The opinion of the court was delivered by: Haight, Senior District Judge.
MEMORANDUM OPINION AND ORDER
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
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
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
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)
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 ...