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

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.

-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.

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

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.

-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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