on a regular basis. Although David Nourse, Apex" counsel at the hearing, elected not to question Mr. Nichols directly on the relationship between Brokerage and Management Corp. and Trade & Transport, Mr. Nourse's questions unambiguously indicate that he understood that Mr. Nichols often represented Trade & Transport. Mr. Nourse questioned Mr. Nichols quite directly about both the past and present business dealings of Trade & Transport, indicating that he understood that Mr. Nichols' firm had a substantial relationship with Trade & Transport. *fn1"

 Mr. Nichols forthright treatment of his association with Trade & Transport is significant for two reasons. First, it belies respondent's suggestion that Mr. Nichols concealed an "inherent bias in favor of owner's position." Affidavit of Donald F. Mooney at 11 (Dec. 7, 1983). Second, it undermines Apex" contention that it had no notice of Mr. Nichols' involvement in the two charter parties ...


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