Bailey Shipping Ltd. v. American Bureau of Shipping
Issue Discussed: “Interim” v. “Final” Decisions
Submitted by Aluyah I. Imoisili, H. Josh Ji*
Date Promulgated: March 28, 2014
Bailey Shipping Ltd. v. American Bureau of Shipping, 2014 WL 1282504 (S.D.N.Y. Mar. 28, 2014)
Court: United States District Court, Southern District of New York
Issues Decided: Whether an interim award denying withdrawal of a claim submitted for arbitration constitutes a final award subject to judicial review
A shipping company (“Bailey”) bought a vessel based on surveys by two classification societies (collectively, “ABS”). Bailey alleged that the ship was in worse condition than ABS represented and filed suit in Greece for a number of claims. ABS filed a demand for arbitration, arguing that the dispute was subject to an arbitration agreement. In response, Bailey an action, seeking declaratory judgment that it was not bound to arbitration. After the court ruled that the arbitration clause governed any claim of negligent misrepresentation that Bailey had against ABS (and also enjoined the Greek litigation for related claims), Bailey unilaterally attempted to withdraw the negligent misrepresentation claim in the arbitration proceedings. The arbitration panel issued an “interim award,” denying the withdrawal. Bailey then moved to vacate the interim award.
The court denied Bailey’s motion, finding that the award was not final. The court reasoned that ABS’s demand for arbitration was to determine the issue of whether ABS was liable for negligent misrepresentation, not whether the claim should proceed in arbitration. Thus, because the interim award (which merely required the arbitration to continue) did not determine liability or associated remedies, it did not constitute a final award.
An arbitration award is not final if the merits of the claims presented to the panel are not fully determined. Thus, an interim order denying withdrawal of a claim from arbitration lacks finality.
* Aluyah I. Imoisili is a Partner and H. Josh Ji is an Associate at Greenberg Gross LLP, where they specialize in commercial litigation and arbitration.