Phoenix Bulk Carriers LTD. v. Triorient LLC

Background

Phoenix Bulk Carriers (BVI) LTD. owned the vessel M/V PRETTY LADY, and Triorient LLC chartered it to transport direct reduced iron from Venezuela to Turkey. Triorient’s intended cargo supplier canceled its tender after Triorient declined to sign the contract and tried to negotiate better terms. Triorient later found substitute cargo, but that cargo might not be ready until mid-January and would have exposed Triorient to demurrage. Triorient then issued a cancellation notice and did not perform the charter party.

Phoenix Bulk Carriers mitigated its damages by using the vessel for another charter to carry coal from Venezuela to Brazil. After Triorient rejected Phoenix Bulk Carriers’ claim for detention and lost profits, Phoenix Bulk Carriers initiated arbitration under the charter party’s arbitration clause. The arbitration took place in New York City under the general maritime law of the United States.

Arbitration Award

Triorient argued that the cargo problems constituted force majeure under the charter party. The arbitrators rejected that defense, finding that Triorient’s inability to provide cargo resulted from its own strategic decisions. The arbitrators also found that Phoenix Bulk Carriers’ substitute fixture was a reasonable mitigation choice. They rejected Triorient’s claim that the vessel was unseaworthy because direct reduced iron was a permissible cargo.

On September 27, 2019, the arbitrators ordered Triorient to pay $523,105.72 in detention fees, lost profits, interest, and attorney and arbitration fees. The award provided for additional interest at the prime rate if it was not paid within 30 days.

Court’s Review

Phoenix Bulk Carriers petitioned the court to confirm the award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act. Triorient did not respond, even after the court extended its response deadline.

The court explained that confirmation proceedings are generally evaluated like a motion for summary judgment rather than treated as an ordinary default judgment. Under the Convention, a court must confirm an award unless one of the specified defenses applies. The Federal Arbitration Act also permits vacatur only on limited grounds, such as corruption, evident partiality, serious procedural misconduct, exceeding the arbitrators’ authority, or manifest disregard of the law.

The court found no evidence that the charter party was invalid, that the award exceeded the matters submitted to arbitration, or that the arbitration was procedurally defective. It also found no basis for a public-policy objection, misconduct, corruption, partiality, or manifest disregard of the law. The court therefore confirmed the final arbitration award.

Disposition

Judge John G. Koeltl granted Phoenix Bulk Carriers’ petition to confirm the arbitration award and for prejudgment interest. Phoenix Bulk Carriers was awarded $523,105.72, plus prejudgment interest at 4.35% from September 27, 2019, through June 1, 2020. The court directed the clerk to enter judgment, close all open motions, and close the case.