Transnitro, Inc. v. M/V Wave

Transnitro, Inc. (plaintiff) entered into a charter agreement with Springwave Marine Limited (defendant), which owned M/V Wave, a cargo vessel. Transnitro chartered the vessel to bring its cargo from Holland to a port in Michigan. Unable to unload the cargo in that port, Springwave directed the vessel to Norfolk, Virginia, where the cargo was unloaded. Transnitro filed a suit in rem against the vessel, alleging breach of the charter agreement, and attached the vessel. The vessel was released after Springwave filed a release bond in the amount of $200,000. The district court referred the matter to arbitration, where the arbitrators awarded Springwave detention damages, attorney’s fees, and costs of the release bond plus interest. Transnitro paid all these amounts except interest. Following the award, Springwave advised Transnitro that it did not know at the time of the arbitration that collateral for the $200,000 release bond had been placed in an interest-bearing account and earned $34,000 in interest. However, Springwave also said it incurred various expenses totaling $28,147.01, which it did not claim during the arbitration. The vessel’s owner suggested Transnitro receive credit for the $34,000 interest owed and that Springwave receive credit for the $28,1471.01 unclaimed expenses. Transnitro objected as this would have allowed Springwave to collect the $28,147.01 it never claimed during arbitration. Transnitro sought modification of the award in district court to correct the award as to interest. Relying on 9 U.S.C. § 11, a part of the Federal Arbitration Act (FAA), which disallowed modification of arbitration awards by district courts except under certain limited circumstances, the district court concluded it had the power to modify the award. It did so by deducting $34,000 from the interest Transnitro owed but refused to allow Springwave to receive credit for the $28,147.01 in expenses it did not claim during arbitration. Springwave appealed on grounds the district court had no power under 9 U.S.C. § 11 to modify or correct the award notwithstanding language in that provision that allowed an order to “modify and correct the award, so as to effect the intent thereof and promote justice between the parties.”