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KERR-MCGEE REFINING v. TRIUMPH TANKERS

July 10, 1990

KERR-MCGEE REFINING CORP., PLAINTIFF,
v.
TRIUMPH TANKERS LTD., DEFENDANT.



The opinion of the court was delivered by: William C. Conner, District Judge.

OPINION AND ORDER

This action is presently before the Court on the motion of plaintiff Kerr-McGee Refining Corp. ("Kerr-McGee") to confirm the Partial Final and Final Arbitration Awards and the cross motion of defendant Triumph Tankers, Ltd. ("Triumph") to vacate such awards. Triumph moves to vacate the partial award as time-barred and the final award on the grounds that the arbitration panel (1) exceeded their powers, (2) are guilty of misbehavior prejudicial to Triumph and (3) acted in manifest disregard of the law. For the following reasons, the partial award is confirmed and the final award is vacated.

FACTS

The present dispute arises out of a voyage charter party (the "Charter") dated March 5, 1984, between Kerr-McGee Refining Corp. ("Kerr-McGee"), as charterer and Triumph Tankers, Ltd. ("Triumph"), as owner of the vessel. On March 9, 1984, the vessel loaded 539,999 net bbls. of Beatrice Crude Oil at the Nigg Oil Terminal in Scotland and on March 10, 1984, sailed for Corpus Christi, Texas, arriving on March 28, 1984. Upon arrival at Corpus Christi, Kerr-McGee found that the amount of cargo on board was only 538,250.09 net bbls. Following discharge of the oil, Kerr-McGee discovered that a total of only 528,060.65 net bbls. had been received from the vessel. On the basis of these measurements, Kerr-McGee alleged short delivery and withheld freight in the amount of $213,000.

Because the Charter provided for arbitration of disputes "arising out of" the Charter, Triumph sought arbitration to recover the balance of freight withheld by Kerr-McGee. Kerr-McGee subsequently paid the balance but counterclaimed in the arbitration for $150,638.59 as damages for short delivery of 4,835.91 net bbls. of cargo. Thereafter, Kerr-McGee increased the amount of its shortage claim to 11,938.35 net bbls. of cargo and sought treble damages based on the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962-1968.

On September 7, 1988, the arbitration panel issued a Partial Final Award unanimously finding in favor of Kerr-McGee for the value of 7,497.41 net barrels of cargo short delivered, together with interest to the date of the Partial Final Award at 9% per annum, in the combined amount of $332,138.41 with interest to continue at 10% per annum until payment or judgment. The arbitrators deferred Kerr-McGee's RICO claim for which both parties submitted further briefs. On March 28, 1990, the panel issued its Decision and Final Award whereby the majority concluded that Triumph had converted 7,497.41 net bbls. of Kerr-McGee's cargo through a pattern of racketeering and awarded treble damages under RICO, costs, attorneys' fees and interest totaling $512,520.10.

In 1984, prior to the arbitration, Kerr-McGee commenced this action seeking to attach assets of Triumph located in New York as security for its claim. By agreement of the parties, this action was discontinued pending arbitration, upon the posting of security by Triumph's protection and indemnity underwriter. By order dated September 13, 1985, the Court dismissed this action subject to reopening for the purpose of confirming or vacating the arbitration award. The Court now considers the cross motions to confirm and to vacate.

DISCUSSION

I. Partial Final Award

Triumph first asks this Court to vacate the Partial Final Award of September 7, 1988 because Kerr-McGee's motion for confirmation is time-barred. Triumph claims that the partial award is a full and final disposition of the shortage claim, subject to confirmation within one year from the date issued, September 7, 1989. Kerr-McGee claims to the contrary, that the partial award did not fully and separately dispose of an independent claim and therefore was not subject to confirmation until the date of the final award, allowing confirmation at the present time.

The Federal Arbitration Act ("Act") provides that if a party wishes to avail itself of summary proceedings for confirmation of an award,

  at any time within one year after the award is
  made, any party to the arbitration may apply to
  the court . . . for an order confirming the award

9 U.S.C. § 9. This provision limits the time in which a party may move for confirmation to one year after the date of the award. The law is well settled that an interim award which finally and conclusively disposes of a separate independent claim may be confirmed although it does not resolve all the claims that were submitted to arbitration. See Metallgesellschaft A. G. v. M/V Captain Constante, 790 F.2d 280, 283 (2d Cir. 1986); Eurolines Shipping Co. v. Metal Transport Corp., 491 F. Supp. 590, 592 (S.D.N.Y. 1980). If, however, the award left open the amount of damages or did not fully dispose of a distinct claim, the limitations period is tolled until the final award. See Metallgesellschaft A.G. v. M/V Captain Constante, 790 F.2d 280, 283 (2d Cir. 1986); Michaels v. Mariforum Shipping, S.A., 624 F.2d 411, 414 (2d Cir. 1980) ([interim award] "did not finally dispose of any of the claims submitted, since it left open the question of damages on the four counterclaims of Owner that it sustained and reserved decision on the fifth"); Puerto Rico Maritime, Etc. v. Star Lines Ltd., 454 F. Supp. 368, 372 (S.D.N.Y. 1978) (declaration of liability leaving the question of the amount owing unanswered and the possibility of further disputes between the parties not separable and non-dependent). The question thus before the Court in determining whether the one-year period has run is whether the Partial Final Award finally and definitely disposed of a separate and independent claim.

In the Partial Final Award, the panel determined that Triumph breached the charter and was liable for shortage damages. Specifically, the panel found that Triumph "failed to deliver 7,497.41 net bbls. of Beatrice Crude. . . . which resulted in a loss to Charterers of $233,544.32." The panel further awarded interest to Kerr-McGee, allocated the arbitrators' fees and set interest at 10% to run until payment was made or the award was reduced to judgment. Kerr-McGee argues that because the panel left open whether, as a result of Triumph's breach, Kerr-McGee was also entitled to costs, attorneys' fees and punitive and/or RICO damages and whether Triumph was entitled to interest for late payment of freight, the ...


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