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REYES COMPANIA NAVIERA S.A. v. MANUMANTE S.A.

December 15, 1986

In the Matter of the Consolidated Arbitration
v.
REYES COMPANIA NAVIERA S.A, as Owner of the M.V. PAEAN, Petitioner; MANUMANTE S.A., as Time-Chartered Owners of the M.V. PAEAN, Respondent, v. CZARNIKOW-RIONDA CO., INC., as Voyage Charterers of the M.V. PAEAN, Respondent



The opinion of the court was delivered by: LEISURE

LEISURE, District Judge :

Petitioner ("Reyes"), owner of the M.V. Paean, seeks an order vacating in part an arbitration award pursuant to 9 U.S.C. § 10(d) or, alternatively, modifying the award pursuant to 9 U.S.C. §§ 11(b) or 11(c).

Reyes had a charterparty with Manumante S.A. ("Manumante"), who in turn sub-chartered the vessel to Czarnikow-Rionda Co., Inc. ("Czarnikow"). The arbitration which is the subject of this petition was a court-ordered consolidation of arbitrations between Czarnikow and Manumante on the one hand, and Manumante and Reyes on the other hand.

 Czarnikow sustained a loss because the ship failed to carry a full cargo of sugar. Manumante had agreed to lift the full amount, but the ship would only accept a lesser quantity. The primary issue was whether Manumante had offered to do more than the ship's capability, or whether the vessel owner had misrepresented how much it could carry. See Affidavit of Donald B. Allen, Esq., counsel for Manumante ("Allen Aff."), sworn to on July 24, 1986, at 2.

 Petitioner does not challenge the findings of the arbitrators (the "panel") as to the substantive merits of the award. Petitioner disputes only the authority of the panel to direct Reyes to pay an award directly to Czarnikow. See Petitioner.'s Memorandum of Law at 2.

 The three parties to the consolidated arbitration entered into the following written agreement, dated October 1982, which they submitted to the panel with a letter of transmittal dated March 8, 1983:

 IT IS HEREBY STIPULATED by and between the parties hereto:

 1. Czarnikow-Rionda Co., Inc. sustained a loss of $27,500., because of the failure to lift a full cargo as alleged herein.

 2. Czarnikow should be awarded a total recovery of $27,500, said amount to be apportioned by arbitrators in their final award against either the vessel owner, or the time charterer, or both.

 3. The cost of arbitration to date shall be borne equally between the three parties hereto.

 According to the attorney for Manumante, the impetus for this agreement was the desire of both defense counsel, in view of their recognition that Czarnikow would probably recover, to preserve an attractive settlement offer. Allen Aff., at 2-3.

 During the course of the arbitration, Manumante ceased to do business and is now reported to be insolvent. Id. at 2.

 In rendering their decision dated April 21, 1986, the arbitrators referred to the submission agreement, which had been made part of the record before the panel. With respect to Czarnikow's claim for failure to lift a full cargo, the panel concluded as follows:

 The panel is unanimous in its decision that Owners are liable for Charterers' loss of $27,500, and, under the stipulation referred to above, they must ...


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