Amicizia Societa Nav. v. CHILEAN NITRATE & I. SALES CORP.

• Decision Date: 22 June 1959
• Citation: 184 F. Supp. 116
• Parties: In the Matter of the Arbitration between AMICIZIA SOCIETA NAVEGAZIONE, Petitioner, v. CHILEAN NITRATE AND IODINE SALES CORPORATION, Respondent.
• Court: U.S. District Court — Southern District of New York

184 F. Supp. 116

In the Matter of the Arbitration between AMICIZIA SOCIETA NAVEGAZIONE, Petitioner, v. CHILEAN NITRATE AND IODINE SALES CORPORATION, Respondent.

United States District Court S. D. New York.

June 22, 1959.

Zock, Petrie, Sheneman & Reid, New York City, for petitioner.

Maclay, Morgan & Williams, New York City, for respondent.

CASHIN, District Judge.

Petitioner is here moving for an order to confirm the award of the arbitrators and for entry of judgment thereon pursuant to Title 9 U.S.C. § 9, and respondent moves to vacate, modify and correct the award under Sections 10 and 11. Respondent also moves that in the event the court does not modify the award, the court should then declare the contract in which the arbitration clause appears void for want of a meeting of the minds.

On April 3, 1959 respondent moved in the Supreme Court of New York for an order vacating or modifying the arbitrators' award under Sections 1462 and 1462-a of the Civil Practice Act. On April 6, 1959 the petitioner started this present action to confirm the award and the respondent acquiesced in the jurisdiction and filed its motion to vacate, modify or correct.^*

Petitioner, an Italian corporation, is the owner of two ships which, while still under construction, it chartered to respondent, a corporation of Chile. The two charter parties were negotiated in New York City and dated September 6, 1955. Clause 29 of the charter party provided that hatches 2, 3 and 5 should be "double-rigged". It was later provided by Addendum No. 1 that all six hatches should be "double-rigged". The controversy arises over the meaning of "double-rigged". Petitioner-owner claims that "double-rigged" means two winches and two booms at each hatch and this is how the ship was outfitted. Respondent-charterer claims that "double-rigged" means four winches and four booms at each hatch. Pursuant to the arbitration clause of the charter parties the controversy went before three arbitrators—one selected by each side, and the third selected by the two first chosen. The arbitrators, one dissenting, found that the express "double-rigged" has two meanings in New York City and found in favor of the petitioner-owner.

It should be noted that New York law is cited because of the scarcity of federal cases directly in point, and because 9 U.S.C. §§ 9, 10 and 11 were taken from Sections 1461, 1462 and 1462-a of the New York Civil Practice Act.

"The federal act in respect to the sections now under consideration is almost verbatim like the corresponding provisions of the New York statute, so that the state practice may be regarded as highly persuasive, if not controlling." The Hartbridge, 2 Cir., 1932, 57 F.2d 672, 673.

Courts cannot rejudge the decision of arbitrators on the merits. If the courts could rejudge the decision then the value of arbitration would be lost. However, the decision of arbitrators can be upset if it was procured by fraud or corruption, if there was evident partiality, if the arbitrators exceeded their powers, or if their decision is a perverse misconstruction of the law. As was stated in Matter of Wilkins, 169 N.Y. 494, 62 N.E. 575,

"Where the merits of a controversy are referred to an arbitrator selected by the parties, his determination, either as to the law or the facts is final and conclusive, and a court will not open an award unless perverse misconstruction or positive misconduct upon the part of the arbitrator is plainly established, or there is some provision authorizing it. The award of an arbitrator cannot be set aside for mere errors of judgment, either as to the law or as to the facts."

It should be pointed out that courts are extremely hesitant about vacating or modifying arbitrators' decisions. All the cases stated that it can be done if the error is a manifest disregard of the law or a perverse misconstruction, but they hesitate to set aside the arbitrators' decision. In Fudickar v. Guardian Mutual Life Insurance Co., 62 N.Y. 392 the court found that the arbitrator had a misconception about the law but upheld the arbitrator's decision because it was not apparent that the decision was based solely on the misconception. The court said that—

"The party alleging error of law must be able to point to the award and say that the arbitrator, as appears from the award itself, intended to decide the case according to law, and has mistaken it, and that except for this mistake his award would have been different."

Respondent-charterer's claim that the arbitrators believed that they had to rule in favor of the petitioner-owner because it was the respondent who inserted the term "double-rigged" into the contract. They base this claim on the language of the arbitration award, which is:

"It is the opinion of Messrs. Simmonds and Schilling the expression `double-rigged' has two meanings in New York, which is obvious from the evidence

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