further proceedings against Maistros, that confirmation of the award is barred as res judicata. However, the claims in the Louisiana proceeding were settled, not adjudicated on the merits, and Exportkhleb was given specific permission to withdraw its claim from the Louisiana proceeding without prejudice. Thus there is no res judicata bar. Furthermore, the defense was never presented to the arbitrators.
Maistros also contends that the arbitration violates an earlier court order, namely, the final decree of the Louisiana court that all persons having claims against Maistros arising from the voyage were permanently enjoined from pursuing their claims. However, the order was not binding on Exportkhleb because it was not a party at the time of the entry of the order and it was given no notice of the petition for the decree or provided any opportunity to object. Furthermore, Maistros waived this objection by not raising it before the arbitrators.
Maistros also claims that the panel's decision that Exportkhleb's cargo damage claim was not time-barred under the Carriage of Goods by Sea Act's ("COGSA") statute of limitations was irrational and in manifest disregard of the law. This argument was made before the arbitrators, and not waived. COGSA provides that
In the event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods . . .
COGSA, 46 U.S.C. § 1303 (6).
The accident occurred on January 24, 1985. On February 12, 1985, Exportkhleb brought an action against Maistros on its cargo damage claim. In early April, 1985 Exportkhleb filed its claim in the limitation proceeding. On July 29, 1986, Exportkhleb's motion to withdraw/dismiss its claims was granted by the Louisiana court. On January 6, 1987, Maistros commenced arbitration on its general average claim. On May 17, 1989, Exportkhleb asserted its counterclaim for cargo damage. The panel ruled that
Exportkhleb responded to Maistros' claim in the limitation proceeding in the United States District in Louisiana and moved to have that matter dismissed. The litigation was dismissed without prejudice and this arbitration was commenced within one year thereafter. It is the panel's view that Exportkhleb has complied with the letter and spirit of the COGSA time bar provision.
(Final Award, pages 13-14).
It may be that the arbitrators misunderstood the law or the facts since in fact Exportkhleb did not assert its counterclaim until over two years after it withdrew its claim from the limitation proceeding. However, "mere error" does not suffice to establish "manifest disregard of the law": "The arbitrator [must have] appreciated the existence of a clearly governing legal principle, but decided to ignore or pay no attention to it." Merrill Lynch, Pierce, Fenner & Smith v. Bobker, 808 F.2d 930 (2d Cir. 1986) (emphasis added).
Judicial inquiry under the 'manifest disregard' standard is  extremely limited. The governing law alleged to have been ignored by the arbitrators must be well defined, explicit, and clearly applicable. We are not at liberty to set aside an arbitration panel's award because of an arguable difference regarding the meaning or applicability of laws urged upon it."
Id. There is no evidence here that the arbitrators' ruling, even if in error, was in manifest disregard of the law.
Finally Maistros argues that the award is irrational and therefore violates section 10(c) of the Federal Arbitration Act, 9 U.S.C. § 207, which provides that an award may be vacated for "misbehavior by which the rights of any party have been prejudiced." The sole case Maistros cites in support of this theory is Swift Industries Inc. v. Botany Industries Inc., 466 F.2d 1125, 1134 (3d Cir. 1972). However, even the Swift court noted that "the irrationality principle must be applied with a view to the narrow scope of review in arbitration cases." Swift, 466 F.2d at 1134. That standard has not been met here since it is not the case that the award is not supported by any evidence in the record.
Maistros' motion to vacate the arbitration award is thus denied and Exportkhleb's motion to confirm the award is granted.
It is so ordered.
Dated: New York, New York
April 22, 1992
Morris E. Lasker