An arbitration tribunal awarded damages to Sino East after Kailuan International wrongfully terminated a coal shipping contract after the delivery was delayed. The two Hong Kong-based companies’ agreement for Sino East to ship coal from Virginia to China was thrown into conflict when Sino East was delayed in loading and shipping the coal. Sino East petitioned for arbitration under the agreement when discrepancies in shipping documents and an ultimately late delivery of coal to China prompted Kailuan to terminate the contract and refuse payment for the shipment. The arbitration tribunal considered whether Kailuan wrongfully terminated the contract and whether Sino East failed to timely present the required shipping documents, and awarded damages to the latter. Kailuan then moved to vacate the arbitration award in New York federal court.

Under the limited review of arbitral decisions afforded to courts under the Federal Arbitration Act (“FAA”), the court analyzed whether the arbitrator’s consideration of Kailuan’s untimely exercise of its termination rights under the contract overstepped the panel’s authority to consider the issues submitted to it. The court concluded that the tribunal acted squarely within its authority in determining the issue of whether Kailuan adequately preserved its termination rights was critical to the determination of the wrongfulness of the ultimate termination—one of two issues submitted to the panel. Because the arbitrators acted within the scope of their authority, and did not exhibit manifest disregard for the law or the agreement, the court denied Kailuan’s motion to vacate.

Kailuan (Hong Long) Int’l Co., Ltd. v. Sino East Minerals, Ltd., Case No. 16-2160 (USDC S.D.N.Y. Dec. 9, 2016).