## Facts

- Carina International Shipping Corp. (Carina), owner of the M/T **SOBRAL**, entered a **voyage charter party** with Adam Maritime Corp. (Adam) on **May 28, 1993** to carry a full cargo of clean petroleum products (including caustic soda) from one or more U.S. ports to one or more South American ports.
- Adam instructed the SOBRAL to load **naphtha** and **methyl butyl ether** at the Oiltanking Terminal in **Houston** for discharge at **La Pampilla, Peru**, and then to proceed to **Corpus Christi** to load **caustic soda** for discharge at **Buenaventura, Colombia** before final discharge in Peru.
- The vessel arrived in Houston on **June 10, 1993**, and loading began on **June 11**.
- While loading, the vessel was **arrested by a third party**, and loading stopped temporarily.
- Loading resumed on **June 12** and was completed. About a half-hour after completion, the terminal ordered the vessel off the berth; the vessel went to anchorage until Adam later instructed it to re-berth for further loading on **June 15, 1993**.
- A dispute arose over **laytime and demurrage** resulting from the delays and movements during loading operations.
- The charter party’s arbitration clause required arbitration in New York under the **Society of Maritime Arbitrators (SMA)** framework, and the parties arbitrated the demurrage dispute before a three-member panel.
- After the evidentiary hearings closed, Carina submitted an **amended demurrage calculation** stating it had discovered an **arithmetical error** in its original computation.
- Adam objected that the amended figure was a **new claim** that could not be raised after the close of evidence under the parties’ agreement and the arbitration clause.
- Carina argued the amendment was a correction to the existing demurrage claim and was allowed under the **SMA Maritime Rules**.
- The panel agreed with Carina, considered the amended calculation, and issued a **final award on June 26, 1996** in Carina’s favor.
- Carina petitioned in the Southern District of New York to **confirm** the award under the Federal Arbitration Act (FAA), and Adam cross-petitioned to **vacate** it.

## Issues

1. Did the arbitrators exceed their powers under FAA § 10(a)(4) by permitting and awarding on Carina’s post-hearing amended demurrage calculation, which Adam characterized as a time-barred “new claim”?
2. Should the award be vacated on any other FAA basis, including “manifest disregard of the law,” based on Adam’s challenges to the panel’s handling of the amendment and its laytime/demurrage determinations?

## Decision

- The court **granted** Carina’s petition to **confirm** the arbitration award.
- The court **denied** Adam’s cross-petition to **vacate** the award.
- The court held that the panel’s decision to allow the amended demurrage computation had a sufficient contractual and rules-based foundation (including the SMA rules) and therefore did not show that the arbitrators exceeded their authority.
- The court rejected Adam’s arguments that the award reflected “manifest disregard of the law,” concluding Adam had not shown the panel knew of a clearly controlling rule and intentionally refused to apply it.
- The court explained that Adam’s remaining objections largely attacked the panel’s contract interpretation and factfinding, which are not grounds for vacatur under the FAA.

## Legal Principles

- - Review of arbitration awards under the FAA is **extremely limited**; courts confirm awards unless a statutory ground for vacatur is proven.
- - Under FAA § 10(a)(4), an award may be vacated only when arbitrators **exceed their powers**; courts do not vacate merely because a party claims the panel misread the contract.
- - “Manifest disregard of the law” requires more than legal error: the challenger must show (i) a **well-defined, clearly applicable** legal rule, (ii) the arbitrators’ **awareness** of that rule, and (iii) an **intentional refusal** to apply it.
- - Arbitrators have broad authority to manage procedure and submissions when that authority is supplied by the parties’ agreement and applicable arbitration rules; a court will uphold the panel’s choice if the panel was at least arguably applying the contract and rules.
- - Challenges to the merits of laytime and demurrage calculations typically concern factfinding and contract construction, which fall within the arbitrators’ role and are not re-tried in confirmation proceedings.

## Conclusion

The Southern District of New York confirmed Carina’s maritime arbitration award for demurrage, holding that the arbitrators acted within their authority in allowing a post-hearing correction of an arithmetical error under the SMA rules and that Adam failed to establish any FAA ground—statutory or “manifest disregard”—for vacating the award.


Carina International Shipping Corp. v. Adam Maritime Corp., 961 F. Supp. 559 (1997)