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Contract – International Arbitration – Rice Contract – Panel Procedures

A commodities trader that operates under the laws of the state of Georgia and that specializes in supplying commodities to markets in the Middle East and Africa, that had a dispute over a rice contract with an agricultural trading firm based in Hamburg, Germany, has an arbitration award in its favor, entered pursuant to the United Nations Convention on the Recognition and Enforcement of Foreign Aribtral Awards, affirmed by the Norfolk federal district court.

The parties’ dispute was heard in Houston, Texas, by a five-member arbitration panel of the U.S. Rice Millers’ Association, which is headquartered in Arlington, Va. The panel found that defendant trading firm breached its obligations under the contract by failing to nominate a suitable vessel and otherwise arrange for the loading and shipment of the rice to Umm Qasr. The panel found that although petitioner ACC breached its obligation to provide a bank guarantee for demurrage claims, respondent firm, by its actions, waived that breach. The panel ordered respondent to pay petitioner ACC $2,006,570 within seven days.

Respondent contends the arbitrators were guilty of misconduct because the panel failed to postpone the hearing despite their request for postponement; failed to consider the parties’ submissions prior to the hearing; permitted a witness to testify by telephone instead of by video link as planned, and without a previously disclosed witness statement; and limited the presentation of evidence and argument.

The court finds no prejudicial grounds to justify vacatur of the award and respondent’s motion to vacate on statutory grounds is denied.

The court detects something of a culture clash in this case, in which an arbitration panel of American businessmen who apparently pride themselves on providing quick commercial decisions held a hearing in Houston, Texas, over a contract governed by English law. The contract required respondent to ship rice from the U.S. to Iraq, which respondent evidently failed to do because it was unable to secure a vessel. The panel’s manner of proceeding surprised respondent’s attorney, who has practiced arbitrations extensively in England and elsewhere, and, in his words, had “[n]ever before (and hopefully will never again) experience anything quite like the arbitration before the RMA.” Of course, Houston is not London. In Texas lore, cowboys and Indians long ago replaced the knights and dragons of English lore.

Whether or not they regret it in hindsight, the parties selected the RMA in their contract as the forum for resolving any disputes arising from the contract. Finding no evidence that the actions of the panel resulted in substantial prejudice to respondent, the court will not substitute its judgment for the arbitrator’s.

Petition to confirm arbitration award is granted.

Al-Haddad Commodities Corp. v. Toepfer Int’l Asia PTE Ltd. (Doumar, J.) No. 2:07cv7, April 19, 2007; USDC at Norfolk, Va.; Lawrence G. Cohen for petitioner; David N. Ventker for respondent. VLW 007-3-147, 24 pp.

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