                    United States Court of Appeals
                          FOR THE EIGHTH CIRCUIT
                                  ___________

                                  No. 02-1780
                                  ___________

Gas Aggregation Services, Inc.,       *
doing business as Gas Services, Inc., *
                                      *
           Plaintiff-Appellant,       *
                                      *
      v.                              *
                                      * Appeal from the United States
Howard Avista Energy, LLC,            * District Court for the
Howard Energy Marketing, Inc.,        * District of Minnesota.
                                      *
           Defendants Third Party     *
           Plaintiffs-Appellees,      *
                                      *
Manjit Bajwa,                         *
                                      *
           Third Party Defendant.     *
                                 ___________

                            Submitted: November 7, 2002

                                 Filed: February 24, 2003
                                  ___________

Before WOLLMAN, LAY, and LOKEN, Circuit Judges.
                           ___________

LAY, Circuit Judge.
      Gas Aggregation Services, Inc. (“GSI”) appeals from an order of the district
     1
court vacating portions of an arbitration panel’s award. We affirm in part and
reverse in part.

                                I. BACKGROUND

      GSI is a Minnesota corporation that operates as a natural gas marketing
company, specializing in providing natural gas needs of utilities in Minnesota and
elsewhere. GSI contracts for the purchase and sale of gas and for transfer and storage
from the producers or owners of the gas to purchasers. Howard Avista Energy LLC,
and Howard Energy Marketing, Inc. (“Howard”) are Delaware corporations with their
principal place of business in Michigan. Howard is a full service gas trading
company which buys and sells large quantities of natural gas as a commodity and also
provides gas supply services to utilities, marketers, and industrial customers in
Michigan and elsewhere.

       In 1998, GSI and Howard entered into a series of four joint venture
transactions, combining GSI’s expertise in natural gas storage and transportation with
Howard’s ability to provide credit and act as guarantor for these transactions. Natural
gas volumes to service the joint ventures were to come from GSI or from Howard as
circumstances required and availability dictated. GSI and Howard frequently
transferred natural gas between themselves from one to the other to service the joint
ventures. In addition, GSI and Howard also engaged in several isolated sales of
natural gas between each other that were unrelated to the joint ventures.




         1
      The Honorable David S. Doty, United States District Judge for the District of
Minnesota.

                                         -2-
       In the course of carrying out these joint ventures, disputes arose between GSI
and Howard concerning responsibilities of each of the parties, and concerning the
sales price of natural gas transfers between the parties.

       In April 1999, GSI filed suit against Howard in district court claiming breach
of contract, fraud, violation of the Minnesota Consumer Fraud Act, tortious
interference with prospective economic advantage and contractual relations, breach
of fiduciary duty, conversion of partnership business opportunities, conversion,
demand for accounting, and unjust enrichment. GSI and Howard subsequently
entered into an agreement to submit the dispute to binding arbitration. The agreement
provided: “All claims in this action and among the parties shall be arbitrated by a
three-person panel.” Pursuant to this agreement, each party chose a selected
representative arbitrator, and by agreement selected a third neutral member who was
an expert in natural gas sales and transportation.

       The parties presented evidence and arguments to the arbitration panel through
briefs and five days of hearings. The panel issued an award and dissent on July 10,
2001. A Supplemental Award and Dissent for Attorneys’ Fees, Costs, and Interest
was issued on September 19, 2001, finding in favor of GSI on all issues. The panel
awarded GSI $466,945.25 as its share of profits for the parties’ joint ventures;
$679,000.00 as the proper balance on its trading account; $959,447.00 as
consequential damages for the loss of GSI’s business; $142,196.00 as interest on an
NSP receivable; $250,725.00 in reasonable attorneys’ fees; $97,646.15 in costs of
arbitration; $25,885.15 for miscellaneous costs; and prejudgment interest of
$242,120.11.

      GSI moved the district court to confirm the arbitration award. Howard filed
a motion to vacate four specific portions of the arbitration award relating to: (1) the
general trading account; (2) the loss of business damages; (3) attorneys’ fees, costs,
and interest, and (4) an NSP receivable. Howard argued that the award “failed to

                                         -3-
draw its essence” from the subject contracts, exhibited a manifest disregard of the
law, failed to make a final and complete resolution of the dispute, and wholly lacked
support in the record.

       The district court vacated the portions of the award dealing with the general
trading account, the loss of business damages, and the attorneys’ fees, costs and
interest, on the grounds that the award failed to draw its essence from the contract,
manifested a disregard of the applicable law, and did not make a final determination
of the issues with respect to attorneys’ fees, costs, and interest.

       GSI timely appealed the district court’s order. We have jurisdiction pursuant
to 28 U.S.C. § 1291 (2000). We review a district court’s decision to vacate an
arbitration award de novo. Executive Life Ins. Co. of New York v. Alexander Ins.
Ltd., 999 F.2d 318, 320 (8th Cir. 1993).

                                  II. DISCUSSION

       The district court vacated significant portions of the arbitration panel’s award,
finding that the panel ignored “unambiguous terms of the underlying contract.” The
central issue before this court is the determination of what contract, if any, governs
the parties’ dispute. In its findings, the district court cites one of Howard’s general
provisions documents as containing the controlling contractual language as to the
issues concerning the general trading account and loss of business damages. GSI
argues that the issues regarding the parties’ general trading account balance and the
loss of business damages flowed from Howard’s behavior within the parties’ joint
venture activities, and were not connected to a single gas transaction, for which the
transaction confirmations were generated. Accordingly, GSI disagrees that these
documents controlled any of the issues that flowed from their joint venture
relationship, and, in addition, contends these documents were inaccurate.



                                          -4-
       GSI argues that the arbitration panel did not address this issue in their award
because it was not raised during the arbitration.2 It is significant that the panel did not
identify this as an issue for arbitration. That omission supports GSI’s assertion that
this was not identified as an issue or argued before the arbitration panel.

      Further, the general provisions document which Howard cites as being
controlling, contains an arbitration clause.3 This clause provides for binding

      2
        This case has been clouded by Howard’s striking change of strategy and focus,
which occurred contemporaneously with their change in counsel between the
arbitration hearing, and their motion in district court for vacation of the arbitration
award. For the first time before the district court Howard vigorously asserted that the
contract which was controlling as to the parties’ trading account and limitation of
damages was the boilerplate general exclusions contract which allegedly was
generated with each transfer of gas between the parties, and which, by its
unambiguous language, applied if at all, only to the single gas trade for which it was
generated. We are satisfied from the record that the issue of whether this general
provisions controlled the parties’ joint venture behavior was not raised before the
arbitration panel. To raise this issue as the primary and controlling issue before the
district court when it was not properly raised for the arbitration panel’s consideration
necessarily precludes it from review by the district court. The district court’s review
is limited to those issues that were raised before the arbitration panel.
      3
      Howard General Provisions Natural Gas Purchase/Sale Contract and
Confirmation, at ¶ 14.

      Arbitration. Any dispute between the parties relating to the
      interpretation of this Agreement and not resolved by agreement shall be
      determined by a sole arbitrator upon notice given by either party, which
      shall identify a representative. Within 10 days of receipt of notice, the
      other party shall name a representative. The two representatives shall
      select as the sole arbitrator an individual having expertise in natural gas
      sales and transportation, or failing to do so in 30 days, the arbitrator
      shall be selected by the senior judge of the U.S. District Court for the
      district in which the party noticing arbitration is located. The rules of
      civil procedure for such district shall govern the arbitration. The

                                           -5-
arbitration of any dispute concerning the interpretation of the general provisions
document by a sole arbitrator, and requires an arbitrator to hear the case and render
a decision within 120 days of appointment. Significantly, this clause was not
invoked. Instead, after GSI filed suit in district court, the parties voluntarily
stipulated to arbitration of all issues by a panel of three, which took greater than 120
days to hear the case and render its decision. This further supports GSI’s assertion
that prior to their motion to vacate the award, Howard did not argue that the general
provisions contract was controlling as to the general trade account or the issue of
limitation of damages for loss of business.

      A. Standard of Review of Arbitrators’ Awards

       A court’s review of an arbitration award is very limited. Lee v. Chica, 983 F.2d
883, 885 (8th Cir. 1993). Where parties agree to arbitrate, a court cannot substitute
a judicial determination for the arbitrator’s decision. United Paperworkers Int’l
Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 40-41 n.10, 108 S. Ct. 364, 371 (1987).
Courts may not review the merits of an arbitration award “even though the parties
may allege that the award rests on errors of fact or on misinterpretation of the
contract.” Bureau of Engraving, Inc. v. Graphic Communication Int’l Union, Local
1B, 284 F.3d 821, 824 (8th Cir. 2002)(quoting Misco, 484 U.S. at 36). Even if the
court is convinced that the arbitrator committed serious error, so “long as the
arbitrator is even arguably construing or applying the contract and acting within the
scope of his authority,” arbitration awards must be confirmed. Bureau of Engraving,
284 F.3d at 824 (quoting Misco, 484 U.S. at 38).4


      arbitrator shall promptly hear the question(s) submitted and shall render
      a written decision within 120 days of appointment with such decision
      being binding on the parties.
      4
       For purposes of determining the correct standard of review, this circuit has not
distinguished between cases in which pre-dispute arbitration agreements exist versus

                                          -6-
       Although limited, arbitration awards are not entirely free from judicial review.
The Federal Arbitration Act (“FAA”) provides limited grounds on which an
arbitration award may be vacated. 9 U.S.C. §§ 1-16 (2000). The FAA requires that
an arbitration award be upheld unless it is obtained by “corruption, fraud, or undue
means;” where there is “evident partiality or corruption in the arbitrators;” where
there was misconduct by the arbitrators; or where the arbitrators exceeded their
powers. 9 U.S.C. § 10(a)(1)(2).

       This court has held that beyond the grounds provided in the FAA, an
arbitration award will be vacated only where it is “completely irrational or evidences
a manifest disregard for the law.” Hoffman v. Cargill Inc., 236 F.3d 458, 461(8th Cir.
2001)(citing Val-U Constr. Co. of S.D. v. Rosebud Sioux Tribe, 146 F.3d 573, 578
(8th Cir. 1998)).

        An arbitrator is not free to ignore or abandon the plain language of the parties’
agreement. Boise Cascade Corp. v. Paper Allied-Industrial, Chemical and Energy
Workers (PACE), Local 7-0159, 309 F.3d 1075, 1081 (8th Cir. 2002). An arbitration
award has been held to be irrational where it fails to draw its essence from the
agreement. Hoffman, 236 F.3d at 462. “An arbitrator’s award draws its essence from
the [parties’ agreement] as long as it is derived from the agreement, viewed in light
of its language, its context, and any other indicia of the parties’ intention.” Boise,
309 F.3d at 1080 (quoting Johnson Controls, Inc., Sys. & Servs. Div. v. United Ass’n
of Journeymen, 39 F.3d 821, 825 (7th Cir. 1994).


those in which the parties stipulate to arbitrate disputes during litigation. However,
we endorse the view of the Second Circuit, which has held that when parties agreed
during litigation to arbitrate certain disputes, the arbitrators have discretion to rule on
each legal question and fact necessary to resolve the disputes. See Fed. Commerce
& Navigation Co., v. Kanematsu-Gosho, Ltd., 457 F.2d 387 (2nd Cir. 1972) (holding
“[a]n arbitrator is entitled to pass on every question of law or fact necessary to the
disposition of the issue submitted to him.”)

                                           -7-
        But where there is no clear and unambiguous agreement, the arbitrator must
utilize other sources to determine the parties’ intent. As this court has previously
held, “[d]etermining the intent of the parties is the essential inquiry; if the written
agreement is silent, the arbitrator may consider past practices and bargaining history
to fill gaps.” Boise, 309 F.3d at 1081-82 (internal quotation marks and citation
omitted). “On the other hand, where the plain language of the parties’ agreement is
silent or ambiguous with respect to a disputed issue, an arbitrator is obliged to
consider other relevant sources of the parties’ intent.” Id.

      B. Arbitration

       Based on arguments and evidence, the arbitration panel organized the issues
for arbitration into the following categories: (1) The nature of the parties’ business
relationship; (2) accounting for profit and loss from the parties’ joint venture
activities; (3) accounting for GSI’s general trading account with Howard; (4) GSI’s
claim for loss of business; (5) GSI’s claim for attorneys’ fees; (6) prejudgment
interest; (7) arbitration costs and fees; (8) disposition of the NSP receivable assigned
by GSI to Howard; and (9) other claims and issues.

       Significantly, the arbitration panel did not identify the issue of what contract
controls the issues of the general trading account or loss of business damages as an
issue to be determined.

      C. General Trading Account Award

      The district court granted Howard’s motion to vacate three of the four
specifically identified awards.5 First, the district court vacated the portion of the


      5
      The arbitration panel granted the award of $600,000 in accounts receivable
from NSP to GSI. The district court affirmed this portion of the arbitration award.

                                          -8-
award related to parties’ general trading account, finding that the panel majority
ignored the unambiguous terms of the underlying contracts.

       GSI contends that the issues regarding the general trading account flow from
the parties’ joint venture relationship, for which there is no written contract. GSI and
Howard engaged in multiple varied business transactions. The panel’s award
indicated that the written documentation for the joint ventures consisted of letters of
agreement dated: April 22, 1998; June 8, 1998; and June 10, 1998, and transaction
confirmation documents.

     The panel majority described the dispute concerning the general trading
account as focusing on four (4) accounting issues:

      (1) the correct beginning balance of the account (2) whether any price
      adjustments should be made for prices accounted for by Howard on the
      agreed volumes of gas bought and sold, (3) whether GSI is responsible
      for hedge activity accounted for by Howard for its account after
      November 1, 1998, and (4) the appropriate accounting reconciliation for
      payments and receipts of the parties in, and net profit from, their joint
      venture activities with general trading account.

Arbitrator’s Award And Dissent at 23.

      First, GSI contended that the October 31, 1998 beginning balance of the
account did not include profit from three hedge transactions, and the trading account
beginning balance should have reflected a credit of $112,654.02 to GSI. Howard
contended that the profits from the hedge transactions were credited to GSI in
determining the final balance. The panel determined that GSI’s beginning balance
should be adjusted to reflect the profit of the three hedge transactions.



The district court’s decision regarding this award is not challenged on appeal, and
accordingly we do not address it.

                                          -9-
       Second, Howard argued that sales prices of physical gas sales should not be
adjusted because the prices were documented by its business records. The accuracy
of Howard’s business records was disputed by GSI, with GSI contending that these
transaction confirmations were at least inaccurate and possibly fraudulent. GSI
argued that the prices documented on Howard’s business records should be adjusted
to market prices or seasonal averages. The panel concluded that the price adjustments
sought by GSI for its gas purchases should be made, but not those proposed for its
sales to Howard. The panel majority found that the amount of the price adjustment
(reduction) for the cost of physical gas should be $234,000 to GSI, based upon its
conclusion that Howard imposed prices higher than market on GSI for Farwell gas
purchases, when the above market cost of the Farwell gas was a joint venture
responsibility.

       Third, GSI contended that it did not authorize hedge transactions with Howard
after November 1, 1998, and therefore the associated losses are not collectible from
it. The panel agreed and credited GSI.

     Fourth, the panel concluded that the final balance of GSI’s trading account with
Howard should be a credit of $679,000.

       The court did not address each component of this trading account award
individually, but held generally that the transaction confirmation documents,
generated by Howard for each natural gas transaction, exclusively determined the
rights and obligations of the parties concerning GSI’s trading account. The district
court stated:

      According to defendants, contracts evidenced by the transaction
      confirmations generated and maintained by defendants for each
      transaction exclusively determined the rights and obligations of the
      parties concerning GSI’s Trading Account. Because the court finds that


                                        -10-
      the arbitration panel ignored those contractual terms, the court vacates
      that portion of the arbitration award.

Dist. Ct. Order at 6 (internal citation omitted).

       The district court held that by determining that a monthly average market price
should be substituted for the price term listed on the trade confirmation, the panel
ignored an unambiguous contract term, and exceeded their authority.
       The district court erred. There was no unambiguous contract term to which the
panel could look to determine the parties’ intent. As the panel majority indicated, the
trading account dispute involved transactions between GSI and Howard that went
beyond one-time transfers of gas between the parties, and touched on hedge
transactions as well as joint venture net profit. The clear language of the transaction
confirmation general provisions document provides that the contractual terms set
forth in the document are controlling only as to that gas transaction, and applies only
in the absence of another agreement. The general provisions contract was limited to
the transaction for which it was generated, and then only if there was no other
agreement in existence between the parties. It is clear that any award based on a
breach of the parties’ joint venture relationship could not be controlled by a general
provisions document with application limited to a one-time sale of gas between the
parties.

       In addition, the plain language of the transaction confirmation indicates that it
is not binding on the other party if challenged within ten days: “this confirmation
shall be final and binding, whether or not signed or confirmed by counterpart, unless
counterpart advises Howard Energy of any inaccuracy within ten days.” There was
evidence presented to the panel by GSI that once received, they immediately disputed
the terms and challenged at least one of these documents as being fraudulent.

        In addition, GSI contends that it did not receive transaction confirmations on
all of its gas transfers with Howard in a timely manner despite repeated requests. GSI

                                         -11-
argued that it requested an accounting from Howard multiple times, but that no
accounting was forthcoming from Howard until just prior to the arbitration.
Consequently, the contractual language in these general provisions documents may
not have been controlling even as to the individual transactions for which they were
generated.
      In the absence of clear and unambiguous contractual language, an arbitration
panel must look to other sources to determine the parties’ intent. Here, the arbitration
panel accepted briefs and conducted five days of hearings.

       Due to the conflicting evidence regarding these transactions, the determination
of the existence of any agreement between the parties was ultimately a credibility
determination, on which there is no judicial review of the arbitration panel’s finding.
The panel’s award stated that all of the evidence was considered and carefully
weighed.

       In determining the issues regarding the parties’ joint venture and hedge
activities, the arbitration panel looked to other relevant sources of the parties’ intent,
past practice and bargaining history, as well as industry practice to fill the gaps. This
is precisely what our opinion in Boise required in the absence of clear and
unambiguous contractual language. Boise, 309 F.3d at 1081-82. Here, there was no
controlling contractual language. The panel was required to weigh the evidence in
order to discern the parties’ intended agreement, and they did not exceed their powers
in doing so. Accordingly, the panel’s award must be confirmed.

      D. Loss of Business Award

      The district court also vacated the panel’s award in favor of GSI for loss of
business damages, finding that the transaction confirmation contracts contained an
unambiguous limitation of damages provision which did not provide for loss of
business damages. The district court held that the award failed to draw its essence

                                          -12-
from unambiguous contract language found in Howard’s general provisions
documents. As we stated earlier, the general provisions document is not controlling
as to the joint venture activities between the parties. The panel’s award was based on
the parties’ joint venture relationship, and therefore the limitation on damages
contractual language as cited by the district court did not control. The panel’s award
found that the only written documentation between Howard and GSI consisted of four
letters of agreement detailing their joint venture transactions. These letters of
agreement set forth the terms of joint venture transactions between GSI/Howard and
the third-party business, i.e. ProGas, Minnegasco, and Union Gas. These letters
stated in part, “GSI and Howard Avista agree to be jointly and severally liable for the
obligations of GSI.” The letters did not contain any contractual language regarding
limitation of liability.

       The panel concluded that Howard’s actions in the course of the parties’ joint
ventures caused GSI loss of viability and credibility as a natural gas broker with its
preexisting and ongoing customers. The panel cited specific instances: Howard’s
failure to agree to let the Farwell gas move to Dawn in November, 1998 to satisfy the
Minnegasco Peaking Contract;6 the increased security demands Howard made on GSI
for the purchase of gas after November 1, 1998; and Howard’s curtailment of gas
deliveries to GSI in January and March, 1999, which the panel found to result in the
loss of GSI’s business viability. The panel’s award indicated that it based its




      6
       Two disputes between GSI and Howard arose out of a joint venture involving
ProGas. First, the parties disagreed as to the delivery point, which was significant to
the value of the gas. Evidence presented to the arbitration panel indicated that gas
located at Dawn, Ontario, is more valuable than gas located at Farwell, Michigan, due
to Dawn’s superior pipeline access to greater markets, and its inherently lower
transportation costs. Second, the parties disagreed on the price for the natural gas.
These disputes put the joint venture at risk, and set off a series of conflicts between
the parties.

                                         -13-
evaluation on the entirety of the evidence, and found that the loss of GSI’s business
viability was a natural and foreseeable consequence of Howard’s activities.

       “We may not set an award aside simply because we might have interpreted the
agreement differently or because the arbitrators erred in interpreting the law or in
determining the facts.” Stroh Container Co. v. Delphi Indus., Inc., 783 F.2d 743, 751
(8th Cir. 1986). In the absence of unambiguous contractual language, the arbitration
panel considered the entirety of the evidence in making its determination and award.
Because we find that the panel’s award was not irrational, nor did the panel exceed
their authority, the panel’s arbitration award must be confirmed.

      E. Attorneys’ Fees, Costs and Interest

      Finally, GSI sought and was awarded attorneys’ fees under the Minnesota
Consumer Fraud Act. The district court vacated the panel’s award for attorneys’ fees,
costs and prejudgment interest, finding that the award manifested a disregard of
applicable Minnesota law, and failed to make a final determination of the issues.

      A district court has the authority to vacate a panel’s award when it “evidences
a manifest disregard for the law.” Missouri River Servs., Inc. v. Omaha Tribe of
Nebraska, 267 F.3d 848, 854 (8th Cir. 2001). An arbitration decision evidences a
manifest disregard for the law where the arbitrators clearly identify the applicable,
governing law and then proceed to ignore it. Hoffman, 236 F.3d at 462.

      The panel’s award of attorneys’ fees is troubling. The panel majority states,
“Howard’s Reply Brief presented the panel with a decision of the Minnesota Supreme
Court holding that the Consumer Fraud Act does not apply to GSI’s dispute with




                                        -14-
Howard.”7 The Minnesota Consumer Fraud Act permits private parties to recover
attorneys’ fees for violations of Minn. Stat. § 325F.69. We agree with the arbitration
panel dissent which states: “As a matter of law, the transactions between the parties
are not consumer transactions at all. Rather they are transactions between
sophisticated gas traders in the wholesale, commercial gas market.”

       Despite acknowledging the rule as set forth by the Minnesota Supreme Court
in Ly which precludes a cause of action under the Consumer Fraud Act by a
commercial trader, the panel majority ultimately awarded GSI attorneys’ fees. This
ruling ignores the relevant law. Where an arbitration panel cites relevant law, then
proceeds to ignore it, it is said to evidence a manifest disregard for the law. Hoffman,
236 F.3d at 462 (citing Stroh, 783 F.2d at 749-50). We find that the award evidenced
a manifest disregard for Minnesota law, and therefore affirm the district court’s
decision to vacate the award of attorneys’ fees.

       We also agree with the district court’s analysis regarding prejudgment interest.
A court can vacate an arbitrator’s award where the arbitrators fail to make a “mutual,
final, and definite award upon the subject matter submitted.” 9 U.S.C. § 10(a)(4).
The arbitrator must “resolve all issues submitted to the arbitration, and determine
each issue fully so that no further litigation is necessary to finalize the obligations of
the parties under the award.” Dighello v. Busconi, 673 F. Supp. 85, 90 (D. Conn.
1987).

       Here, the panel’s award indicates that the panel did not fully decide the issue
of prejudgment interest:




      7
       In Ly v. Nystrom, 615 N.W.2d 302, 314 (Min. 2000), the Minnesota Supreme
Court held that claims for attorneys’ fees under the Minnesota Consumer Fraud Act
are not available for private causes of action which do not benefit the public.

                                          -15-
      The panel further recognizes that the entitlement to an amount of
      prejudgment interest . . . may also be specifically governed by
      Minnesota or federal statute, court rule, and/or case law. The panel has
      not sought to make purely legal rulings with respect to those two (2)
      issues. The panel emphasizes that, should a Minnesota or federal court
      of competent jurisdiction determine that GSI is not legally entitled to
      Attorneys Fees and Prejudgment Interest, such a determination should
      not and does not affect the other findings, conclusions, or awards made
      by the panel herein.

Arbitrator’s Award And Dissent at 27-28.

       By expressly leaving this award open for judicial determination, the panel
failed to make a final determination. Accordingly, we affirm the district court’s
decision to vacate the award of prejudgment interest.

      The judgment of the district court is REVERSED and the arbitration panel’s
decision CONFIRMED as to the awards for loss of business damages and general
trading account (“Sale Price in Contract”). The district court is AFFIRMED as to the
attorneys’ fees, costs and interest award.

      A true copy.

            Attest:

                CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                       -16-
