American Arbitration Association 12 December 2007 (Macromex Srl. v. Globex International Inc.) Final Award
[Cite as: http://cisgw3.law.pace.edu/cases/071212a5.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: Case No. 50181T 0036406
CASE HISTORY: 1st instance Interim Award dated 23 October 2007; 3d instance Confirmation of award U.S. Federal District Court 16 April 2008; 4th instance U.S. Circuit Court of Appeals 26 May 2009 [affirming]; 4th instance U.S. Circuit Court of Appeals 26 May 2009 [affirmed]
SELLER'S COUNTRY: United States (respondent)
BUYER'S COUNTRY: Romania (claimant)
GOODS INVOLVED: Frozen chicken parts
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
74A [General rules for measuring damages: loss suffered as consequence of breach]; 78B [Rate of interest
74A [General rules for measuring damages: loss suffered as consequence of breach];
78B [Rate of interest
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1346&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language (English): Text presented below; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1346&step=FullText>
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Macromex Srl. v. Globex International Inc.
Case No. 50181T 0036406
12 December 2007
I, the UNDERSIGNED ARBITRATOR, having been designated in accordance with the arbitration provisions of agreements entered into between the above-named parties through multiple order confirmation/sales contracts dated April 14, 2006; having been duly sworn; and having duly heard the proofs and allegations of the parties, and having duly issued an INTERIM AWARD on October 23, 2007, do hereby issue this FINAL AWARD as follows.
In the INTERIM AWARD, the Sole Arbitrator found that Claimant had prevailed on its claims and, in accordance with the terms of the Agreement between the parties and arbitration Rules of the International Centre for Dispute Resolution, is entitled to an award of costs (including reasonable attorney's fees) that it incurred in connection with the prosecution of its claims in this proceeding.
The Scheduling and Procedural Order issued in connection with the INTERIM AWARD directed Claimant to submit to the Sole Arbitrator an application for costs, including reasonable attorney's fees, together with supporting documentation setting forth the amounts of its claims for costs, etc. The Scheduling and Procedural Order further directed Claimant to set forth its position concerning the rate of interest, as well as the appropriate allocation of the administrative fees of the American Arbitration Association (the "AAA"), and the compensation of the Sole Arbitrator. Claimant timely submitted to the Sole Arbitrator its positions, together with supporting documentation.
The Scheduling and Procedural Order as well as Post-Hearing Order No. 2 directed the Respondent to submit to the Sole Arbitrator its reply to the matters addressed in Claimant's submission; timely submission was made in this regard.
The submissions of the parties were duly considered. After analysis of the arguments made by the parties in their respective submissions, and the evidence submitted by the parties concerning the issues of pre-judgment interest, costs (including reasonable attorneys' fees) and allocation of AAA administrative fees and Sole Arbitrator's compensation, the Sole Arbitrator hereby FINALLY AWARDS as follows:
A. The Sole Arbitrator's INTERIM AWARD dated October 23, 2007, is hereby incorporated by reference in its entirety.
B. With respect to the disputed positions over the legal fees and costs, I conclude that:
(i) Arbitrators typically use the same fee calculation methods as the courts. See Porziqv. Dresdner, Kleinwert, Benson, North America, 2007 W.L. 2241592, at *5 (2nd Cir. Aug. 7, 2007) ("[I]n ascertaining the amount of reasonable attorney's fees to which a successful claimant is entitled, arbitration panels use the same fee calculation methods as the courts -- generally the 'lodestar' analysis"). Here, the situs of the arbitration is New York. The standard that New York courts use in determining attorney fee awards is one of reasonableness, based on the specific facts of the case. See Downes v. Aran, 273 AD.2d 435, 436, 710 N.Y.S,2d381, 382 (2d Dep't 2000); Santemma v. Chasco Co., 261 A.d.2d 408, 408, 689 N.Y.S.2d 220, 221 (2d Dep't 1999); Colangelo v. Colangelo, 176 Misc. 2d 837, 840, 673 N.Y.S.2d 897, 899 (Oneida Co, 1998); and Antidote Intern. Films, Inc. v. Bloomsbury Pub., PLC, 2007 WL 2175906, at *1 (SD.N.Y, July 30, 2007). "Relevant factors to be considered in determining reasonableness include the time required, the difficulties involved, the nature of the seryices provided, the amounts involved, the professional standing and ability of counsel, contingency or certainty of compensation, and the results obtained." See In re Estate of Drossos, 26 AD.3d 602, 603, 808 N.Y.2d 837,838 (3d Dep't 2006); Gaffney v. Village of Mamaroneck, 21 AD.3d 1032, 1032, 801 N.Y.S.2d 400, 401 (2d Dep't 2005); and Norwest Financial, Inc. v. Fernandez, 121 F. Supp. 2d 258, 262 (S.D,N.Y. 2000).
The Second Circuit Court of Appeals recently articulated a guiding principle in applying the standard; the court, or here the Sole Arbitrator:
"bears the burden of disciplining the market, stepping into the shoes of the reasonable paying client, who wishes to pay the least amount necessary to litigate the case effectively." Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 493 F.3d 110, 112 (2d cir. 2007) (emphasis added).
This guiding principle in Arbor Hill fully supports limiting the attorney fee award here to the "least amount necessary" to arbitrate the case. There is also precedent in New York for using the contingent fee in cases to reduce compensation Where that is actually lower than the "Lodestar" approach. See, e.g., U.S. v. Villus, 419 F. Supp. 2d 293, 300 (E.D. NY 2005). Cf. Mid-Hudson Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp. 418 F.3d 168, 179-181 (2nd Cir. 2005), Collectively, these precedents reflect the high level of judicial restraint currently exercised in awarding legal fees in the arbitral situs. While a "Lodestar" approach is more commonly employed by courts in New York, in contingent fee cases that is often done because the "Lodestar" approach usually results in a lower fee than that triggered by the contingent fee arrangement. That is not the case here. In all of the circumstances of this case, and based on the specific facts, it is reasonable to award the contingent fee; to do otherwise would effectively penalize Respondent with an additional amount than that for which Claimant is actually obligated.
(ii) Pursuant to ICDR Article 28(4) an award of pre-judgment and post-award interest is made. Taking into consideration both the contracts (made in U.S. dollars) and the applicable law -- here the domestic law of the United States pursuant to CISG Article 78 -- the Sole Arbitrator concludes that the Treasury Bill Rate is appropriate to apply from among those argued by the parties. Respondent's calculation of the prejudgment interest rate as 4.77% is accepted, and such interest is awarded as specified below.
C. Within thirty (30) days of the date of issuance of this FINAL AWARD, Respondent shall take all necessary steps to ensure that the following aggregate sums are paid to Claimant.
(1) $608,323, representing the principal amount of the Interim Award;
(2) $38,689.34 representing pre-judgment interest.
(3) $152,080 representing legal fees.
(4) $28,519.47 representing non-AAA related costs as follows.
$12,600.00 Professor [...]
4,000.00 Hotel, per diem and transportation
9,399.41 Nicolletti Office Disbursements
(5) The administrative fees and expenses of the American Arbitration Association totaling $8,500.00 shall be borne entirely by Respondent, and the compensation and expenses of the arbitrator totaling $71,748.77 shall be borne entirely by Respondent.
Therefore, Respondent shall reimburse Claimant the sum of $48,698.77 representing that portion of said fees and expenses in excess of the apportioned costs previously incurred by Claimant.
(6) Therefore, within thirty (30) days of issuance of this FINAL AWARD, Respondent shall pay to Claimant the total sum of $876,310.58.
D. Post-judgment interest shall be at the rate of the weekly one-year constant maturity (nominal) Treasury yield, as published by the Federal Reserve System, for the calendar week preceding the date of the Final Award. It shall be due per annum beginning thirty (30) days aflerthe date of issue of this FINAL AWARD, until the judgment is paid or otherwise satisfied.
E. Except as expressly set forth above, this FINAL AWARD is in full settlement of all claims and counterclaims submitted to this arbitration.
This FINAL AWARD may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall constitute together one and the same instrument.
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