## Facts

- Al-Haddad Commodities Corporation (ACC) and Toepfer International Asia Pte., Ltd. (Toepfer) contracted (Oct. 27, 2005) for sale of U.S. No. 2 long grain white rice to be shipped by bulk vessel to Umm Qasr, Iraq, by Dec. 31, 2005.
- The contract incorporated GAFTA 122 terms and required arbitration under U.S. Rice Millers Association (RMA) rules, with English law as the governing substantive law.
- A key disputed term required ACC to provide a deposit or bank guarantee to cover potential demurrage claims.
- Toepfer’s attempted performance was delayed: loading began Jan. 9, 2006, was interrupted when the vessel owner refused to proceed to Iraq, and a replacement vessel was later rejected as unsuitable.
- ACC asserted Toepfer breached by failing to ship by the contractual deadline; Toepfer asserted ACC first materially breached by failing to provide the demurrage guarantee, excusing Toepfer’s nonperformance.
- ACC initiated RMA arbitration; the RMA set a hearing about 11 weeks later and denied Toepfer’s request to postpone.
- The panel set deadlines for English-law expert submissions; although some expert materials were submitted late, the panel admitted both sides’ expert opinions.
- ACC’s president was permitted to testify by telephone (after video testimony proved unavailable), with direct and cross-examination.
- The RMA panel awarded ACC $2,006,570.10, finding Toepfer liable and concluding Toepfer waived any breach by ACC concerning the demurrage guarantee through its conduct and failure to timely ship.
- ACC petitioned in federal court to confirm the award under the New York Convention and 9 U.S.C. § 207; Toepfer opposed and cross-petitioned to vacate under FAA vacatur standards.

## Issues

1. Whether the court was required to confirm the arbitral award under the New York Convention absent a proven ground for refusal of recognition or enforcement.
2. Whether vacatur was warranted for arbitrator “misconduct” under 9 U.S.C. § 10(a)(3) based on (a) refusal to postpone the hearing, (b) alleged refusal to hear evidence, or (c) allowing telephonic testimony.
3. Whether the award should be set aside for “manifest disregard of the law” regarding English-law principles of breach and waiver tied to the demurrage-guarantee dispute.

## Decision

- The court granted ACC’s petition to confirm and denied Toepfer’s opposition and cross-petition to vacate.
- Under 9 U.S.C. § 207, the court held it must confirm the award because Toepfer failed to establish any recognized ground to refuse enforcement under the New York Convention.
- The court rejected § 10(a)(3) misconduct claims, finding the panel’s scheduling and procedural rulings were within its discretion and did not deprive Toepfer of a fair hearing.
- The court found no improper exclusion of evidence because the panel admitted both parties’ English-law expert opinions, including late submissions.
- The court held allowing telephonic testimony with cross-examination was a reasonable procedural measure and caused no cognizable prejudice, particularly where the testimony was largely duplicative.
- The court rejected “manifest disregard” because the panel considered English-law materials and, at most, made an arguable application of that law; the court would not reweigh evidence or revisit the merits.

## Legal Principles

- Under the New York Convention as implemented by 9 U.S.C. § 207, a federal court must confirm an arbitral award unless a limited, enumerated defense to recognition or enforcement is established.
- Judicial review of arbitral awards is highly deferential; disagreement with the merits is not a basis to deny enforcement.
- Vacatur for “misconduct” under 9 U.S.C. § 10(a)(3) requires a showing that procedural rulings (e.g., denial of postponement or evidentiary limits) deprived a party of a fundamentally fair hearing and caused prejudice.
- Arbitrators may control scheduling, manage evidentiary submissions, and permit remote testimony; such case-management decisions do not constitute misconduct absent denial of a fair opportunity to present the case.
- “Manifest disregard of the law” requires proof that arbitrators knew a clearly governing legal rule and intentionally refused to apply it; alleged legal or factual errors are insufficient.

## Conclusion

The court confirmed the international commercial arbitration award, holding that the New York Convention and FAA permit only narrow review and that Toepfer did not show arbitrator misconduct, unfairness, or intentional disregard of governing law.


Al-Haddad Commodities Corp. v. Toepfer Int'l Asia Pte., Ltd., 485 F. Supp. 2d 677 (E.D. Va. 2007)