Full text decision US 49

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au
Pet i tioner ,
eiv . 3230
HE': tOn;'.N tJu~l
D2CI S:r.ON
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-a~a inst -
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COF.PORt·:l'I 'IN,
KOrl?,\ ?, Itmo:·:r'nBLE
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GAGLI?"\RDI, D.J .
to 9
~ . s.e.
,
:
c on~irm
an
§9 .
c:.;:;
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'
a~ b ~ tra t~on
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This is a pctiticn to
p ~[suant
~.
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c:
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Respondent.
On March 17 , 1972, iri
Hambu~g,
r.:ar.y , ped tio ne :: Kon,;;;)r Indomi tabl e Cor. po;::ati on
Ger-
("!(onkur"),
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awar- d
the Libe:: ian owner of the vessel M.V. Konl;a! I&domitable, fly-
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IJ nd Eereecierung s - G!;SlI ("Fr itzen") ; the Ger;nar.
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tered into a
eight years .
ti~e
cha rter party for a period of
chart~rcr,
en-
appr o~im2te ly
Clause seventeen of the ch arter party provides
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ing under a Gr eek flag, and res pond9nt Fritzen Schiff s3gc iltu r
pa rti e~
s hall be "refer -
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that any disputes d ris ing between the
red to three persons at New York . "
A dispute a rose concerRing interpretation of claus e
fifty-nine cf th e chart er party, which provides that hire payments to Konkar werc to be made at specified rates of exchang e
~
~
~
:.:3':;PI;:~
,betlvecn Uni ted States Dollar s and Ger man Deu tschcm;u!;s.l Fr i t ·zen made payments in accordznce with clause fifty-nine until
N,'VbG0C r
15, 1977,
-
\\'hen
) , -~ _, I,
informed
it
,LLr--- 1-
I<oni,ar
that
it
would
United
States
Page 1 of 8
....., : .. :.
~ :
th cr':; .' ftc r ['C '·!:. t p;":Jm':nt::; "doll.JC fo r doll.)r" in:;t:::ad of ", t
th~
Q~ uL sch 0ma ~~ 0 ~ c h~ n~ ~
rate
provi~ed
fo r by
cl ~ use
fifty-
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nille, contending th<lt the desi snatcd cxc hang.e rate violated
546 3 p,ovid0s in pertinent pa rt:
N
U.S. C.
31
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t he "Gold C:;'aus,:," 31 U. S . C. 5463 (197 0 ) (,mended 19 77).
(a) Every ? rovi:ion co ntain ed in or made with re spe ct
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to a.ny ot.li g c:til):1 \,q"';.cn pur!?orts t o 0i.\:e the o b l igee
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a rig h t to require payme nt in gold or a part icu l ar
ki nd of coin or curr enc y , or in an amou nt in m cn~y
of the United States measured ther~by , is dec l a r ed
to be ag a in s t p ublic po licy .
)
O
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The 2a r ties agre ed to submi t to arbi trat ion t he issue arising from Konka r' s expect a tion that payment .ias to be
KC
made in accord ance wi th clause fifty-nine <lnd Fritzen's con-
unenfo~c eab le
under 31 U.S.C.
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lid a nd
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te n ti on th at the obligation und er claus e fifty - nine was inva5~6 3.
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Th e panel, afte r four days of hearings in New York,
render ed a unanimo us inte rim award in favor of Konkar,2 llolding that the cha rter party was not an "l-'JIlerican Contract" and
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and its hi r e payment provisions.
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~ent
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)
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that the Gold Clause was therefore inapplicable to the agree-
For
the
r easons
which
follow
the
pe tition
is
granted .
Discussion
This court's role i n reviewing an arbitration award
is limited to consideration of those gro unds set forth in 9
U.S.C. § 10, sec Local 771 , I.A.T_S.E., AFL-CIO v. RKO Genera l,
Inc., 546 F.2d 1107
(2d Cir. 197 7); Saxis
United States
v. 8
of
Steam~hip Page
Co. 2
Nulti.f ,1CS Int'l Tr aders, Inc., 375 F.2d 5 77 (2d Cir. 1967), or
-to thr, non- ::: :at utO C'1 ground of
law.
v.
SC'~
" r,..... nife::::t
d i.::: r C']'I r.d" of the
\';ilko v . 5 \'ian, 3t,6 U.S . !I/.7, 436-37 (1953);
KrCl::;n':!..£ , 572 F.2d 348,
352
.Q~yer
(2d CiL), c ert ., denie r) , 436
In limited situations, when the pr c?icio ns
U. s. 9 48 (1978).
in vok~d ,
a court may deny enforcem0nt on the groun d::: that
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are
~2 0 1-~OB,
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·forcE:!:l': nt of For e::i sn f,rbitration Aliards, 9 U.S.C.
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of the Uni tr::d S':ilt.:S Con ve ntion on the Reco<jlli tion .: nd En-
S~e
U.S.C. §201, Article V; Transmarine f"'~<'\'12" S Corn . v .
9
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enforcement would be contrary to this co untry's pulic policy .
Supp. 352, 357 (S.D.N.Y.
In9).
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Hare Ri ch r.. Co., A. G., 480 F.
the
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Sinc e Fritzen's claims are directed to the latter gro unr. ,
court will address only those arguments.
~'ell
settled in this Circuit that arbit,ators
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It is
~ward.
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need not explain the reasons for their
See SelJe l v .
YO
Hertz, Ha rner & Co., 469 F.2d 1211,1214 (2d Cir.
1972).
In
EW
fact, "if a ground for the arbitrator's decision can be i nfer red fro:n the facts of the case, the. i:.\}a rd should be aff irmed ."
It is apparent here that the panel c C'llcluded
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Id. at 1216.
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that there were insufficient contacts
with the United States
,
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to invoke this country's
award
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1;3S
L'I~I.
In considering
~Ihethcr
the
in manifest disregard of the law, the issue before
this court is nct \'Ihether the panel was merely in erro r in
holding that the agreement was not governed by United States
law, but rather \o.'hether, in reaching that result, the panel
disregarded the applicable standards for determining which law
should govern this contract dispute.
H~!ltif :'. :::s !nt'l.
Tri'.dcr~,
Se e Saxis S.S. Co . v.
Inc., SlJ.2.E.!!, 375 ·F.2d 577.
United States
Page 3 of 8
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may
:~ ': lccti o ll
=O ~~ tl ~~~ ~ ~ co n5 i ~ ~r ~d
ties'
choice
S upp .
1368 ,
of
law
il
i ~ rli c it
goycrnin')
[Oi'
(S.D.N . Y.
[or 'ltn
1 97 1; ) ;
fa r ilr')i tr,:l'tio n
inlJ i ~ J t i on
contr <.! ct'
th ~
par-
di::; [lu t c~ ,
sec
of
cf.
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1370
~n
o [
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t h ',~
fll ti.o u']r,
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Cuh- " ! Co . , 417 U. S . 506, 519 , n .13 (1974) :diclum) , ssl (" ction
a
d~ter ~ ining
465,
477
plic itl~'
(S .D.!l.Y .
o[
v .' I::;br a nci tsen Co ., 151 F . Supp .
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See Fric ke
c~c:ice
"c enter of grav i ty" for
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1 aI" purpoaes.
contr~ct t s
Even ,.;h en
1 9 50 ).
the
p a r ties
pro"i c;ecl that the la'lI of a part icuL:: r
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will govern any dis pute, such a st i pula ti on is not
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bindi ng on th e body resol v i ng disputes .
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moreover, appropri.ate to dis re gard t he
Id . a t
p~rties '
have ex -
ju ri::di-:: t ion
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in
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of an arbitration forum may also be v i e wed as but one facte :
necess~rily
467.
It i s,
c llcic e if the
chas er. l c:'" ,Ioc:ld rend e r any portion of the c e ntr.",ct i:. v a lid.
of
Co n: '. ict o f
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(1971) .
H~d
e
United States or Ne\"
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the panel 2 ppl ied eith e r
L.::' .'s § 137, COi!.!;H!n t
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Yorl; la;; , although tbere ,-ras no manda te fo r it to do so , it
would
h ~v c
adopted a ·center of gravity " ana l ysis under appli -
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(S ec ond)
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See ;t =si:a t er:1 e !1t
ca ble c:loice of law principles.
sur a nc e Co . o f
1978),
Heller,
c~rt.
65
I sbr ~ndtse n
No rt h
1\J:\;:>~ic 3.,
dc r. ied , 440 U. S .
F . R.D .
83 ,
90
Germ~ny
580 F.2d 1158, 1162
betKe en Germ3n
(2d _ ~ir.
912 (1979); Uniroyal, In c . v.
1974);
(S.D.N . Y.
Co., stipr3., 151 F . Supp . a t
308 N. Y. 155, 160-61 (195 4 ).
in
Se "! Index Pund , Inc. v. In-
Fricke
v.
467; Auten v. Aut en ,
'r he charter
r3.rt~{ w~s
~ nd Li be r i~ n p~rties
executed
for the charter
United States
Page 4 of 8
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neith er
lor:: no r
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United
th~
Stat~s
W~~
~o cl~arly
, _ \i(,,':'_
den by t he citation o f two
•
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:ntern2. r; ior:1lc: s
v.
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C 2~ es.
r:?_~t':; 2r;~
Ir:c1u stri;:l
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In "ersior. e~
~c~~l'ng
l'n
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r~I'7 n1 r
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'- pr'n "~~l
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l ,~'_.y.
the cen -
p.?n:":
r.Jf
Finland , 269 :1. Y. 22 (19 35 ) , the Ne~l Yor l: Court found not ,mly
plain tif~
had
chos en
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ply, but that t he
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that the ~arties intended Nc~ Yo r k or United States l aw,to a~ -
tion by resort ':0 t! lis countr y 's court s .
inst~nt
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by Un it ed States law.
i\ cci. c1",,,~
&
In -------_
Bethlc ~c rn ~o. 7 .
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co~r t
to
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te nsitJly int 2r. r.ati o:i2.l co ntr actu<l l obl ige,t ion.
i~st ant
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t~2
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c~force
an 05 -
The parti es i.n
2c t i on reso rt ed to a rbitr a ti o n in t he fi rst in -
s tanc e, not t o th e juai cial sys tem.
should not,
co~si~=re~
Li .:.b ilitv In c__._Co., 307 U.S. 26 5
when sui,t W2S i nstitut2d i n a New Yo r k
•
e n obliga-
UnGer thoSE: ;;ircur.1 -
cas e , the court
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Zur ic:,
bo u~d
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t he pa rt i25
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stances , boLh absent in the
enfo~~c
3b s~ nt
.:: c:lear i:1i.:ention
ply to the ar bitr ation ,
An
asree ~ an t
t~1a::
auto rn~ tically
~o arbitr~te
united States la;J ap -
subject fore i gn parti es
to this cOllntry's lal\' in t he same ma nn e r as institution o[
sui t.
Also
unavailing
is
Fritzen's
argument
that
this
court should de ny e n for cem en t of the al\'ard o n public pol i cy
grounds pursuant to ;\ rticl e
V(2 )
(b ) of the Convention on the
United States
Page 5 of 8
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and
R~cognition
Enforcement
("the Convention") . 4
v.
Pap ier
F.2d
508
Foreign· Arbitration
awards
The Second Circuit in Parsons & Whitte -
more Overseas Co.
(RAKT!),
of
Societe Generale De
969
(1974),
L'lndustrie Du
rejected
the
pu!Jlic
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policy defense, declaring that arbitral awards should be de-
nied confirmation only when the asserted public policy "would
ld.
"
at 974.
To do otherwise wou ld "undermin e the
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violate the forum state's most basic notions of morality and
Convention's utility . . . and enshrine the vagaries of international pc litics undEr the rubric 'public policy.'"
~h , :
E" ct thut Congress has legi:;lated .to limi t the
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light
ld.
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3ppliC.:lbility of the "Gold Clause" to obligations preda':ing
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October 28, 1977, Act of October 28,1977 , Pub. L . 95-147, 91
Stat. 1229 (codified at 31 U.S.C. 5463
United
cha'
the
Sta ~ a s'
•
"Gold Clause"
it is
j,
cai1!1ot be deemed one
0
E the
"most bas ic notions of morality and justice."
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clear
(S upp. 1979)
the Court grants Konkar's motion to
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P.<:cordingly,
Frit~en's
cross-motion to va -
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confirm the arbitration award.
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cate the arbitration award is denied .
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So Ordered.
Dated:
:sO·J·
New York, New York
April 30, 1981.
United States
Page 6 of 8
fif :y - ni.1 10
Cl.:t 'j~;C:
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nt
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Hir <::/:i ir. r::
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provit1~::; :
payobl0 i n
Gcr~~n
Mar~s :
1.96 ;j t rat,= of ey.ch<:ln!;e of 3.2225
first thce~ y ~~ r3,
USS 2 . 16 8t r~Le of exc~e nge of 3 . 2225
s ~cond thr~~ (3) years ,
US$ 2 . 31 at r ate of exch<.nc;e of 3 .2225
last t~o ( 2) y~~ rs ,
al2. [le r 2. 0:1S~O;] d!;:3d-.;e i g~ t all tole l=e r
or D:: 6. 3161 [ or
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US ~
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rn~y , at
::i~,= ,
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Ch ~~terer3
for
mo nth •
theit optiorl , pay sa id hire,
o ~ficC3
o1n-: :or :7I.;a2.B ;:r.d SL:p2r Cil(go Chii;:-~0S,
in unite1 St 2tOE Colla rs ~U3$) in a n arnou~ t ~~u al
anL ere',,' Qt:':!r
if
6.9 60G
or Di·1 7 . 41;1;0 .for
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or
at~Y ,
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to the amount of U n i~ ~~ St~tes D ~ llars (US$~ :equir zd to
purc ;~ase t he orig in.:l G:[J:1~!1 :,~nrk {C:,:} 2".-:o unt: usi.ng the
spot c :~ cha i:J~ r2.t {~ i.~:"~ ~ q\) ted t.y the Fir~:t j';.:ltic:~:! l City
BanK, Lon:::;":H!, 5 S at 11 : 00 o'c2.ocl~, t,;o (2 ) . da~{:; b2Lore
th e hi~e .;;.!:.(~ instal ;:~~ ilt i.::; dU I}, O !" d t ~: l)e rate of CY. chi:lnCJe as C:l!otca on t:~e nea :- er:1.: :)!.":!::::(;~ing nQ!'!ii.J.l b.:::.:-. ~i n g
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da y bef o re tbr? hi:e v.r.c1 instali;, ~ nt is due.
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Hi re to b~ ~) ,~ iJ on e ~l <2r.(: ually t::.sce : tJ.ir~ 2 d final Sll';::~;1 er
ce=,d.:leight or t!l .: :t on 4.4 feet 10 il :ch l'.s dratt , ~ihici-! .~\i("r
is iess .
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2 ..
In its int '2rin '-~~:2t'd tl.c panel d~ci.d\?ti or: :!.y the ir..::Jue of
Fritzen's liabil i t~· p urs ~~ nt to cla~ s c fifty - nino, rcs e r '!i n~
tl!0 quc2~i0~ oE t i1~ ~~ount ~~e to I:011:~~ r fc ~ a l ater ~uh'~i s ­
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Hir e to be ;-','liel to : r:o ni:il r Indorni table Corporation , a cc ount nL~!~~c.r f) ,1 227 ~21 \./ i th I:he '2irs t natiol1 =1 City
Bank , 2 Broad':',,:,' , Nc'.v Yorl;, N. Y. , 2. 0004 .
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sion in
th~
its fin 2 !
~bility
eV~:1C
il~ 3rd,
\'i2!S
t~l C
;1l20
!..,;"! r ::
~(-::~
co ~!ld
cc~ fi = !~~d
ll~re t
:;,,:,t
th~
r GCl :::h
o.grce :T~:;/':..
do l lsr
axo~nt
In
of 1i-
(lett,;.~ni! iil ..=d .
3.
.;ckd [ .) lt y choice of 1<1\1 provides for le~ loci cn;1~E.~c:.!=S,
appl icc t ion of the l.:tw of the place o f the contr<:lct ' u ex~cu ­
ti on . S ~ :.. S . C . f:·~ '·,':'l.:l nc1, rn~ . v . E.:lst ":cst 'l'o{l in q , Inc . , GOS
'"
1--0-;-'-·-. . ll~~
. 1 ·t1 ~i} .. ;'tom. !.,• t ~ n. , ~;.t 1
J!. ?d
_
I J , .1-'
0'"1 {"
~ t,
; Llr • .1". .'-.,
:...\ I ccr~_':::.~l
-1.:
)
-:>
r.:erCllr\'
'Ins .
Co ..
v.
E.:1!:t
t·:c· ; t
'l'O',,' lllQ ,
Inc .,
446
U .. S .
910
Thus , since-tile cho rter p2.rty ~us c::C:'cutcd i n
Germun y , it is cleu r tha t m~ri tim c cho ice of law woulJ yi e ld
the S:~1~1 0 ( c'! s ul t .
(198 0f .
4.
9
u.s .c.
§201
~[ticle
V, provi des i n r e l e van t part :
United States
Page 7 of 8
7
/
~2.
n ~ c \.)u l,i tic·n ~ Ild en f o r c c r:c nt
.1 1. :W Cf,' rcf u :: <:d
i E th,~ ':'lI. ,y, t
ITtily
c .') untcy
\:/h~.: rr:
[e: c 'Yj:1ition
o [ an
r: nt
~rbitral
iluthor i t y
~nd ~n~() rc c ::-J.: nt
i~
award
in
~.~(j :J:J h t
th~
Cind:.:
(b) T br:
Sin ::;~
th e.!.: the ccntr () ct f;Ja~ ii ot a.n
this ~w urd a s (;l: C !lnot
cons i6 cr e d as a domestic ~~ ~rd
in the s ~.•:!. te t 1 he!:" ~ the
r ec 0ql~ ition and e nforc e rn e nt Dee SO ~gtl t . "
conve ntion, Article
•
0 fle,
pCJ.n"~ l
t h~
C:;~t~r j':'\ ined
C ·~) :1·v· c! i.t .:' o n
cov c : s
N
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.l~ m€ r i(; a;~
t ~'2
or e nf or c e ment of the ~ w a rd would
t o t he ?ublic f o licy of that counLry.
r c co ~n i tia n
ccn~rdr7
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be
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thilt :
I (1).
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United States
Page 8 of 8