Tuesday, April 9, 2013

Stolt–Nielsen S.A. v. AnimalFeeds International Corp. case brief

Stolt–Nielsen S.A. v. AnimalFeeds International Corp. case brief summary
548 F.3d 85

CASE SYNOPSIS:
Appellant, an animal feed company, alleged that appellee shipping companies engaged in a global conspiracy to restrain competition in the world market for parcel tanker shipping services. An arbitration panel issued a clause construction award deciding that the parties' agreements permitted class arbitration.
-The United States District Court for the Southern District of New York vacated the award.
-Appellant filed an appeal.

CASE FACTS:
-Appellant alleged that appellees were involved in a conspiracy to fix the price of international shipments of liquid chemicals in the United States.
-The parties to this litigation were also parties to international maritime contracts that contained arbitration clauses.
-The contracts were silent as to whether arbitration was permissible on behalf of a class of contracting parties.
-The question presented on appeal was whether the arbitration panel, in issuing a clause construction award construing that silence to permit class arbitration, acted in manifest disregard of the law.
-The district court answered that question in the affirmative and therefore vacated the award.

HOLDING:
-The United States Court of Appeals for the Second Circuit concluded to the contrary that the demanding "manifest disregard" standard had not been met.

ANALYSIS:
Because the parties specifically agreed that the arbitration panel would decide whether the arbitration clauses permitted class arbitration, the arbitration panel did not exceed its authority in deciding that issue; irrespective of whether it decided the issue correctly.

RULES:
-Interpreting a silent arbitration clause to permit class arbitration does not “manifestly disregard the law” and thus is not a proper reason to vacate an arbitration award.

OUTCOME: The judgment was reversed, and the case was remanded to the district court with instructions to deny the petition to vacate.

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