The case of the day is Daebo International Shipping Co. v. Americas Bulk Transport (BVI) Ltd. (S.D.N.Y. 2013). Daebo Shipping, a Korean company, chartered the M/V Nicole to ABT, which, despite its name, was, according to the judge, a Liberian company. After a dispute arose, Daebo Shipping asserted a claim for more than $300,000 against ABT, and ABT asserted a counterclaim for nearly $730,000. As provided in the charterparty, the parties submitted the dispute to arbitration in London. In 2012, the tribunal awarded Daebo Shipping the full amount of its claim plus interest and costs, and it rejected ABT’s counterclaim.

After the arbitration had begun, but before the award, Daebo Shipping merged with Daebo International. Under Korean law, Daebo Shipping thereafter ceased to exist as a separate entity. Daebo International never notified the tribunal of the merger until after the merger, when it requested the tribunal to correct the award or to issue a supplementary award stating that the award was enforceable by Daebo International. The tribunal refused on the grounds that it lacked power to correct the award or to issue a supplementary award.

Daebo International then sought confirmation of the award in New York. At a very early stage in the proceedings, Daebo Shipping (not Daebo International) filed an amended petition seeking confirmation. ABT moved to dismiss, and the judge held that Daebo Shipping was an improper plaintiff, dismissing the petition but giving leave for an amendment to name Daebo International as the proper plaintiff. After the amendment, the parties filed cross-motions for summary judgment.

The judge granted ABT’s motion. Section 207 of the FAA provides that “any party to the arbitration” may apply for confirmation of an award. On the one hand, it seemed clear that Daebo International was the successor in interest to Daebo Shipping, and in Productos Mercantiles e Industriales, S.A. v. Faberge USA, Inc., 23 F.3d 41 (2d Cir. 1994), the court held that “a straightforward decision regarding successor liability” can permit the district court to confirm an award on a petition brought by a clear successor in interest. But the judge distinguished Productos Mercantiles on the grounds that the arbitration agreement in that case provided that the award would inure to the parties’ successors and assigns; there was no such clause here. The judge also emphasized the fact that Daebo International was asking the court for relief that it had previously and unsuccessfully sought from the tribunal. It was, in effect, seeking a modification of the tribunal’s orders, not simple confirmation of the award. Under Article V of the New York Convention, reasoned the judge, the enforcing court lacks the power to modify the award; requests for modification of the award had to be made to the courts at the seat of the arbitration.

Daebo seems to have made a tactical decision to proceed in New York rather than in London: it claimed it did not appeal the award because “the costs of appealing what was essentiall an arbitrators’ jurisdiction point could not be justified when weighed against the possibility of any such appeal succeeding.” It seems that Daebo chose poorly. Penny wise, pound foolish.