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March 1, 1999


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


This case requires the Court to consider whether the Federal Arbitration Act allows a district court or commercial arbitrators to correct an arbitration award based in part upon a mathematical calculation which the arbitrators subsequently acknowledge to be erroneous. The question arises on a petition to modify and correct the award, or alternatively to remand the matter to the arbitrators for further proceedings.


Petitioner Laurin Tankers America, Inc. ("Laurin") chartered the M/T MOUNTAIN BLOSSOM to respondent Stolt Tankers, Inc. ("Stolt") to carry quantities of two chemicals, monoethylene glycol ("MEG") and diethylene glycol ("DEG"), from U.S. Gulf ports to Mediterranean ports. The charterparty contained an agreement for the arbitration of disputes in the City of New York before a panel of three arbitrators.

The MOUNTAIN BLOSSOM is a "parcel tanker." The more conventional vessel's cargo-carrying tanks are filled with the same substance for carriage from one port to another. The parcel tanker, divided into a number of smaller tanks, is capable of loading, carrying, and discharging different substances (or "parcels") at different ports on the same voyage.

On February 21, 1995 the MOUNTAIN BLOSSOM arrived at the port of New Orleans to load the Stolt parcels. The designated discharge ports were Torre Annunziata, Italy (south of Naples), and Ravenna, Italy. But the cargoes were not loaded into the vessel. On March 10, 1995, Stolt advised Laurin that it had rejected the vessel, and further advised that Laurin was free to proceed on the voyage and seek alternative employment.

Laurin demanded arbitration of its claim that Stolt breached the charterparty by rejecting the vessel at New Orleans. A panel of three experienced maritime arbitrators was appointed: Manfred W. Arnold, Klaus C.J. Mordhorst, and Patrick V. Martin as chairman. After the panel conducted two evidentiary hearings, but before making an award, Stolt conceded liability for wrongful rejection of the vessel and cancellation of the charterparty voyage. That left the arbitrators to decide the amount of Laurin's damages.


The arbitrators did so in a unanimous award dated June 19, 1998. They found that had Stolt performed the charter, Laurin would have earned gross freights of $594,-526.50. But the proper calculation of damages caused by cancellation of the Stolt charter was affected, in the arbitrators' view, by the performance of the Enichem charter, which partially overlapped in time and space with the originally intended Stolt charter. The arbitrators explained their approach as follows:

  From the freight for the notional voyage, i.e.,
  the one that should have been performed, the Owner
  [Laurin] must give credit in its calculations for
  the expenses not incurred in the performance of
  that notional voyage. These include: (1) the fuel
  consumption from New Orleans to St. Croix, (2)
  fuel consumed from St. Croix to Priolo, on a
  pro-rata basis with two-thirds being assessed
  against the Stolt charter and (3) fuel savings for
  the voyage from Priolo to Torre Annunziata and
  Ravena [sic].

Award at pp. 4-5. In a footnote, the arbitrators explained that the two-thirds pro-rating of fuel on the St. Croix/Priolo leg of the voyage, in performance of the Enichem charter, "is based upon the fact that the voyage must be viewed as a total concept," and, thus viewed, "Stolt's cargo represented approximately two-thirds of the total intended cargo and likewise approximately two-thirds of the voyage revenue." Id. at p. 5 n. 1.

The arbitrators undertook to implement this approach by calculating the amounts of fuel oil the MOUNTAIN BLOSSOM consumed while at sea during these three passages. I reproduce the arbitrators' calculations, which appear in their award at p. 6:

   Bunkers Nola/St. Croix
      5.1 days x 51.7T x $100)               (29,986.00)
      5.1 days x 4.7 x $151)
   Bunkers Priolo/Torre Annunziata-Ravena
      3.1 days x 51.7T x $100)               (16,027.00)
      3.1 days x 4.7 x $151)                  (2,200.07)
Torre Annunziata-Ravena disbursements     (55,485.00)
   St. Croix/Priolo
      15.3 days x 51.7T x $100 = $79,101
      15.3 days x 4.7 x $151   = 10,858
      2/3 against Stolt voyage               (59,973.00)

The arbitrators' calculations of fuel consumption savings appearing on p. 6 of the award employ a form of shorthand, but the meanings appear from the evidence before them, as summarized by Laurin in its present petition, and are not disputed. The notation "51.7T x $100" means 51.7 tons of fuel oil at a cost of $100 per metric ton, which equals $5,170. The notation "4.7 x $151" means 4 .7 tons of diesel oil at a cost of $151 per metric ton, which equals $709.70.*fn2 The arbitrators then multiplied those amounts by the number of days the MOUNTAIN BLOSSOM was at sea on each passage. It necessarily follows that the arbitrators regarded these amounts of fuel as the vessel's daily rates of consumption.

We now arrive at the basis for Laurin's petition to the Court. The exhibits and briefs of counsel submitted to the arbitrators, reproduced on this petition, seem to establish beyond question or dispute that the consumption figures of 51.7 tons of fuel oil and 4.7 tons of diesel oil represent not daily consumption, but rather the vessel's total consumptions during the sea passage from Priolo to Torre Annunziata and then on to Ravenna.

Presumably in preparation for the arbitration, on November 5, 1996 Laurin's agent telexed to the master of the MOUNTAIN BLOSSOM a request for "some est [estimated] consumptions," namely: "The voy would of [sic] been Priolo to Naples then onto Ravenna. I need est consumptions for the above sea passage (abt 3.10 days)."*fn3 The master telexed back: "Passage consumption HFO/MDO 51.7/4.7 mt." That is a shorthand way of saying that on that sea passage taking 3.1 days, the vessel would have consumed an estimated 51.7 metric tons of heavy fuel ...

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