Duferco S.A. v. Ocean Wide Shipping Corp.

• Decision Date: 07 April 2000
• Docket Number: No. 99CV2951.,99CV2951.
• Citation: 210 F.Supp.2d 256
• Parties: DUFERCO S.A., Petitioner, v. OCEAN WIDE SHIPPING CORPORATION, and Canadian Forest Navigation: Company Ltd., Respondents and Cross-Petitioners.
• Court: U.S. District Court — Southern District of New York

210 F.Supp.2d 256

DUFERCO S.A., Petitioner, v. OCEAN WIDE SHIPPING CORPORATION, and Canadian Forest Navigation: Company Ltd., Respondents and Cross-Petitioners.

No. 99CV2951.

United States District Court, S.D. New York.

April 7, 2000.

Robert P. Stein, Camhy, Karlinsky & Stein, L.L.P., New York City, for petitioner.

ORDER

BERMAN, District Judge.

I. INTRODUCTION

Petitioner Duferco S.A. moves for an order, pursuant to 9 U.S.C. §§ 10 and 12, vacating a Maritime Arbitration Award rendered on February 26, 1999 (the "Award"). Respondents Ocean Wide Shipping Corporation and Canadian Forest Navigation Company, Ltd. cross-move for an order, pursuant to 9 U.S.C. § 9, confirming the Award. The Award, which assesses damages resulting from improper stowage of cargo, was made by a panel of three arbitrators (the "Panel") from the Society of Maritime Arbitrators pursuant to an agreement dated August 11, 1995; one arbitrator dissented. For the reasons set forth below, the motion to vacate the Award is denied and the cross-motion to confirm the Award is granted.

II. BACKGROUND

Respondent Ocean Wide Shipping Corporation ("Ocean Wide" or "Owner") is a corporation organized under the laws of Liberia with its principle place of business in Villach, Austria. At all relevant times, Ocean Wide was the owner of the vessel M/V PUNICA ("PUNICA" or the "Vessel").

Respondent Canadian Forest Navigation Company, Ltd. ("Canadian Forest") is a corporation organized under the laws of Canada with its principle place of business in Vancouver, Canada.

Petitioner Duferco S.A. ("Duferco" or "Charterer") is a corporation organized under the laws of the Channel Islands¹ with its principle place of business in Lugano, Switzerland.

Pursuant to a Time Charter Party Agreement² dated February 18, 1994 (the "Head Time Charter"), Ocean Wide, as Owner, time chartered the Vessel to Canadian Forest under an amended New York Produce Exchange ("NYPE") Time Charter.

On January 4, 1995, Canadian Forest chartered the Vessel to Trans Sea Transport, N.V. ("Trans Sea") under a NYPE Time Charter (the "Sub-Time Charter"), the terms of which were substantially similar to those contained in the Head Time Charter between Ocean Wide and Canadian Forest. (Award at 2-3.)

Trans Sea sub chartered the Vessel from Canadian Forest in order to fulfill a Gencon Voyage Charter³ between Trans Sea and Duferco (the "Gencon Charter") for a cargo of steel slabs from Taranto, Italy to Sparrows Point, Maryland. (Award at 2.) There were a total of 15,462,687 metric tons to be loaded, comprised of 716 slabs said to measure 9.652 meters long by 1.117 to 1.27 meters wide and .24 meters thick. The weight of each slab varied between 13,750 and 23,138 kg. (Award at 3.)

ILVA Laminati Piani S.p.A. ("ILVA"), a large steel exporter, was the shipper and stevedore hired by Duferco to load the cargo pursuant to the Gencon Charter. (Award at 3-4.) The vessel's Master, Captain Satish Kumar Sud ("Captain Sud" or the "Master"), had never carried steel slabs before. (Award at 4.) ILVA's cargo superintendent informed the Master that the stevedores would use a stowage method known as "California Block Stow," by which the steel slabs are loaded "fore and aft in free-standing stacks, dunnaged and shored, then secured with Signode strapping using the `Olympic' lashing method."⁴ (Award at 4.) The straps were to bind only the top few tiers in the outer stacks vertically, but the top slabs in all the stacks would be tied together horizontally. The Master was initially skeptical of the stowage plan and "suggested that the slabs be stowed athwartships⁵ and out to the sloping sides of the hopper tanks." (Award at 4.) ILVA advised the Master that this would be impossible because the receivers of the cargo did not have cranes with sufficient capacity to handle the fork lifts, which would be necessary if this approach were employed. (Award at 4.)

Persuaded (by the cargo superintendent) that the California Block Stow method was widely used for steel slab cargoes and that ILVA was expert in its application, the Master accepted ILVA's stowage plan. (Award at 4.) The Chief Officer perceived an acceptable ship stability based on ILVA's intended plan and the Master was given a letter that stated, among other things, that "[t]he [California Block Stow] system has proved much more safe and sound than the traditional use of wire lashing and wooden chock/structures. ..." (Award at 4-5.)

On January 5, 1995, the Vessel arrived at Taranto, Italy to receive Duferco's cargo of steel slabs. (Award at 3.) Loading began on January 6, 1995 and was completed on January 10, 1995. The lashing and securing was also completed on January 10, 1995, and the Vessel set sail that same day. (Award at 5.) Prior to the Vessel's departure, the Master was presented with, and signed, a form letter from ILVA (the "Form Letter"), (Award at 5.), which stated:

This is to certify that the cargo laden onboard my vessel has been loaded, stowed, secured and lashed under my supervision and up to my complete satisfaction. The vessel is in all respects seaworthy and is ready to carry on her voyage.

During the early morning hours of January 13, 1995, the Chief Officer heard a loud noise coming from the direction of the No. 5 hold and the Vessel took a sudden list⁶ of about 12 degrees. (Award at 5.) According to the log, the Vessel was rolling moderately. (Award at 5.) The Chief Officer immediately called the Master, who arrived on the bridge within five minutes and assumed command of the Vessel. (Award at 6.) The ship's course was altered and speed was reduced to ease the Vessel's motion. (Award at 6.) The Chief Officer inspected the cargo spaces and discovered that the cargo stow in all five of the Vessel's holds had collapsed. (Award at 6.) After consulting with the Owner, the Master set a course for Cagliari, Sardinia as a port of refuge and Owner declared a general average.⁷ (Award at 6.)

Canadian Forest continued to pay hire charges to Owner, believing it improper to make any deductions unless and until there was a finding of liability against Owner. (Award at 6.) Trans Sea, on the other hand, placed the Vessel offhire from the time of the casualty until the voyage resumed believing that it was proper to do so under Clause 15 of the time charter parties. (Award at 6.)

On January 14, 1995, at Cagliari, six surveyors, representing the Owner, cargo and hull underwriters, and the shippers inspected the Vessel and cargo. Each prepared a report, but all jointly agreed to the following statement, (Award at 6-7.), with respect to the cargo condition on arrival:

The cargo stowed in no 1, 2, 3, 4 and 5 holds has sustained a general shifting to portside.

Having considered that the ship, with such disposition of the cargo, can not proceed with the voyage they have concurred on necessity to handle the cargo restowing the same as due, fitting also side structures to contain the cargo, composed of one vertical stiffener and one horizontal beam made up with double T shaped steel beams, which had not been previously fitted in Taranto.

On January 15, 1995, work began to remove and restow the cargo, and to weld steel brackets, in order to contain the cargo and prevent it from shifting. Apart from the steel brackets, the restowage plan was essentially the same as the one planned at Taranto. (Award at 7.)

On January 17, 1995, it was discovered that the stevedores had disregarded their instructions and wrongly increased the number of slabs in each stack in the No. 3 hold. The increase in the number of slabs created "an excessive load on the tank-tops" and had to be undone. (Award at 7.) No. 3 hold was then restowed according to plan. Welding work at the other holds continued uninterrupted during the delay at No. 3, and the restowage was completed on February 8, 1995. (Award at 7.) The Vessel sailed shortly thereafter for Baltimore and both the voyage to Baltimore and the discharge of the cargo there were uneventful. (Award at 7.)

The Arbitration Proceedings

In or about January 1995, "various arbitration proceedings were commenced to recover, inter alia, the costs of restowage at Cagliari, as well as the amount of hire that was claimed to be due and owing after the Owner's declaration of [g]eneral [a]verage during which the Vessel was off-hire." (Stein Aff. at 4.) The two time charters provided for arbitration before a tripartite panel in New York. However, the Gencon Charter provided for arbitration in London, under U.K. law. (Award at 7.) Pursuant to a Consolidation Agreement, dated August 11, 1995, the parties agreed to consolidate all arbitration proceedings into one proceeding in New York under the Maritime Arbitration Rules of the Society of Maritime Arbitrators, Inc. (Award at 7.)

The arbitration proceeding consisted (essentially) of Owner and Duferco asserting claims against one another in accordance with the various charter agreements.⁸ Owner denied any responsibility for the casualty and sought to recover the sum of $435,047.16, representing restowage costs (and certain other costs that were not reimbursed). (Award at 8.) Duferco denied any liability for the casualty and counterclaimed for $57,844.33, representing its general average contribution. (Award at 9.) Duferco contended that, in the event Owner were to prevail, any award to Owner should be reduced by the cost of restowage delays at Cagliari. Duferco also contended that the net restowage expenses or "special charges" of $337,789.80, should be apportioned among the various parties, so that Duferco would bear only its proportionate share of the "special charges" rather than the full cost. (Award at 9.) Each party sought interest on any sums awarded, plus the reasonable costs of the arbitration, including attorney's fees. (Award at 9.)

The Panel held seven hearings to receive evidence and take the testimony of both fact and expert witnesses. (Award at 8.) "Considerable post-hearing...