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