Bailey Shipping, Ltd. v. American Bureau of Shipping, et al.

At a glance

Parties

Bailey Shipping, Ltd. (Marshall Islands) v. American Bureau of Shipping (ABS) and others; in the confirmation proceeding, ABS was petitioner and Bailey was respondent

Case no.

No. 12 Civ. 5959 (KPF)

Court

U.S. District Court, Southern District of New York (Katherine Polk Failla, District Judge)

Underlying award(s)

Final Award of 19 April 2018, made in the United States under the arbitration provisions of ABS's survey agreements

Forum and rules

Petition to confirm under the New York Convention and the Federal Arbitration Act

Sector

Shipping; vessel classification

Outcome

The court granted ABS's unopposed motion to confirm the Final Award in full (1 May 2019).

Amount

The arbitral panel awarded ABS USD 156,683.63 in principal for arbitrators' fees, attorneys' fees and costs. The court entered judgment for USD 168,090.19, which includes interest up to judgment. Post-judgment interest runs at the statutory rate under 28 U.S.C. § 1961.

The dispute

Bailey Shipping, a Marshall Islands company, bought the vessel M/V ZAIRA (later renamed M/V MAX). It claimed that ABS, a classification society, had negligently misrepresented the vessel's condition at the time of the sale. On 20 August 2012 the court sent the negligent misrepresentation claim to arbitration under the mandatory arbitration provisions in the survey agreements by which ABS certified the vessel. Bailey also sued ABS in Piraeus, Greece. Bailey later tried to withdraw its arbitral claim, and its counsel withdrew from the arbitration in January 2017. The panel then found against Bailey on the merits and, by majority, awarded ABS fees and costs. Bailey did not appear to oppose ABS's petition to confirm the award.

Key holdings

1. The New York Convention applies because Bailey is a foreign corporation. The award was made in the United States, so the domestic provisions of the Federal Arbitration Act also apply, as far as they do not conflict with the Convention. p. 6
2. Because the petition was unopposed, the court treated it like a motion for summary judgment. It still checked that ABS's submissions showed no genuine dispute of material fact. p. 9
3. None of the grounds for refusal in Article V applies. A translated and certified copy of the award was served on Bailey. Earlier decisions in the case had already held the arbitration agreement valid and the dispute arbitrable. Bailey had notice of the arbitration and took part in it until a late stage. No one raised public policy or challenged the composition of the panel. p. 10
4. No ground to vacate under the Federal Arbitration Act. The reasons for the award are clear from its factual findings, which go beyond the reasoning courts require to confirm an award. pp. 10–11
5. The principal award of USD 156,683.63 stands. The arbitration agreement allowed the panel to award fees and costs. The panel justified the award by Bailey's last-minute withdrawal from the arbitration without notice, after Bailey lost in the Greek litigation. The court found no errors in ABS's calculation of post-award, pre-judgment interest and entered judgment for USD 168,090.19. pp. 11–12

Procedural history

1. 20 August 2012Judge Richard J. Sullivan orders the negligent misrepresentation claim to proceed in arbitration.
2. 23 September 2013Bailey I: the court stays the claims in the Greek litigation that the arbitration covers and lets the Greek-law claims proceed.
3. 28 March 2014Bailey II: the court holds it has no jurisdiction to review the panel's ruling that Bailey could not withdraw its claim without ABS's consent, because that ruling was not a final decision.
4. 8 January 2017Bailey's counsel withdraws from the arbitration. Final hearings are held on 16 and 18 January 2017 without Bailey.
5. 19 April 2018Final Award: the panel unanimously rejects Bailey's claim. A majority awards ABS fees and costs; one arbitrator dissents on fees and costs.
6. 13 September 2018ABS moves to confirm the award. The motion is unopposed.
7. 1 May 2019Opinion and Order confirming the Final Award and entering judgment for USD 168,090.19.

Tribunal, counsel and experts

Decided by

• Katherine Polk Failla Judge, U.S. District Court, Southern District of New York

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Keywords

• New York Convention Article V
• confirmation of arbitral award
• unopposed petition
• Federal Arbitration Act
• classification society
• ABS
• negligent misrepresentation
• vessel survey
• M/V ZAIRA
• M/V MAX
• Piraeus litigation
• arbitration costs and fees
• withdrawal of claim
• pre-judgment interest
• maritime
• Southern District of New York

Summary generated with AI from the published documents — refer to the award for the authoritative text.