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TRADE & TRANSP. v. PETRO. CHARTERERS

June 14, 1990

TRADE & TRANSPORT, INC., PLAINTIFF,
v.
NATURAL PETROLEUM CHARTERERS INCORPORATED; ISTHMUS NAVIGATION M.C.; GLOBAL PETROLEUM CARRIERS, M.C.; NICHOLAS C. PIPILIS; UMB BANK AND TRUST COMPANY, DEFENDANTS. UMB BANK AND TRUST COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFFS, V. DR. CONSTANTINE N. PAPADOPOULOS, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Milton Pollack, Senior District Judge.

OPINION

An application has been presented for entry of a judgment on the Award of arbitrators. The losing party objects on the ground of irregularity in respect to the composition of the panel and seeks a ruling setting aside the Award and that the arbitration be recommenced.

For the reasons shown hereafter, judgment will be ordered to be entered on the Award.

Background

Clause 29 of the contract of the parties stipulates the governance of arbitration in case of disputes or differences. Pursuant to this agreement, after the dispute herein involved surfaced, each side chose one arbitrator and these two selected a third. Plaintiff chose Mr. Lloyd Nelson. Defendant chose Mr. Frank Crocker. Together these two chose Mr. Manfred Arnold.

On December 18, 1981, this panel of arbitrators, at the request of the parties, complied with a modification of the arbitral submission to decide the issue of liability separately and to set forth its decision in an Award. The panel then reserved their assessment of damages.

The Court ruled that the death of defendant's nominee to the panel, after finality was reached and announced on the separated issue of liability made by an unanimous ruling thereon during Crocker's lifetime, did not impair a so-styled Partial Final Award. The Court further ruled that by supplying a successor arbitrator for its deceased representative did not give the defendant the option to displace the existing neutral whose choice was made with the concurrence of the defendant's initial representative, Crocker. Nor was defendant's successor arbitrator entitled to the right, for the damage phase of the arbitration, to disregard the choice of the neutral made by defendant's original designee. Defendant also contended that untrue evidence had been submitted to the original panel which would warrant a rehearing on the Award. The Court left it to the panel to decide whether the previous determination of liability would be left intact or if the arbitration should be recommended ab initio. The arbitrators by a majority vote, Berg not voting, let stand the finding of liability and decided that the arbitration should not be recommenced and that the damage phase of the bifurcated arbitration should proceed accordingly.

On March 28, 1990, the entire panel with the successor, Berg, on board rendered its final decision on the issue of damages. The majority of the panel awarded Trade & Transport, Inc. the sum of $625,752.01. Berg dissented, in opinion, from a portion of the Award.

On this motion defendant renews the objections heretofore passed upon by the Court when the successor to Crocker, Jack Berg, succeeded Crocker on the panel. Defendant contends that it was beyond the power of the arbitration panel to pass on the issue of damages; that the arbitration Award on liability made at the request of both sides should be set aside; and that an arbitration be recommenced from the beginning on all issues.

Discussion

The contract for affreightment contains an arbitration clause providing for the resolution of disputes in a New York forum. Under this agreement, judgment may be entered upon any award made in any court having jurisdiction. (Plf's Ex. A: Clause 29) Accordingly, this Court has jurisdiction for the confirmation of the Arbitration Award. 9 U.S.C. § 9 provides that "if the parties in their agreement have agreed that the judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award. . . ."

The Federal Arbitration Act mandates that the Court must grant an order to confirm an arbitration award "unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title." 9 U.S.C. § 9. The relevant subsection, 9 U.S.C. § 10(c), provides that the Court may vacate the award "where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced."

Natural Petroleum Charterers contends that it was misconduct or misbehavior for Arnold, the third arbitrator, to refuse to step down from the panel and permit the selection of a new third arbitrator. Mr. Arnold, however, was recognized by the Court to be a legitimate member of the arbitral panel. To be sure, Arnold, together with Nelson and Berg, were instructed by the Court to "proceed ...


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