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In re Arbitration No. A Aa13-161-0511-85 Under Grain Arbitration Rules of American Arbitration Association Between Government of India

decided: January 25, 1989.

IN THE MATTER OF ARBITRATION NO. AAA13-161-0511-85 UNDER THE GRAIN ARBITRATION RULES OF AMERICAN ARBITRATION ASSOCIATION BETWEEN: GOVERNMENT OF INDIA, PETITIONER-APPELLANT,
v.
CARGILL INCORPORATED, RESPONDENT-APPELLEE



Appeal from an order of the United States District Court for the Southern District of New York (Daronco, J.), denying appellant's motion to vacate an arbitration award, and granting Cargill's cross-motion to confirm that award. Affirmed.

Meskill, Pierce, and Winter, Circuit Judges.

Author: Pierce

PIERCE, Circuit Judge:

The Government of India appeals from an order of the United States District Court for the Southern District of New York, Daronco, J., denying India's motion to vacate an arbitration award for certain carrying charges owed Cargill, Inc. India seeks to vacate the arbitrators' award on three grounds: 1) that Cargill's claims were not arbitrable, since they were brought after the contractual time limit for commencing arbitration had passed; 2) that the arbitrators failed to make the award in a timely manner; and 3) that the award was too indefinite, because made in a lump sum without differentiating between the individual claims contested by the parties. The Government of India also appeals from the granting of Cargill's cross-motion to confirm the award. Since we find that the arbitrators acted well within their discretion, we affirm.

BACKGROUND

Underlying this controversy are four contracts for the sale of wheat, entered into between Cargill, Inc. and the Government of India ("India") in August 1982 and September 1983. The contracts were all essentially identical. Clause 17 of each contract required India to pay Cargill carrying charges for storage, insurance, and interest, if India's designated ships failed to begin loading within the periods prescribed by contract. Clause 17 further required Cargill, if it sought to recover carrying charges, to notify India of its claims within ninety days after the loading was complete, and to file for "remedial proceedings" within six months after loading. Under Clause 24 of the contracts, "any controversy or claim arising out of, in connection with or relating to [the] contract[s]" was to be settled by arbitration before the American Arbitration Association, pursuant to the Association's Grain Arbitration Rules.

The grain was delivered, per the contracts, to five different ships from March 1983 to January 1984. In each instance, India's designated vessel was late in beginning the loading process, and thus India incurred carrying charges. Cargill issued invoices to India for the carrying charges, and India concedes that the invoices were issued in a timely manner. Cargill's five invoices claimed, in total, carrying charges of $186,333.02.

It was not until July 10, 1985, however, that Cargill, having failed to settle its invoiced claims against India, demanded arbitration of the dispute over the carrying charges. Before the three-member arbitration panel subsequently convened, India vigorously contested Cargill's right to seek arbitration, arguing in preliminary proceedings that Cargill was time-barred from seeking arbitration because Cargill had not demanded arbitration within the six-month limit set by the contracts. Among the more compelling of Cargill's responses to India's contention was Cargill's argument that the parties had an established history of negotiating claims for carrying charges. As a result of the logistical difficulties of negotiating between India and the United States, negotiations had typically continued beyond the contractual six-month time limit for arbitration.

After considering the parties' arguments on the time bar issue, the arbitration panel-without setting forth its reasoning-notified the parties in a letter dated February 27, 1986 that the claims were not time-barred, and that the panel would hear the parties' arguments on the merits. In a letter dated February 3, 1987, the American Arbitration Association notified the parties that their briefs on the merits had been received. The panel informed the parties in a letter dated March 27, 1987 that the hearings were officially closed as of March 23, and that the award would issue within thirty days thereafter. On April 13, 1987, the arbitrators awarded Cargill the lump sum of $156,846.69, plus interest, on Cargill's original claim of $186,333.02. The arbitrators' decision did not set forth any rationale for the size of the award, and did not specify the carrying charges due on each of the five disputed deliveries.

On July 14, 1987, India commenced an action in the United States District Court for the Southern District of New York, pursuant to 9 U.S.C. ยงยง 10, 12 (1982), seeking to vacate the award. As mentioned, India's opposition to the award was based on three grounds: 1) that Cargill's demand for arbitration was time-barred, and that the arbitrators exceeded their authority by allowing the arbitration to go forward; 2) that the arbitrators exceeded their authority under the Grain Arbitration Rules by failing to render an award within thirty days of the filing of the parties' briefs; and 3) that the lump sum award was too indefinite to be enforceable.

Discussion

I. The Time Bar to Arbitration

We turn first to India's claim that, because Cargill did not demand arbitration within six months after the grain was loaded, the dispute was not arbitrable under the terms of the contract. India's challenge to the arbitrators' finding on this issue breaks down into two sub-questions: first, did the arbitrators act within their powers when, in effect, they held that the time-bar issue was itself arbitrable; and, second, ...


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