## Facts

- A shipowner chartered its vessel to National Metal Converters, Inc. to carry bulk scrap steel from Bath, Maine, to Bilbao, Spain.
- The charter party’s arbitration clause required arbitration in New York for “any and all” disputes arising out of the charter and provided that a decision by any two arbitrators would be final.
- After delivery in Spain, a dispute arose over unpaid freight; the charterer argued freight liability was limited by the owner’s ability to recover from the cargo under a lien provision.
- The parties arbitrated before a three-member panel in New York; a 2–1 majority awarded the owner $32,742.61 plus 6% interest from September 1, 1972, and allocated arbitration fees.
- The charterer resisted judicial confirmation, arguing (1) lack of jurisdiction under the Federal Arbitration Act (FAA) because the clause did not expressly state judgment could be entered on the award, and (2) the award reflected legal error amounting to “manifest disregard” of law.

## Issues

1. Whether a federal court may confirm an arbitration award under FAA § 9 when the arbitration clause lacks an explicit statement that judgment may be entered on the award.
2. Whether the award should be vacated because the arbitrators’ contract interpretation was clearly erroneous or in manifest disregard of the law.

## Decision

- The Second Circuit affirmed the district court’s order confirming the arbitration award.
- The court held FAA § 9 did not bar confirmation merely because the arbitration clause omitted an explicit “judgment may be entered” phrase where the agreement and conduct showed intent for binding arbitration enforceable in court.
- The court held the award was not subject to vacatur: even if the arbitrators’ contract construction were doubtful, it did not constitute manifest disregard of the law.

## Legal Principles

- An explicit contractual formula authorizing entry of judgment is not invariably required for FAA § 9 confirmation when the parties’ agreement and conduct plainly contemplate final, binding arbitration subject to judicial enforcement.
- Judicial review of arbitration awards is highly limited; courts do not overturn awards for mere legal or contractual interpretive error.
- “Manifest disregard of the law” requires more than mistake; it requires that arbitrators knew a governing legal rule and deliberately refused to apply it.
- Disputes over charter party construction are typically within the arbitrators’ authority, and courts generally will not substitute their own interpretation for the arbitrators’ reasoned reading of the contract.

## Conclusion

The Second Circuit upheld confirmation of a maritime arbitration award, ruling that the parties’ broad, final-and-binding New York arbitration clause supported FAA § 9 confirmation despite the absence of explicit judgment-entry wording, and that alleged errors in charter interpretation did not meet the stringent manifest-disregard standard for vacatur.


I/S Stavborg v. Nat’l Metal Converters, Inc., 500 F.2d 424 (2d Cir. 1974)