Elite did not present any case law to the arbitrators which
clearly required a one year statute of limitations to be applied.
Indeed, Elite's claim that COGSA's one year statute of
limitations would apply to a claim between Texaco and Texaco
Antilles was based upon an interpretation of a complex series of
documents, which incorporate various contracts and documents by
reference. Nowhere in any of these documents is it unquestionably
evident that the COGSA one year statute of limitations applies so
that "the average person qualified to serve as an arbitrator"
could not have concluded otherwise. Merrill Lynch, Pierce,
Fenner & Smith v. Bobker, 808 F.2d at 933. Since manifest
disregard will generally only be found where the arbitrators
"`understood and correctly stated the law but proceeded to ignore
it,'" Fahnestock, 935 F.2d at 516 (quoting Siegel v. Titan
Indus., 779 F.2d 891, 893 (2d Cir. 1985), it follows that the
arbitrators' decision to award Texaco damages by accepting
Texaco's argument that a six year statute of limitations applies
cannot be more than "a mere error in law or failure on the part
of the arbitrators to understand or apply the law," Saxis
Steamship Co. v. Multifacs Int'l Traders, Inc., 375 F.2d 577,
582 (2d Cir. 1967), assuming that any error was made at all.*fn5
Elite further argues that the arbitrators were guilty of
misbehavior and of exceeding the scope of their authority when
they accused Elite of attempting to steal cargo by means of
"surreptitious" piping. This contention borders on the frivolous.
Elite's argument is based on isolated statements by the
arbitrators which in fact were made to help clarify the potential
source of contamination to the fuel. These statements can hardly
be seen as beyond the scope of the arbitrators' authority,
especially in light of the fact that the AAA commercial
arbitration rules, to which the parties agreed to abide, allow
the arbitrators to consider any evidence deemed "necessary to an
understanding and determination of the dispute." See AAA
Commercial Arbitration Rule 31. Indeed, the Second Circuit has
stated that "a court must accord the `narrowest of readings' to
the `excess of powers' provision of 9 U.S.C. § 10(d)."
Kerr-McGee Refining Corp. v. M.T. Triumph, 924 F.2d 467, 471
(2d Cir. 1991) (quoting Andros Compania Maritima, S.A. v. Marc
Rich & Co., A.G., 579 F.2d 691, 703 (2d Cir. 1978)).
Similarly, there is no merit to Elite's contention that the
arbitrators prejudged the merits of the case simply because a
statement was made that there is no doubt that contamination did
occur, especially since the arbitrator did not express any
opinion as to the cause of that contamination, and merely made
this observation in an attempt to explain why the panel was
inquiring further into the ship's piping layout. See Petition
at Exhibit H, pp. 519-524.
Finally, Texaco claims it is entitled to attorneys' fees and
costs with respect to the instant motion under Clause 27 of the
charter party which provides that "[d]amages for breach of this
Charter shall include all provable damages, and all costs of
arbitration suit and attorneys' fees incurred in any action
hereunder." See Petition at Exhibit A. Elite simply argues,
without any support in the language of the charter agreement
itself, that a dispute as to the arbitrators conduct is not
within that clause. There is no merit to that argument. The
language of the charter clearly supports Texaco's claim that
attorneys' fees and costs are recoverable with respect to any
action arising under that agreement.
For the reasons given above, petitioner's motion to vacate the
arbitration award is
denied, and respondent's cross-motion to confirm the award is
granted. The Clerk of the Court is directed to enter a judgment
accordingly and to close the above-captioned action.
It is SO ORDERED.