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In re Arbitration Between Waterside Ocean Navigation Co.

June 18, 1984

IN THE MATTER OF THE ARBITRATION BETWEEN WATERSIDE OCEAN NAVIGATION CO., INC., PETITIONER-APPELLEE-CROSS-APPELLANT, AND INTERNATIONAL NAVIGATION LTD., RESPONDENT-APPELLANT-CROSS-APPELLEE


Appellant argues that the confirmation of foreign arbitral awards entered in appellee's favor is inconsistent with the public policy of the United States. Cross-appellant argues that it is entitled to post-award, pre-judgment interest.

Feinberg, Chief Judge, Winter, Circuit Judge, and Lasker, District Judge.*fn*

Author: Feinberg

FEINBERG, Chief Judge.

International Navigation, Ltd. (INL), appeals from an order of the United States District Court for the Southern District of New York, Mary Johnson Lowe, J., confirming five arbitration awards entered in London in favor of appellee Waterside Ocean Navigation Co., Inc. (Waterside). In turn, Waterside cross-appeals from an order of Judge Lowe denying it post-award, pre-judgment interest. On the main appeal, we consider the scope of the public policy defense to the confirmation of foreign arbitral awards under 9 U.S.C. § 207, which was enacted to implement the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention). On the cross-appeal, we consider whether district courts may grant post-award, pre-judgment interest when confirming awards pursuant to the Convention. For reasons given below, we affirm on the appeal, and reverse and remand on the cross-appeal.

I.

In October 1975, INL, as disponent owner, and Waterside, as charterer, entered into a charter party pursuant to which Waterside agreed to hire from INL the vessel "LAURENTIAN FOREST." The agreement called for the arbitration of disputes in London, England.

In 1976, a dispute arose between the parties. Following judicial proceedings in Canada -- which are not directly relevant to this opinion -- the matter was submitted to arbitration in London. In May 1982, the arbitrators entered an interim award in favor of Waterside on the issue of liability only. Subsequently, between August 1982 and March 1983, the arbitrators entered four further awards, granting damages to Waterside.

Waterside then applied to the United States District Court for the Southern District of New York for confirmation of the five awards. It also sought post-award, pre-judgment interest.INL opposed confirmation and presented a counterclaim based on fraud. In November 1983, Judge Lowe confirmed the awards in the sum of $1,634,442.33 and 15,754 pounds sterling, and dismissed the counterclaim. In a subsequent order, Judge Lowe denied Waterside's request for post-award, pre-judgment interest, holding that she did not have jurisdiction "to go beyond confirmation" of the awards. These appeals ensued.

II.

INL argues that confirmation of the awards pursuant to 9 U.S.C. § 207 is inconsistent with the public policy of the United States. Its argument stems from the allegation that the awards on damages were based in critical respects on the testimony before the arbitrators of Waterside's owner and chief executive officer, Thomas J. Holt, which allegedly contradicted testimony that Holt had given in prior judicial proceedings. According to INL, the confirmation of the award would be contrary to "this nation's public policy against granting relief on the basis of sworn testimony directly contradictory to prior sworn testimony, and in favor of the sanctity of the oath and maintenance of the integrity of the judicial system." INL also contends that confirmation would be contrary to the public policy against fraud.

We find little merit in INL's position. The public policy defense to confirmation under the Convention is set out in Article V, paragraph 2, which states in pertinent part:

Recognition and enforcement of an arbitral award may . . . be refused if the competent authority in the country where recognition and enforcement is sought finds that:

(b) The recognition and enforcement of the award would be contrary to the public policy of that country.

This defense must be construed in light of the overriding purpose of the Convention, which is "to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries," Scherk v. Alberto-Culver Co., 417 U.S. 506, 520, 41 L. Ed. 2d 270, 94 S. Ct. 2449 n.15 (1974); see Bergesen v. Joseph Muller Corp., 710 F.2d 928, 933 (2d Cir. 1983); Fotochrome, Inc. v. Copal Co., 517 F.2d 512, 516 (2d Cir. 1975); Parsons & Whittemore Overseas Co. v. Societe Generale de l'Industrie du Papier, 508 F.2d 969, 973 (2d Cir. 1974). Thus, this court has unequivocally stated that the public policy defense should be construed ...


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