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Mutual Marine Office, Inc. v. Transfercom Limited

April 15, 2009


The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.


Petitioners Mutual Marine Office, Inc., Pacific Mutual Marine Office, Inc., Mutual Inland Marine Office, Inc. and Mutual Marine Office of the Midwest, Inc. (collectively, "MMO"), have petitioned the Court to confirm an arbitration award rendered in their favor against Respondent Transfercom Limited ("Transfercom"), as successor in interest to Yasuda Fire & Marine Insurance Co., Ltd. ("Yasuda"). (Amended Petition ¶ 14; Response to Amended Petition ¶ 2) For the reasons stated below, MMO's petition is GRANTED, except with respect to the form of the proposed judgment.



This action arises from an arbitration between MMO and Yasuda concerning Yasuda's obligations under certain marine reinsurance contracts. Among other things, MMO requested that the arbitration panel order Yasuda to pay it "$690,599.70 in unpaid balances" and to "post a letter of credit in the amount of $369,706.35 to secure Yasuda's portion of MMO's outstanding loss reserves." (Ex. B to Pet. Ex. D, at 20) On July 29, 2008, the panel rendered an award in MMO's favor (the "Final Award"). The Final Award states, inter alia, that: (1) "Within thirty (30) days, Yasuda shall pay to [Mutual Marine] $690,599.70 in satisfaction of unpaid balances due under the reinsurance Contracts," and (2) "Within thirty (30) days, Yasuda shall post a letter of credit for $365,538.89 to secure reserves for outstanding losses." (Pet. Ex. A at 2)

After the Final Award was issued, Transfercom informed its counsel that at some time prior to the arbitration, Yasuda -- Transfercom's predecessor in interest -- had posted a letter of credit in the amount of $769,191.11 to secure reserves under the contracts at issue in the arbitration. (Keely Decl. ¶ 2; Walter Decl. ¶ 5) Transfercom's counsel informed MMO of the letter of credit, but MMO took the position that under the Final Award, Transfercom was required to post a new letter of credit for $365,538.89. (Keely Decl. ¶ 3)

Transfercom then wrote to the arbitration panel, stating that it "believe[d] that . . . [the Final Award] [wa]s already satisfied by a letter of credit previously posted in favor of MMO," and requesting that the panel "clarify" the sentence in the Final Award concerning the letter of credit "to state as follows: A majority of the Panel finds that MMO is entitled to security for reserves for outstanding losses in the amount of $365,538.89. Accordingly, the collateral posted for [the $769,191.11 letter of credit] . . . shall be reduced such that the letter of credit is sufficient to secure $365,538.89." (Pet. Ex. C at 1-2) MMO objected to Transfercom's request on the ground that under the functus officio*fn1 doctrine, the panel "lack[ed] any power to re-examine" its decision, and that none of the three exceptions to that doctrine -- which apply where "there is a mistake apparent on the face of the award," where the award "does not adjudicate an issue which has been submitted," or where there is an "ambiguity which requires clarification" -- were applicable. (Pet. Ex. D at 1-3 (quoting Colonial Penn Ins. Co. v. The Omaha Indemnity Co., 943 F.3d 327, 331 (3d Cir. 1991)).

On October 11, 2008, the panel agreed that it was "without authority to consider" Transfercom's request "on the basis of the . . . functus officio" doctrine. (Pet. Ex. E) Transfercom has not posted a new letter of credit, however.


The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"), 9 U.S.C. §§ 201 et seq., applies to the Final Award. (See Pet. Br. at 4; Pet. ¶ 14; Resp. ¶ 14) Therefore, the Court must confirm the Final Award "unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the . . . Convention," 9 U.S.C. § 207, namely, grounds for vacating, modifying or correcting the award as provided under 9 U.S.C. §§ 10-11. See 9 U.S.C. § 208 (providing that the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., will apply in cases governed by the Convention so long as they are not in conflict with the Convention); Hall Street Assoc., L.L.C. v. Mattel, Inc., 128 S.Ct. 1396, 1402 (2008) ("Under the terms of § 9 [of the Federal Arbitration Act], a court 'must' confirm an arbitration award 'unless' it is vacated, modified, or corrected 'as prescribed' in §§ 10 and 11. Section 10 lists grounds for vacating an award, while § 11 names those for modifying or correcting one.").

In this case, neither side contends that the Final Award should be vacated, modified, or corrected. Accordingly, the Court will confirm the Final Award.


The nub of the parties' dispute here is not whether the Final Award should be confirmed, but instead whether Transfercom should be deemed to have fully satisfied the Final Award in light of the existing letter of credit, or whether the Final Award requires Transfercom to post a new letter of credit in the amount of $365,538.89. "At the confirmation stage, the court is not required to consider the subsequent question of compliance." Zeiler v. Deitsch, 500 F.3d 157, 169 (2d Cir. 2007). Here, however, Transfercom has asked this Court to issue a "judgment declaring that Transfercom has fully complied with and satisfied all requirements of the Final Award. . . . Such a judgment will properly give effect to the decision of the arbitrators in the Final Award and provide finality to the parties' dispute." (Transfercom Br. 7); see also Letter of Sean Thomas Keely dated February 3, 2009 ("Keely Ltr."), at 3 (acknowledging that the Court may "treat MMO's filing as a petition to confirm and motion to enforce (and Transfercom's response as a cross-motion).") Similarly, MMO states that "it is the Court's obligation to determine whether the Final Award does or does not require [Transfercom] to post a letter [of] credit." (Letter of Andrew J. Costigan dated February 3, 2009, at 4) Given the parties' request, their opportunity to fully brief the issue of satisfaction and to submit relevant evidence, and considering the interests of judicial economy and cost savings for the parties, the Court will address the issue now.

"In the context of an arbitration, the judgment to be enforced encompasses the terms of the confirmed arbitration awards and may not enlarge upon those terms." Zeiler, 500 F.3d at 170. Thus, the question before this Court is whether Transfercom has complied with the terms of the Final Award. On its face, the Final Award unambiguously requires Transfercom to "post a letter of credit for $365,538.89" "[w]ithin thirty (30) days" of July 28, 2008. (Pet. Ex. A) It is undisputed that Transfercom did not post a letter of credit for ...

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