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EXPORTKHLEB v. MAISTROS CORP.

April 22, 1992

In the Matter of an Arbitration -between- EXPORTKHLEB, Petitioner, -and- MAISTROS CORPORATION, Respondent.

Lasker


The opinion of the court was delivered by: MORRIS E. LASKER

LASKER, D.J.

 Maistros Corporation ("Maistros") seeks to vacate an arbitration award against it of $ 932,818.24 on the grounds that the arbitrators exceeded their powers under the Federal Arbitration Act, 9 U.S.C. § 10(d), and that, under the terms of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, T.I.A.S. 6997 (1970) (reprinted as a note following 9 U.S.C. § 201), the award went beyond the scope of the issue submitted to arbitration and violated public policy. Exportkhleb has made an opposing motion to confirm the award of the arbitrators. The crux of Maistros' argument is that a limitation of liability proceeding -- concluded over two years before the arbitrators granted the award -- bars an affirmative award against Maistros in connection with the incident in question.

 The petition to vacate is denied, and the petition to confirm is granted.

 I.

 The Master Petros, a ship owned by Maistros, set sail for the Soviet Union on December 12, 1984, with cargo including 36,276.52 metric tons of yellow corn owned by Exportkhleb on board. After various mishaps, it ran aground on January 24, 1985 and the voyage was abandoned. On February 12, 1985, Exportkhleb sued Maistros in personam and the Master Petros in rem in the United States District Court for the Eastern District of Louisiana for damage to the corn caused by the accident. Maistros promptly petitioned the Louisiana court for exoneration from or limitation of liability on all claims arising from the voyage, pursuant to the U.S Vessel Owner's Limitation of Liability Act, 46 U.S.C. § 183. That Act provides that where the shipowner is not "in privity" with the accident, the shipowner's liability is limited to the amount or value of its interest in the vessel. On April 15, 1985, the Louisiana court, pursuant to Rule F(3) of the Supplemental Rules for Certain Admiralty and Maritime Claims, enjoined the filing or further prosecution of any proceeding against Maistros in connection with the incident and required all parties with claims relating to the voyage to submit those claims in the limitation proceeding. *fn1" Thereafter, Exportkhleb timely filed its claims for cargo damage in the Maistros limitation of liability proceeding.

 However, in early 1986, Exportkhleb moved the Louisiana Court to withdraw its claim from the limitation proceeding and to dismiss its separate cargo damage action, without prejudice. Maistros opposed the motion, arguing that the withdrawal should be without prejudice. However, on July 29, 1986, the Louisiana court granted Exportkhleb's motion to withdraw and dismiss without prejudice.

 Subsequently, the claims of the parties other than Exportkhleb in the limitation proceeding were settled with Maistros, and on December 4, 1986, although Exportkhleb's claim for cargo damage was still unresolved, the court entered a decree permanently enjoining all further proceedings against Maistros in connection with the incident. The order -- a decree of exoneration from liability and final dismissal -- stated:

 Maistros Corp . . [is] hereby declared permanently and forever exonerated from any liability of any sort, or from any complaint, claim, demand or suit in any way directly or indirectly connected with the matters which are the subject of the complaint herein;

 All persons having, or claiming to have against Maistros Corp. . . . any right, demand or cause of action, in any way connected with the matters which are the subject of the complaint herein be, and they are hereby, permanently enjoined from commencing, prosecuting or proceeding with any such claim, suit, demand, or cause of action in any court or forum whatsoever;

 It is to be noted that Exportkhleb was no longer a party to the limitation proceeding at the time of the entry of the order.

 On January 6, 1987, Maistros informed Exportkhleb of its intention to seek arbitration on a claim for general average contribution against Exportkhleb growing out of the Master Petros voyage. On May 17, 1989, Exportkhleb sent Maistros a letter in which it stated, "we intend to counterclaim [i.e., before the arbitrators] for the damage sustained to the cargo in the amount of $ 578,052.91, plus a percentage of the cost of discharging the corn at Boothville." The first hearing before the arbitrators was held on June 26, 1989.

 On August 16, 1991, the three arbitrators unanimously denied Maistros' claim for general average contribution in the amount of $ 242,938.59, but granted Exportkhleb $ 932,818.24 ($ ...


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