Court Opinion

ID: 9460831
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:01:14.685151+00
Date Added: 2024-06-11T17:36:47.983668
License: Public Domain

MANSFIELD, Circuit Judge
(dissenting) :
I must respectfully dissent.
I agree with Judge Oakes’ statement that a majority of the arbitrators have “read Clause 8 out of the charter party.” However, I cannot agree with his conclusion that appellant’s claims here “reduce to the proposition that the arbitrators misconstrued the contract” and that the arbitrators’ decision, which he concedes to be “clearly erroneous,” was based upon a “misinterpretation of the contract.”
As I see it, we are not confronted here with a mere error of law or misconstruction of an agreement, which would be insufficient to justify judicial intervention, see Saxis S.S. Co. v. Multifacs International Traders, Inc., 375 F.2d 577, 582 (2d Cir. 1967); Amicizia Societa Navegazione v. Chilean Nitrate and Iodine Sales Corp., 274 F.2d 805 (2d Cir. 1960) (construction of contract term “double rigged”), but with a decision which manifestly disregards the clear and unambiguous terms of the controlling contract from which the arbitrators’ powers are drawn, and which finds no basis in the provisions of that contract or elsewhere. Such conditions mandate our intervention. Wilko v. Swan, 346 U.S. 427 (1953); United Steel Workers v. American Mfg. Co., 363 U.S. 564, 597, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960); H. K. Porter Co. v. United Saw, File & Steel Prod. Workers, 333 F.2d 596 (3d Cir. 1964).
The pertinent provisions of the charter party contract are crystal clear and there is no conflict between them. Clause 8 plainly and unambiguously provides that “Charterers shall also remain responsible for freight . . . but only to such extent as the Owners have been unable to obtain payment thereof by exercising the lien on the cargo.” There is not the slightest conflict between this specific obligation and the Charterer’s general duty, as set forth in Clause 1 of the contract, “to remain fully responsible for fulfillment of charter party.” The charter party obviously obligated the charterer to perform various obligations, including payment of freight according to the terms and conditions of Clause 8, and other specific duties according to the terms of other paragraphs of the agreement (e. g., stowage of cargo, payment of demur-rage, wharfage, literage, subletting, lay days, etc.).
Thus the Charterer here assumed full responsibility for fulfillment of the charter party, including the obligation to pay the freight upon the owner’s compliance with Clause 8, and the Owner obligated itself first to seek payment “by exercising the lien on the cargo.” The Owner clearly failed to perform this latter obligation, which was a condition precedent to its exacting payment from the Charterer. The Owner should either have obtained payment of the freight from the consignee prior to or at the time of discharge or, upon completing discharge, have petitioned the court for an order placing the cargo under lien. *433It did neither. Its failure to perform its obligation was not excused by the existence of the Charterer’s August 30, 1972 letter to its broker enclosing a check for the freight, since the letter, aside from its not being part of the contract between the parties, was to be held in escrow pending the Owner’s fulfillment of its obligation to secure payment from the consignee.
Although we are obligated to avoid frustrating the purpose of arbitration, which is to resolve disputes quickly and inexpensively by minimizing judicial review or interference, we may not go so far as to countenance a wholly baseless and irrational award. To do so would be to deny due process. Our guideline was well stated by the Supreme Court in United Steel Workers, supra, where it said:
“Nevertheless, an arbitrator is confined to interpretation and application of the collective bargaining agreement; he does not sit to dispense his own brand of industrial justice. He may of course look for guidance from many sources, yet his award is legitimate only so long as it draws its essence from the collective bargaining agreement. When the arbitrator’s words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.” (363 U.S. at 697).
See, in accord, H. K. Porter Co. v. United Saw, File & Steel Prod. Workers, supra.
Since the arbitrators’ award fails to draw its essence from the charter party contract and is wholly baseless and irrational, I would reverse the decision of the district court and direct the entry of judgment vacating the award.