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Navegazione v. Nitrate

decided: February 16, 1960.


Author: Clark

Before CLARK, HINCKS, and WATERMAN, Circuit Judges.

CLARK, Circuit Judge.

This proceeding was instituted by petitioner's motion under 9 U.S.C. § 9 to confirm an arbitration award. Respondent filed a cross-motion under 9 U.S.C. §§ 10, 11, to vacate, modify, and correct the award. The court below granted the motion to confirm and denied the crossmotion, and respondent appeals.

On September 6, 1955, petitioner, as owner, and respondent, as charterer, executed two time-charter parties for vessels then under construction. The vessels were respectively delivered on December 27, 1956, and August 31, 1957, and currently remain in respondent's service under a five-year term. The dispute involves the vessels' rigging, i. e., booms and winches. Clause 29 of each charter party provided that hatches 2, 3, and 5 were to be "double-rigged." But at respondent's insistence the parties adopted Addendum No. 1, which provided that all six holds of each vessel were to be "double-rigged." The vessels were in fact equipped with two winches and two booms at each hold, which petitioner asserts constitute "double-rigging." Respondent's position is that the expression "double-rigged" means four winches and four booms at each hold.

Clause 17 of the charter parties is a provision for unrestricted arbitration thus:

"That should any dispute arise between Owners and the Charterers, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them, shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the Court. The Arbitrators shall be commercial men."

Pursuant to this clause, the parties submitted the following question to arbitration: "Under the subject charter party, does hatch equipment, consisting of two winches and two booms, satisfy the charter party term that the hatch be 'doubled-rigged'?" If answered in the negative, damages were to be assessed by the arbitrators.

The arbitrators, by a vote of two to one, ruled in favor of petitioner. Relevant portions of the majority opinion read as follows:

"Based on testimony and the documents offered in evidence, it would appear both the owner and the charterer took for granted their individual opinion as to the requirement dealing with the number of winches and booms at a hatch and no attempt was made by either party to further clarify their understanding.

"It is the opinion of [the majority that] the expression 'double-rigged' has two meanings in New York, which is obvious from the evidence presented.

"The facts indicate this expression was proposed and inserted in the charter party at the request of the charterer.

"Therefore, under the circumstances, we find in favor of the owner in Item #1 of the agreement covering the submission to arbitration and no damages are awarded to the charterer."

The dissenting opinion relied upon the course of negotiations between the parties in concluding that petitioner understood "double-rigged" to mean four winches and four booms. Petitioner had forwarded plans of a vessel showing two winches and two booms at each hatch, but respondent had excepted in a counteroffer which specified that holds 2, 3, and 5 be "double-rigged."

Were we empowered to view the matter de novo, we would find much to persuade in the arguments advanced by the dissenting arbitrator. But as respondent recognizes, the court's function in confirming or vacating an arbitration award is severely limited. If it were otherwise, the ostensible purpose for resort to arbitration, i. e., avoidance of litigation, would be frustrated. See Note, Judicial Review of Arbitration Awards on the Merits, 63 Harv.L.Rev. 681 (1950). The statutory provisions, 9 U.S.C. §§ 10, 11, in expressly stating certain grounds for either vacating an award or modifying or correcting it, do not authorize its setting aside on the grounds of erroneous finding of fact or of misinterpretation of law. It is true that an award may be vacated where the arbitrators have "exceeded their powers." 9 U.S.C. § 10(d). Apparently relying upon this phrase, the Supreme Court in Wilko v. Swan, 346 U.S. 427, 436-437, 74 S. Ct. 182, 98 L. Ed. 168, suggested that an award may be vacated if in "manifest disregard" of the law. But cf. Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 203 note 4, 76 S. Ct. 273, 276, 100 L. Ed. 199: "Whether the arbitrators misconstrued a contract is not open to judicial review," citing The Hartbridge, 2 Cir., 62 F.2d 72, certiorari denied Munson Steamship Line v. North of ...

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