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FILS ET CABLES D'ACIER DE LENS v. MIDLAND METALS C

April 5, 1984

In the Matter of the Arbitration between FILS ET CABLES D'ACIER DE LENS, Petitioner and Cross-Respondent, and MIDLAND METALS CORPORATION, Respondent and Cross-Petitioner.


The opinion of the court was delivered by: CONNER

OPINION AND ORDER

CONNER, D.J.:

 Fils et Cables d'Acier de Lens ("FICAL") has petitioned this Court pursuant to § 9 of the Federal Arbitration Act, 9 U.S.C. § 9, to confirm an arbitration award rendered on September 23, 1983 against respondent Midland Metals Corporation ("Midland"). Midland has cross-petitioned the Court to vacate, or in the alternative to modify, that same award. For the reasons stated below, both motions are granted in part.

 I.

 The underlying dispute between the parties concerns the quality of certain galvanized wire furnished by FICAL to Midland pursuant to two written contracts, dated June 4 and December 4, 1980. In paragraph 13 of both contracts, the parties agreed to arbitrate their disputes in New York City under the Rules of the American Arbitration Association. The provision embodied in the FICAL/Midland contracts differs from a standard arbitration clause, however, insofar as it specifically sets forth the standard of judicial review to be applied in the event that either party seeks confirmation of an arbitration award. Paragraph 13(c) of both contracts provides:

 The arbitrator shall make findings of fact and shall render an award based thereon and a transcript of the evidence adduced thereat shall, upon request, be made available to either party. Upon an application to the court for an order confirming said award, the court shall have the power to review (1) whether the findings of fact rendered by the arbitrator are, on the entire record of said arbitration proceedings, supported by substantial evidence, and (2) whether as a matter of law based on said findings of fact the award should be affirmed, modified or vacated. Upon such determination, judgment shall be entered in favor of either party consistent therewith.

 On September 23, 1983, following proceedings before a panel of three arbitrators designated in accordance with American Arbitration Association Rules, the arbitrators rendered a final award. In that award, the arbitrators made the following factual findings:

 A. The material shipped to Taiwan did not meet the Taiwan customer specifications;

 B. The material in other customer hands and in U.S. inventory was not proven to be outside of the specifications; [and]

 C. MIDLAND METALS CORPORATION . . . had full use of the Taiwan payments.

 Pet. Ex. 5 at 1. On the basis of these findings, the arbitrators rendered a monetary award, expressed partially in American dollars and partially in French francs.They directed that Midland pay FICAL: (a) $266,217.30 for Taiwan merchandise; (b) $4,788.97 for merchandise in customer hands; (c) an additional sum of 1,004,503 French francs for merchandise in inventory and in customer hands; and (d) interest of $25,000 plus FF 135,000 plus 11% on FF 834,915 from December 10, 1982 to September 10, 1983. On the other hand, the arbitrators directed that FICAL pay Midland $250,025 for Taiwan settlement and related expenses. The conversion rate determined by the arbitrators to be applicable to these sums was that "in effect 90 days after date of the respective invoices." Pet.Ex. 5 at 1.

 While FICAL now seeks to have this award confirmed in all respects, Midland has asked the Court to vacate the award insofar as it grants FICAL damages for merchandise in customer hands and in inventory or, alternatively, to modify that aspect of the award so that it is reflected in American dollars, converted from French francs as of the date of judgment rather than as of the earlier date specified in the arbitrators' award. Midland further seeks to have the interest provisions of the award modified, either to eliminate or reduce the interest awarded in FICAL's favor, or to equalize the award by providing for interest on the sum awarded in its favor. Midland agrees, however, that the Court should confirm the award relating to Taiwan merchandise in the principal amounts of $266,217.30 to FICAL and $250,025 to Midland.

 II.

 The threshold question before the Court is whether the parties can, by agreement, alter the nature of a federal court's role in the arbitration process. It is well settled that, in the normal case, judicial review of an arbitration award under the Federal Arbitration Act is quite limited, being confined to determining whether one of the specific grounds enumerated in 9 U.S.C. §§ 10 or 11 for vacating or modifying an award is present. See 9 U.S.C. § 9; Bell Aerospace Co. Div. of Textron v. Local 516, 500 F.2d 921, 923 (2d Cir. 1974); Office of Supply, Gov't of Republic of Korea v. New York ...


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