     06-3474-cv
     Stolt-Nielsen SA v. AnimalFeeds Int'l Corp.




1                         UNITED STATES COURT OF APPEALS
2                             FOR THE SECOND CIRCUIT
3                                August Term, 2007
4    (Argued: May 30, 2008                          Decided: November 4, 2008)
5                              Docket No. 06-3474-cv
6                     ------------------------------------
 7                           STOLT-NIELSEN SA,
 8               Stolt-Nielsen Transportation Group Ltd.,a
 9         Odfjell ASA, Odfjell Seachem AS, Odfjell USA, Inc.,
10      Jo Tankers BV, Jo Tankers, Inc., and Tokyo Marine Co. Ltd.,
11                            Petitioners-Appellees,
12                                      - v -
13                      ANIMALFEEDS INTERNATIONAL CORP.,
14                             Respondent-Appellant,
15                               KP Chemical Corp.,
16                                   Respondent.*
17                    ------------------------------------
18   Before:     KEARSE, SACK, and LIVINGSTON, Circuit Judges.
19               Appeal from an order and judgment of the United States

20   District Court for the Southern District of New York (Jed S.

21   Rakoff, Judge) vacating an arbitration award.         We conclude that

22   the arbitration panel, in construing an arbitration clause in an

23   international maritime agreement to permit class arbitration when




           *
           The Clerk of Court is directed to amend the official
     caption as set forth above.
1    the clause was silent on that issue, did not manifestly disregard

2    the law.

3               Reversed and remanded with instructions to deny the

4    petition to vacate.

 5                             STEVEN F. CHERRY, Wilmer Cutler
 6                             Pickering Hale and Dorr LLP (William J.
 7                             Kolasky, Leon B. Greenfield, and David
 8                             F. Olsky, Wilmer Cutler Pickering Hale
 9                             and Dorr LLP, Washington, DC, of
10                             counsel), McLean, VA, for
11                             Petitioners-Appellees Odfjell ASA,
12                             Odfjell Seachem AS, and Odfjell USA,
13                             Inc.
14                             CHRISTOPHER CURRAN, White & Case LLP
15                             (Francis A. Vasquez, Jr., Peter J.
16                             Carney, Eric Grannon, Kristen McAhren,
17                             and Charles C. Moore, of counsel),
18                             Washington, DC, for Petitioners-
19                             Appellees Stolt-Nielsen SA and Stolt-
20                             Nielsen Transportation Group Ltd.
21                             Richard J. Rappaport, Amy B. Manning,
22                             and Tammy L. Adkins, McGuireWoods LLP,
23                             Chicago, IL; and Richard J. Jarashow,
24                             McGuireWoods LLP, New York, NY, for
25                             Petitioners-Appellees Jo Tankers BV and
26                             Jo Tankers, Inc.
27                             Keith S. Dubanevich, Garvey Schubert
28                             Barer, Portland, OR, for Petitioner-
29                             Appellee Tokyo Marine Co. Ltd.
30                             BERNARD PERSKY, Labaton Sucharow LLP
31                             (Steven A. Kanner, Much Shelist Freed
32                             Denenberg Ament & Rubenstein, P.C.,
33                             Chicago, IL; Michael D. Hausfeld, Cohen,
34                             Milstein, Hausfeld & Toll, P.L.L.C.,
35                             Washington, DC; Solomon B. Cera, Gold
36                             Bennet Cera & Sidener LLP, San
37                             Francisco, CA; J. Douglas Richards,
38                             Milberg Weiss Bershad & Schulman LLP,
39                             New York, NY; W. Joseph Bruckner,
40                             Lockridge Grindal Nauen P.L.L.P.,
41                             Minneapolis, MN; and Aaron F. Biber,
42                             Gray, Plant, Mooty, Mooty & Bennett,
43                             P.A., Minneapolis, MN, of counsel), New
44                             York, NY, for Respondent-Appellant.
                                      2
1    SACK, Circuit Judge:
2               The parties to this litigation are also parties to

3    international maritime contracts that contain arbitration

4    clauses.   The contracts are silent as to whether arbitration is

5    permissible on behalf of a class of contracting parties.    The

6    question presented on this appeal is whether the arbitration

7    panel, in issuing a clause construction award construing that

8    silence to permit class arbitration, acted in manifest disregard

9    of the law.   The United States District Court for the Southern

10   District of New York (Jed S. Rakoff, Judge) answered that

11   question in the affirmative and therefore vacated the award.      We

12   conclude to the contrary that the demanding "manifest disregard"

13   standard has not been met.   The judgment of the district court is

14   therefore reversed and the cause remanded with instructions to

15   deny the petition to vacate.

16                                BACKGROUND

17              Respondent-Appellant AnimalFeeds International Corp.

18   ("AnimalFeeds") alleges that Petitioners-Appellees Stolt-Nielsen

19   SA, Stolt-Nielsen Transportation Group Ltd., Odfjell ASA, Odfjell

20   Seachem AS, Odfjell USA, Inc., Jo Tankers BV, Jo Tankers, Inc.,

21   and Tokyo Marine Co. Ltd. (collectively "Stolt-Nielsen") are

22   engaged in a "global conspiracy to restrain competition in the

23   world market for parcel tanker shipping services in violation of

24   federal antitrust laws."   Appellant's Br. 4.   AnimalFeeds seeks

25   to proceed on behalf of a class of "[a]ll direct purchasers of

26   parcel tanker transportation services globally for bulk liquid

                                      3
1    chemicals, edible oils, acids, and other specialty liquids from

2    [Stolt-Nielsen] at any time during the period from August 1,

3    1998, to November 30, 2002."   Claimants' Consolidated Demand for

4    Class Arbitration, May 19, 2005, at 4.

5              AnimalFeeds initially filed suit in the United States

6    District Court for the Eastern District of Pennsylvania on

7    September 4, 2003.   That action was transferred to the District

8    of Connecticut pursuant to an order of the Judicial Panel on

9    Multidistrict Litigation, see 28 U.S.C. § 1407 (2000),

10   consolidating "actions shar[ing] factual questions relating to

11   the existence, scope and effect of an alleged conspiracy to fix

12   the price of international shipments of liquid chemicals in the

13   United States," In re Parcel Tanker Shipping Servs. Antitrust

14   Litig., 296 F. Supp. 2d 1370, 1371 (J.P.M.L. 2003).    In the

15   District of Connecticut, Stolt-Nielsen moved to compel

16   arbitration.   The district court denied the motion but we

17   reversed, holding that the parties' transactions were governed by

18   contracts with enforceable agreements to arbitrate and that the

19   antitrust claims were arbitrable.   JLM Indus., Inc. v.

20   Stolt-Nielsen SA, 387 F.3d 163, 183 (2d Cir. 2004).1

21             The parties then entered into an agreement stating,

22   among other things, that the arbitrators "shall follow and be


          1
            AnimalFeeds was not a named party in JLM Industries,
     which reversed a decision that had been entered by the District
     of Connecticut prior to In re Parcel Tanker Shipping Services
     Antitrust Litigation's transfer and consolidation order. It is
     undisputed, however, that our decision in JLM Industries had the
     effect of requiring arbitration of AnimalFeeds's claims.
                                     4
1    bound by Rules 3 through 7 of the American Arbitration

2    Association's Supplementary Rules for Class Arbitrations (as

3    effective Oct. 8, 2003)."   Agreement Regarding New York

4    Arbitration Procedures for Putative Class Action Plaintiffs in

5    Parcel Tanker Services Antitrust Matter ("Class Arbitration

6    Agreement") 3.

7         Rule 3 provides:
 8             Upon appointment, the arbitrator shall
 9             determine as a threshold matter, in a
10             reasoned, partial final award on the
11             construction of the arbitration clause,
12             whether the applicable arbitration clause
13             permits the arbitration to proceed on behalf
14             of or against a class (the "Clause
15             Construction Award"). The arbitrator shall
16             stay all proceedings following the issuance
17             of the Clause Construction Award for a
18             period of at least 30 days to permit any
19             party to move a court of competent
20             jurisdiction to confirm or to vacate the
21             Clause Construction Award. . . .
22             In construing the applicable arbitration
23             clause, the arbitrator shall not consider
24             the existence of these Supplementary Rules,
25             or any other AAA rules, to be a factor
26             either in favor of or against permitting the
27             arbitration to proceed on a class basis.2
28   American Arbitration Ass'n, Supplementary Rules for Class

29   Arbitrations (2003) ("Supplementary Rules"), available at

30   http://www.adr.org/sp.asp?id=21936 (last visited October 17,

31   2008).   Pursuant to the Class Arbitration Agreement, AnimalFeeds,



          2
            The Supplementary Rules were issued following the Supreme
     Court's decision in Green Tree Financial Corp. v. Bazzle, 539
     U.S. 444, 452-53 (2003), which held that when parties agree to
     arbitrate, the question of whether the agreement permits class
     arbitration is one of contract interpretation to be determined by
     the arbitrators, not by a court.
                                      5
1    together with several co-plaintiffs not parties to this appeal,

2    filed a demand for class arbitration.   An arbitration panel was

3    appointed to decide the Clause Construction Award.

4              The arbitration panel was required to consider the

5    arbitration clauses in two standard-form agreements known as the

6    Vegoilvoy charter party and the Asbatankvoy charter party.3    The

7    Vegoilvoy agreement, which governs all transactions between

8    AnimalFeeds and Stolt-Nielsen relevant to this appeal, contains

9    the following broadly worded arbitration clause:

10             Any dispute arising from the making,
11             performance or termination of this Charter
12             Party shall be settled in New York, Owner and
13             Charterer each appointing an arbitrator, who
14             shall be a merchant, broker or individual
15             experienced in the shipping business; the two
16             thus chosen, if they cannot agree, shall
17             nominate a third arbitrator who shall be an
18             Admiralty lawyer. Such arbitration shall be
19             conducted in conformity with the provisions
20             and procedure of the United States
21             Arbitration Act, and a judgment of the Court
22             shall be entered upon any award made by said
23             arbitrator. Nothing in this clause shall be
24             deemed to waive Owner's right to lien on the
25             cargo for freight, dead freight or demurrage.

26   The Asbatankvoy agreement, which governs some relevant

27   transactions between Stolt-Nielsen and other putative class


          3
            "A charter party is a specific contract, by which the
     owners of a vessel let the entire vessel, or some principal part
     thereof, to another person, to be used by the latter in
     transportation for his own account, either under their charge or
     his." Asoma Corp. v. SK Shipping Co., 467 F.3d 817, 823 (2d Cir.
     2006) (citations and internal quotation marks omitted); see also
     2 Thomas J. Schoenbaum, Admiralty & Maritime Law § 11-1, at 2
     (4th ed. 2004) ("The charter party is . . . a specialized form of
     contract for the hire of an entire ship, specified by name."
     (footnote omitted)).

                                     6
1    members not parties to this appeal, contains a similar broadly

2    worded arbitration clause.4    Both agreements unambiguously

3    mandate arbitration but are silent as to whether arbitration may

4    proceed on behalf of a class.

5              The arbitration panel, tasked with deciding whether

6    that silence permitted or precluded class arbitration, received

7    evidence and briefing from both sides.     AnimalFeeds and its co-

8    plaintiffs argued that because the arbitration clauses were

9    silent, arbitration on behalf of a class could proceed.     They

10   cited published clause construction awards under Rule 3 of the

11   Supplementary Rules permitting class arbitration awards where the

12   arbitration clause was silent.     They also argued that public

13   policy favored class arbitration and that the contracts'

14   arbitration clauses would be unconscionable and unenforceable if

15   they forbade class arbitration.

16             Stolt-Nielsen's position was that because the

17   arbitration clauses were silent, the parties intended not to

18   permit class arbitration.     It cited several federal cases and

19   arbitration decisions denying consolidation and class treatment

20   of claims where the arbitration clause was silent.     Stolt-Nielsen

21   also argued that arbitration decisions cited by AnimalFeeds were

22   inapposite because they were not made in the context of

23   international maritime agreements, where parties have no



          4
            The Asbatankvoy arbitration clause is reproduced in the
     district court's opinion. See Stolt-Nielsen SA v. Animalfeeds
     Int'l Corp., 435 F. Supp. 2d 382, 384 n.1 (S.D.N.Y. 2006).
                                     7
1    expectation that arbitration will proceed on behalf of a class.

2    In addition, Stolt-Nielsen offered extrinsic evidence regarding

3    "the negotiating history and the context" of the arbitration

4    agreements to "reinforce the conclusion that the parties did not

5    intend . . . to authorize class arbitration."   Respondents'

6    Opposition to Claimants' Motion for Clause Construction Award

7    Permitting Class Arbitration ("Stolt-Nielsen's Arbitration Br.")

8    16.   At oral argument before the arbitration panel, Stolt-Nielsen

9    acknowledged that the interpretation of the contracts at issue

10   here was a question of first impression.

11              On December 20, 2005, the arbitration panel issued a

12   Clause Construction Award deciding that the agreements permit

13   class arbitration.5   The panel based its decision largely on the

14   fact that in all twenty-one published clause construction awards

15   issued under Rule 3 of the Supplementary Rules, the arbitrators

16   had interpreted silent arbitration clauses to permit class

17   arbitration.   The panel acknowledged that none of those cases was

18   decided in the context of an international maritime contract.     It

19   said that it was nonetheless persuaded to follow those clause

20   construction awards because the contract language in the cited

21   cases was similar to the language used in the charter parties,

22   the arbitrators in those cases had rejected contract-

23   interpretation arguments similar to the ones made by

           5
            The panel did not certify a class or otherwise decide
     whether the arbitration would actually proceed as a class action.
     The panel's decision was limited to deciding a question of
     contract interpretation: whether the arbitration agreements
     permit class arbitration.
                                     8
1    Stolt-Nielsen in this case, and Stolt-Nielsen had been unable to

2    cite any arbitration decision under Rule 3 in which contractual

3    silence had been construed to prohibit class arbitration.

4               In addition, the panel distinguished Second Circuit

5    case law prohibiting consolidation of claims when an arbitration

6    agreement is silent, see, e.g., United Kingdom v. Boeing Co., 998

7    F.2d 68, 74 (2d Cir. 1993), reasoning that "consolidation of two

8    distinct arbitrations under two distinct arbitration clauses

9    raises a different situation from a class action."    Clause

10   Construction Award 6.

11              Lastly, the panel acknowledged that the arbitration

12   clauses under consideration "are part of a long tradition of

13   maritime arbitration peculiar to the international shipping

14   industry."   Id.   It concluded nonetheless that Stolt-Nielsen's

15   arguments regarding the negotiating history and context of the

16   agreements did not establish that the parties intended to

17   preclude class arbitration.

18              Stolt-Nielsen petitioned the district court to vacate

19   the Clause Construction Award.    The court granted the petition,

20   concluding that the award was made in manifest disregard of the

21   law.   Stolt-Nielsen SA v. Animalfeeds Int'l Corp., 435 F. Supp.

22   2d 382, 387 (S.D.N.Y. 2006).   According to the district court,

23   the arbitrators "failed to make any meaningful choice-of-law

24   analysis."   Id. at 385.   They therefore failed to recognize that

25   the dispute was governed by federal maritime law, that federal

26   maritime law requires that the interpretation of charter parties
                                       9
1    be dictated by custom and usage, and that Stolt-Nielsen had

2    demonstrated that maritime arbitration clauses are never subject

3    to class arbitration.   Id. at 385-86.    Even under state law, the

4    district court said, the panel was required to interpret

5    contracts in light of industry custom and practice.    Id. at 386.

6    Because these clearly established rules of law were presented to

7    the panel and the panel failed to apply them, the district court

8    held, the Clause Construction Award must be, and was, vacated.

9    Id. at 387.

10             AnimalFeeds appeals.

11                                DISCUSSION

12             I.     Standard of Review

13             We review de novo a district court's order vacating an

14   arbitration award for manifest disregard of the law.      Hoeft v.

15   MVL Group, Inc., 343 F.3d 57, 69 (2d Cir. 2003).

16             II.    Grounds for Vacating an Arbitration Award

17             "It is well established that courts must grant an

18   arbitration panel's decision great deference."    Duferco Int'l

19   Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d

20   Cir. 2003).    The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et

21   seq. (2006), allows vacatur of an arbitral award:

22             (1)    where the award was procured by
23                    corruption, fraud, or undue means;

24             (2)    where there was evident partiality or
25                    corruption in the arbitrators, or either
26                    of them;

27             (3)    where the arbitrators were guilty of
28                    misconduct in refusing to postpone the
                                       10
1                      hearing, upon sufficient cause shown, or
2                      in refusing to hear evidence pertinent
3                      and material to the controversy; or of
4                      any other misbehavior by which the
5                      rights of any party have been
6                      prejudiced; or

 7             (4)     where the arbitrators exceeded their
 8                     powers, or so imperfectly executed them
 9                     that a mutual, final, and definite award
10                     upon the subject matter submitted was
11                     not made.

12   Id. § 10(a).6    We have also recognized that the district court

13   may vacate an arbitral award that exhibits a "manifest disregard"

14   of the law.     Duferco, 333 F.3d at 388 (citing Goldman v.

15   Architectural Iron. Co., 306 F.3d 1214, 1216 (2d Cir. 2002);

16   Westerbeke Corp. v. Daihatsu Motor Co., Ltd., 304 F.3d 200, 208

17   (2d Cir. 2002).     We do not, however, "recognize manifest

18   disregard of the evidence as proper ground for vacating an

19   arbitrator's award."     Wallace v. Buttar, 378 F.3d 182, 193 (2d

20   Cir. 2004) (citation and internal quotation marks omitted;

21   emphasis added).

22             III. Stolt-Nielsen's "Manifest Disregard" Claim

23   A.   Legal Standards

24             The party seeking to vacate an award on the basis of

25   the arbitrator's alleged "manifest disregard" of the law bears a

26   "heavy burden."     GMS Group, LLC v. Benderson, 326 F.3d 75, 81 (2d

27   Cir. 2003).     "Our review under the [judicially constructed]



          6
            Section 11 of the FAA, moreover, enumerates various
     circumstances in which the district court may "modify[] or
     correct[]" an arbitration award. 9 U.S.C. § 11.

                                       11
1   doctrine of manifest disregard is 'severely limited.'"    Duferco,

2   333 F.3d at 389 (quoting India v. Cargill Inc., 867 F.2d 130, 133

3   (2d Cir. 1989)).   "It is highly deferential to the arbitral award

4   and obtaining judicial relief for arbitrators' manifest disregard

5   of the law is rare."   Id.7   The "manifest disregard" doctrine

6   allows a reviewing court to vacate an arbitral award only in

7   "those exceedingly rare instances where some egregious

8   impropriety on the part of the arbitrators is apparent."    Id.




         7
           The Duferco court made this point in quantitative terms,
    noting that between "1960 [and the 2003 Duferco decision] we have
    vacated some part or all of an arbitral award for manifest
    disregard in . . . four out of at least 48 cases where we applied
    the standard." Duferco, 333 F.3d at 389 (collecting cases). The
    fact that a finding of manifest disregard is "exceedingly rare,"
    id., does not, of course, mean that this appeal does not provide
    us with just such a case. But to update the observation made by
    the Duferco court, since Duferco, we have vacated one award, and
    remanded two others for clarification. See Rich v. Spartis, 516
    F.3d 75 (2d Cir. 2008); Porzig v. Dresdner, Kleinwort, Benson, N.
    Am. LLC, 497 F.3d 133 (2d Cir. 2007); Hardy v. Walsh Manning
    Sec., L.L.C., 341 F.3d 126 (2d Cir. 2003). We count fifteen
    instances during the same period in which we have declined to do
    either. See Parnell v. Tremont Capital Mgmt. Corp., 280 F.App'x
    76 (2d Cir. 2008) (summary order); Metlife Sec., Inc. v. Bedford,
    254 F. App'x 77 (2d Cir. 2007) (summary order); Appel Corp. v.
    Katz, 217 F. App'x 3 (2d Cir. 2007) (summary order); Nicholls v.
    Brookdale Univ. Hosp. & Med. Ctr., 204 F. App'x 40 (2d Cir. 2006)
    (summary order); D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (2d
    Cir. 2006); IMC Mar. Group, Inc. v. Russian Farm Cmty. Project,
    167 F. App'x 845 (2d Cir. 2006) (summary order); Nutrition 21,
    Inc. v. Wertheim, 150 F. App'x 108 (2d Cir. 2005) (summary
    order); Bear, Stearns & Co. v. 1109580 Ontario, Inc., 409 F.3d 87
    (2d Cir. 2005); Stone & Webster, Inc. v. Triplefine Int'l Corp.,
    118 F. App'x 546 (2d Cir. 2004) (summary order); Tobjy v.
    Citicorp/Inv. Servs., 111 F. App'x 640 (2d Cir. 2004) (summary
    order); Wallace v. Buttar, 378 F.3d 182 (2d Cir. 2004); IBAR Ltd.
    v. Am. Bureau of Shipping, 92 F. App'x 820 (2d Cir. 2004)
    (summary order); Carpenter v. Potter, 91 F. App'x 705 (2d Cir.
    2003) (summary order); Banco de Seguros del Estado v. Mut. Marine
    Office, Inc., 344 F.3d 255 (2d Cir. 2003); Hoeft v. MVL Group,
    Inc., 343 F.3d 57 (2d Cir. 2003).
                                    12
1               Vacatur of an arbitral award is unusual for good

2    reason:   The parties agreed to submit their dispute to

3    arbitration, more likely than not to enhance efficiency, to

4    reduce costs, or to maintain control over who would settle their

5    disputes and how -- or some combination thereof.    See Porzig v.

6    Dresdner, Kleinwort, Benson, N. Am. LLC, 497 F.3d 133, 138-39 (2d

7    Cir. 2007); Willemijn Houdstermaatschappij, BV v. Standard

8    Microsystems Corp., 103 F.3d 9, 12 (2d Cir. 1997); see also Note,

9    Judicial Review of Arbitration Awards on the Merits, 63 Harv. L.

10   Rev. 681, 681-82 (1950).    "To interfere with this process would

11   frustrate the intent of the parties, and thwart the usefulness of

12   arbitration, making it 'the commencement, not the end, of

13   litigation.'"    Duferco, 333 F.3d at 389 (quoting Burchell v.

14   Marsh, 58 U.S. (17 How.) 344, 349 (1854)).    It would fail to

15   "maintain arbitration's essential virtue of resolving disputes

16   straightaway."    Hall Street Assocs., L.L.C. v. Mattel, Inc., 128

17   S. Ct. 1396, 1405 (2008).

18              In this light, "manifest disregard" has been

19   interpreted "clearly [to] mean[] more than error or

20   misunderstanding with respect to the law."    Merrill Lynch,

21   Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 933 (2d

22   Cir. 1986).   "We are not at liberty to set aside an arbitration

23   panel's award because of an arguable difference regarding the

24   meaning or applicability of laws urged upon it."    Id. at 934.

25              A federal court cannot vacate an arbitral
26              award merely because it is convinced that the
27              arbitration panel made the wrong call on the
28              law. On the contrary, the award should be
                                      13
1               enforced, despite a court's disagreement with
2               it on the merits, if there is a barely
3               colorable justification for the outcome
4               reached.

5    Wallace, 378 F.3d at 190 (2d Cir. 2004) (citation and internal

6    quotation marks omitted; emphasis added in Wallace).

7               In the context of contract interpretation, we are

8    required to confirm arbitration awards despite "serious

9    reservations about the soundness of the arbitrator's reading of

10   th[e] contract."    Westerbeke Corp., 304 F.3d at 216 n.10 (2d Cir.

11   2002).   "Whether the arbitrators misconstrued a contract is not

12   open to judicial review."   Bernhardt v. Polygraphic Co. of Am.,

13   350 U.S. 198, 203 n.4 (1956).    "Whatever arbitrators' mistakes of

14   law may be corrected, simple misinterpretations of contracts do

15   not appear one of them."    I/S Stavborg v. Nat'l Metal Converters,

16   Inc., 500 F.2d 424, 432 (2d Cir. 1974).

17              The concept of "manifest disregard" is well illustrated

18   by New York Telephone Co. v. Communications Workers of America

19   Local 1100, 256 F.3d 89 (2d Cir. 2001) (per curiam).   There the

20   arbitrator recognized binding Second Circuit case law but

21   deliberately refused to apply it, saying -- no doubt to the

22   astonishment of the parties -- "'Perhaps it is time for a new

23   court decision.'"   Id. at 91.   Because the arbitrator explicitly

24   rejected controlling precedent, we concluded that the arbitral

25   decision was rendered in manifest disregard of the law.    Id. at

26   93.




                                      14
1              "The manifest disregard doctrine is not confined to

2    that rare case in which the arbitrator provides us with explicit

3    acknowledgment of wrongful conduct, however."   Westerbeke, 304

4    F.3d at 218 (citing Halligan v. Piper Jaffray, Inc., 148 F.3d

5    197, 204 (2d Cir. 1998) ("[W]e doubt whether even under a strict

6    construction of the meaning of manifest disregard, it is

7    necessary for arbitrators to state that they are deliberately

8    ignoring the law."), cert. denied, 526 U.S. 1034 (1999)).   If the

9    arbitrator's decision "strains credulity" or "does not rise to

10   the standard of barely colorable," id. (citations, internal

11   quotation marks, and brackets omitted), a court may conclude that

12   the arbitrator "willfully flouted the governing law by refusing

13   to apply it," id. at 217.

14             There are three components to our application of the

15   "manifest disregard" standard.

16             First, we must consider whether the law
17             that was allegedly ignored was clear, and
18             in fact explicitly applicable to the
19             matter before the arbitrators. An
20             arbitrator obviously cannot be said to
21             disregard a law that is unclear or not
22             clearly applicable. Thus, misapplication
23             of an ambiguous law does not constitute
24             manifest disregard.

25             Second, once it is determined that the law
26             is clear and plainly applicable, we must
27             find that the law was in fact improperly
28             applied, leading to an erroneous outcome.
29             We will, of course, not vacate an arbitral
30             award for an erroneous application of the
31             law if a proper application of law would
32             have yielded the same result. In the same
33             vein, where an arbitral award contains
34             more than one plausible reading, manifest
35             disregard cannot be found if at least one

                                      15
1              of the readings yields a legally correct
2              justification for the outcome. Even where
3              explanation for an award is deficient or
4              non-existent, we will confirm it if a
5              justifiable ground for the decision can be
6              inferred from the facts of the case.

 7             Third, once the first two inquiries are
 8             satisfied, we look to a subjective
 9             element, that is, the knowledge actually
10             possessed by the arbitrators. In order to
11             intentionally disregard the law, the
12             arbitrator must have known of its
13             existence, and its applicability to the
14             problem before him. In determining an
15             arbitrator's awareness of the law, we
16             impute only knowledge of governing law
17             identified by the parties to the
18             arbitration. Absent this, we will infer
19             knowledge and intentionality on the part
20             of the arbitrator only if we find an error
21             that is so obvious that it would be
22             instantly perceived as such by the average
23             person qualified to serve as an
24             arbitrator.

25   Duferco, 333 F.3d at 389-90 (citations omitted).

26   B.   The Effect of Hall Street on
27        the "Manifest Disregard" Doctrine

28             We pause to consider whether a recent Supreme Court

29   decision, Hall Street Associates, L.L.C. v. Mattel, Inc., 128 S.

30   Ct. 1396 (2008), affects the scope or vitality of the "manifest

31   disregard" doctrine.   See Thomas E.L. Dewey & Kara Siegel, Room

32   for Error: 'Hall Street' and the Shrinking Scope of Judicial

33   Review of Arbitral Awards, N.Y.L.J., May 15, 2008, at 24

34   (commenting that Hall Street "appeared to question the validity"

35   of the manifest disregard doctrine).

36             There, the parties had entered into an arbitration

37   agreement that, unlike the FAA, provided for a federal court's de

                                     16
1    novo review of the arbitrator's conclusions of law.        Hall Street,

2    128 S. Ct. at 1400-01.    The Court rejected the parties' attempt

3    to contract around the FAA for expanded judicial review of

4    arbitration awards, concluding that the grounds for vacatur of an

5    arbitration award set forth in the FAA, 9 U.S.C. § 10, are

6    "exclusive."    Hall Street, 128 S. Ct. at 1401, 1403.      Although

7    the "manifest disregard" doctrine was not itself at issue, the

8    Hall Street Court nonetheless commented on its origins:

 9             The Wilco Court . . . remarked (citing FAA
10             § 10) that "[p]ower to vacate an
11             [arbitration] award is limited," and went
12             on to say that "the interpretations of the
13             law by the arbitrators in contrast to
14             manifest disregard [of the law] are not
15             subject, in the federal courts, to
16             judicial review for error in
17             interpretation."
18   Hall Street, 128 S. Ct. at 1403 (quoting Wilko, 346 U.S. at 436-

19   37) (citations omitted) (second, third, and fourth alterations in

20   Hall Street).

21             Maybe the term "manifest disregard" was
22             meant to name a new ground for review, but
23             maybe it merely referred to the § 10 grounds
24             collectively, rather than adding to them.
25             Or, as some courts have thought, "manifest
26             disregard" may have been shorthand for
27             § 10(a)(3) or § 10(a)(4), the subsections
28             authorizing vacatur when the arbitrators
29             were "guilty of misconduct" or "exceeded
30             their powers."
31   Id. at 1404 (citations omitted).         The Court declined to resolve

32   that question explicitly, noting instead that it had never

33   indicated, in Wilko or elsewhere, that "manifest disregard" was

34   an independent basis for vacatur outside the grounds provided in

35   section 10 of the FAA.    See id.
                                         17
1                In the short time since Hall Street was decided, courts

2    have begun to grapple with its implications for the "manifest

3    disregard" doctrine.   Some have concluded or suggested that the

4    doctrine simply does not survive.     See Ramos-Santiago v. United

5    Parcel Service, 524 F.3d 120, 124 n.3 (1st Cir. 2008) (dicta);

6    Robert Lewis Rosen Assocs., Ltd. v. Webb, 566 F.Supp.2d 228, 233

7    (S.D.N.Y. 2008); Prime Therapeutics LLC v. Omnicare, Inc., 555 F.

8    Supp. 2d 993, 999 (D. Minn. 2008); Hereford v. D.R. Horton, Inc.,

9    -- So. 2d --, No. 1070396, 2008 WL 4097594, *5, 2008 Ala. LEXIS

10   186, *12-*13 (Ala. Sept. 5, 2008).    Others think that "manifest

11   disregard," reconceptualized as a judicial gloss on the specific

12   grounds for vacatur enumerated in section 10 of the FAA, remains

13   a valid ground for vacating arbitration awards.    See MasTec N.

14   Am., Inc. v. MSE Power Sys., Inc., No. 1:08-cv-168, 2008 WL

15   2704912, at *3, 2008 U.S. Dist. LEXIS 52205, at *8-9 (N.D.N.Y.

16   July 8, 2008); Chase Bank USA, N.A. v. Hale, 859 N.Y.S.2d 342,

17   349 (Sup. Ct. N.Y. County 2008).

18               We agree with those courts that take the latter

19   approach.    The Hall Street Court held that the FAA sets forth the

20   "exclusive" grounds for vacating an arbitration award.      Hall

21   Street, 128 S. Ct. at 1403.    That holding is undeniably

22   inconsistent with some dicta by this Court treating the "manifest

23   disregard" standard as a ground for vacatur entirely separate

24   from those enumerated in the FAA.     See, e.g., Hoeft, 343 F.3d at

25   64 (describing manifest disregard as "an additional ground not

26   prescribed in the [FAA]"); Duferco, 333 F.3d at 389 (observing

                                      18
1    that the doctrine's use is limited to instances "where none of

2    the provisions of the FAA apply"); DiRussa v. Dean Witter

3    Reynolds Inc., 121 F.3d 818, 821 (2d Cir. 1997) (referring to the

4    doctrine as "judicially-created"), cert. denied, 522 U.S. 1049

5    (1998); Merrill Lynch, Pierce, Fenner & Smith, Inc., 808 F.2d at

6    933 (same).8   But the Hall Street Court also speculated that "the

7    term 'manifest disregard' . . . merely referred to the § 10

8    grounds collectively, rather than adding to them" -- or as

9    "shorthand for § 10(a)(3) or § 10(a)(4)."   Hall Street, 128 S.

10   Ct. at 1404.   It did not, we think, abrogate the "manifest

11   disregard" doctrine altogether.9

12             We agree with the Seventh Circuit's view expressed

13   before Hall Street was decided:
14             It is tempting to think that courts are
15             engaged in judicial review of arbitration
16             awards under the Federal Arbitration Act,
17             but they are not. When parties agree to


          8
            But see I/S Stavborg, 500 F.2d at 431 (2d Cir. 1974) ("But
     perhaps the rubric 'manifest disregard' is after all not to be
     given independent significance; rather it is to be interpreted
     only in the context of the specific narrow provisions of 9 U.S.C.
     §§ 10 & 11 . . . ." (footnote omitted)); Amicizia Societa
     Navegazione v. Chilean Nitrate & Iodine Sales Corp., 274 F.2d
     805, 808 (2d Cir.) ("It is true that an award may be vacated
     where the arbitrators have 'exceeded their powers.' 9 U.S.C. §
     10(d). Apparently relying upon this phrase, the Supreme Court in
     Wilko v. Swan suggested that an award may be vacated if in
     'manifest disregard' of the law."), cert. denied, 363 U.S. 843
     (1960) (internal citation omitted).
          9
            Cf. State Employees Bargaining Agent Coal. v. Rowland, 494
     F.3d 71, 84, 86 (2d Cir. 2007) (adhering to Circuit precedent
     despite the Supreme Court having "cryptically cast doubt" on
     prior holdings, noting that "[w]e are bound by our own precedent
     unless and until its rationale is overruled, implicitly or
     expressly, by the Supreme Court or this court en banc" (citation
     and internal quotation marks omitted)).
                                     19
 1             arbitrate their disputes they opt out of the
 2             court system, and when one of them
 3             challenges the resulting arbitration award
 4             he perforce does so not on the ground that
 5             the arbitrators made a mistake but that they
 6             violated the agreement to arbitrate, as by
 7             corruption, evident partiality, exceeding
 8             their powers, etc. -- conduct to which the
 9             parties did not consent when they included
10             an arbitration clause in their contract.
11             That is why in the typical arbitration . . .
12             the issue for the court is not whether the
13             contract interpretation is incorrect or even
14             wacky but whether the arbitrators had failed
15             to interpret the contract at all, for only
16             then were they exceeding the authority
17             granted to them by the contract's
18             arbitration clause.
19   Wise v. Wachovia Sec., LLC, 450 F.3d 265, 269 (7th Cir.)

20   (citations omitted), cert. denied, 127 S. Ct. 582 (2006).    This

21   observation is entirely consistent with Hall Street.   And it

22   reinforces our own pre-Hall Street statements that our review for

23   manifest disregard is "severely limited," "highly deferential,"

24   and confined to "those exceedingly rare instances" of "egregious

25   impropriety on the part of the arbitrators."    Duferco, 333 F.3d

26   at 389.

27             Like the Seventh Circuit, we view the "manifest

28   disregard" doctrine, and the FAA itself, as a mechanism to

29   enforce the parties' agreements to arbitrate rather than as

30   judicial review of the arbitrators' decision.   We must therefore

31   continue to bear the responsibility to vacate arbitration awards

32   in the rare instances in which "the arbitrator knew of the

33   relevant [legal] principle, appreciated that this principle

34   controlled the outcome of the disputed issue, and nonetheless

35   willfully flouted the governing law by refusing to apply it."
                                    20
1    Westerbeke, 304 F.3d at 217.    At that point the arbitrators have

2    "failed to interpret the contract at all," Wise, 450 F.3d at 269,

3    for parties do not agree in advance to submit to arbitration that

4    is carried out in manifest disregard of the law.    Put another

5    way, the arbitrators have thereby "exceeded their powers, or so

6    imperfectly executed them that a mutual, final, and definite

7    award upon the subject matter submitted was not made."    9 U.S.C.

8    § 10(a)(4).

 9   C.   Analysis of Stolt-Nielsen's
10        "Manifest Disregard" Claim

11              If we were of the view that Hall Street, decided after

12   the district court granted the petition in this case, eliminated

13   "manifest disregard" review altogether, our inquiry would be at

14   an end.   We would be required to send this matter back to the

15   district court for it to dismiss the petition on that ground.

16   But in light of our conclusion that the "manifest disregard"

17   doctrine survives Hall Street, we must instead decide whether the

18   district court's finding of "manifest disregard" was correct.10

19              1.   Review of the District Court's Opinion.   According

20   to the district court, the arbitration panel went astray when it

21   "failed to make any meaningful choice-of-law analysis."    Stolt-

22   Nielsen, 435 F. Supp. 2d at 385.



          10
             We undertake this task cognizant of the fact that the
     district court did not have the benefit of the Hall Street
     decision and its requirement that courts adhere scrupulously to a
     narrow, FAA-tethered view of their authority to vacate
     arbitration awards based on manifest disregard of the law.

                                      21
1               In actuality, the choice of law rules in this
2               situation are well established and clear cut.
3               Because the arbitration clauses here in issue
4               are part of maritime contracts, they are
5               controlled in the first instance by federal
6               maritime law.
7    Id.   Because the arbitrators failed to recognize that the dispute

8    was governed by federal maritime law, the district court

9    reasoned, they ignored the "established rule of maritime law"

10   that the interpretation of contracts "is . . . dictated by custom

11   and usage."     Id. at 385-86.    Even under state law, the arbitral

12   panel was required to interpret contracts in light of "industry

13   custom and practice."     Id. at 386 (citation and internal

14   quotation marks omitted).     The district court concluded that, had

15   the arbitration panel followed these well-established canons,

16              the [p]anel would necessarily have found for
17              Stolt, since, as the [p]anel itself noted,
18              Stolt presented uncontested evidence that the
19              clauses here in question had never been the
20              subject of class action arbitration.

21   Id. (emphasis in original).

22              Had the district court been charged with reviewing the

23   arbitration panel's decision de novo, we might well find its

24   analysis persuasive.     See Westerbeke, 304 F.3d at 216 n.10.   But

25   the errors it identified do not, in our view, rise to the level

26   of manifest disregard of the law.

27              a.     Choice of Law

28              First, the arbitral panel did not "manifestly

29   disregard" the law in engaging in its choice-of-law analysis.

30   See Stolt-Nielsen, 435 F. Supp. 2d at 385-86.


                                         22
1              The "manifest disregard" standard requires that the

2    arbitrators be "fully aware of the existence of a clearly defined

3    governing legal principle, but refuse[] to apply it, in effect,

4    ignoring it."   Duferco, 333 F.3d at 389.   "In determining an

5    arbitrator's awareness of the law, we impute only knowledge of

6    governing law identified by the parties to the arbitration."     Id.

7    at 390.

8              Stolt-Nielsen's brief to the arbitration panel referred

9    to choice-of-law principles in a single footnote without citing

10   supporting case law.   It then assured the panel that the issue

11   was immaterial:

12             Claimants argue that the law of New York
13             governs these contracts . . . . We believe,
14             to the contrary, that because these are
15             federal maritime contracts, federal maritime
16             law should govern. The Tribunal need not
17             decide this issue, however, because the
18             analysis is the same under either.

19   Stolt-Nielsen's Arbitration Br. 7 n.13.     This concession bars us

20   from concluding that the panel manifestly disregarded the law by

21   not engaging in a choice-of-law analysis and expressly

22   identifying federal maritime law as governing the interpretation

23   of the charter party language.11

24             We are not convinced that the arbitral panel, in any

25   event, "failed to make any meaningful choice-of-law analysis."



          11
            Had the arbitrators looked to the charter parties
     themselves for a choice-of-law provision, as of course they may
     have, they would have found none. See Stolt-Nielsen, 435 F.
     Supp. 2d at 385 n.2.

                                        23
1    Even where an arbitrator's explanation for an award is deficient,

2    we must confirm it if a justifiable ground for the decision can

3    be inferred from the record.   See Bear, Stearns & Co. v. 1109580

4    Ontario, Inc., 409 F.3d 87, 91 (2d Cir. 2005); Duferco, 333 F.3d

5    at 390; see also Wallace, 378 F.3d at 190 (2d Cir. 2004) ("[A]

6    court reviewing an arbitral award cannot presume that the

7    arbitrator is capable of understanding and applying legal

8    principles with the sophistication of a highly skilled

9    attorney.").   The first paragraph of the arbitrators' discussion

10   of the law states that they "must look to the language of the

11   parties' agreement to ascertain the parties' intention whether

12   they intended to permit or to preclude class action.   This

13   is . . . consistent with New York law . . . and with federal

14   maritime law."   Clause Construction Award 4.   Although the panel

15   did not use the term "choice of law," it is a plausible reading

16   of the award decision that the panel intended to interpret the

17   charter parties according to the rules of both New York State law

18   and federal maritime law –- each of which, the panel thought,




                                     24
1    would render the same result.12    That is what Stolt-Nielsen had

2    asked it to do.

3              b.      Federal Maritime Rule of Construction

4              Second, the arbitration panel did not manifestly

5    disregard the law with respect to an established "rule" of

6    federal maritime law.    See Stolt-Nielsen, 435 F. Supp. 2d at 386.

7              Although the district court's opinion states that the

8    interpretation of maritime contracts "is very much dictated by

9    custom and usage," id. at 385-86, custom and usage is more of a

10   guide than a rule, see Great Circle Lines, Ltd. v. Matheson &

11   Co., 681 F.2d 121, 125 (2d Cir. 1982) ("Certain long-standing

12   customs of the shipping industry are crucial factors to be

13   considered when deciding whether there has been a meeting of the

14   minds on a maritime contract."); Schoonmaker-Conners Co. v.

15   Lambert Transp. Co., 269 F. 583, 585 (2d Cir. 1920) ("While

16   maritime contracts or their interpretation are probably more



          12
             We find it instructive that under New York choice-of-law
     principles,
               the first question to resolve in determining
               whether to undertake a choice of law
               analysis is whether there is an actual
               conflict of laws. It is only when it can be
               said that there is no actual conflict that
               New York will dispense with a choice of law
               analysis.
     Fieger v. Pitney Bowes Credit Corp., 251 F.3d 386, 393 (2d Cir.
     2001) (citations and internal quotation marks omitted). Another
     plausible reading of the arbitration award, then, is that the
     panel concluded there was no need to make a "choice of law"
     between federal maritime law and New York law because there was
     no actual conflict of laws in the case before it.

                                       25
1    subject to the influence of usage or general custom than most

2    other agreements, yet they are and a charter is a contract like

3    another, subject to the same general rules and leading to the

4    same liabilities."); Samsun Corp. v. Khozestan Mashine Kar Co.,

5    926 F. Supp. 436, 439 (S.D.N.Y. 1996) ("[E]stablished practices

6    and customs of the shipping industry inform the court's analysis

7    of what the parties agreed to.").13   Thus, although the custom

8    and usage rule is "clear and plainly applicable" as a general

9    matter in disputes over the meaning of charter parties, Duferco,

10   333 F.3d at 390, it should "be considered," "influence"

11   interpretation, and "inform the court's analysis."   It does not

12   govern the outcome of each case.

13              Indeed, Stolt-Nielsen cites no decision holding that a

14   federal maritime rule of construction specifically precludes

15   class arbitration where a charter party's arbitration clause is

16   silent.   Cf. Bazzle v. Green Tree Fin. Corp. ("Bazzle I"), 569

17   S.E.2d 349, 360 (S.C. 2002) (holding as a matter of state law

18   that "class-wide arbitration may be ordered when the arbitration

19   agreement is silent"), vacated on other grounds, 539 U.S. 444

20   (2003).   To the contrary, during oral argument before the

21   arbitration panel, counsel for Stolt-Nielsen conceded that the




          13
             According to Stolt-Nielsen's submission to the
     arbitration panel, "both New York state law and federal maritime
     law allow a court or arbitrator to examine the negotiating
     history and the context in which the contract was executed in
     order to ascertain the parties' intent." Stolt-Nielsen's
     Arbitration Br. 15 (emphasis added).

                                     26
1    interpretation of the charter parties in this case was an issue

2    of first impression.

3              Stolt-Nielsen's challenge to the Clause Construction

4    Award therefore boils down to an argument that the arbitration

5    panel misinterpreted the arbitration clauses before it because

6    the panel misapplied the "custom and usage" rule.   But we have

7    identified an arbitrator's interpretation of a contract's terms

8    as an area we are particularly loath to disturb.    See Westerbeke,

9    304 F.3d at 214 ("The arbitrator's factual findings and

10   contractual interpretation are not subject to judicial challenge,

11   particularly on our limited review of whether the arbitrator

12   manifestly disregarded the law."); id. at 222 (holding that

13   "vacatur for manifest disregard of a commercial contract is

14   appropriate only if the arbitral award contradicts an express and

15   unambiguous term of the contract or if the award so far departs

16   from the terms of the agreement that it is not even arguably

17   derived from the contract" (emphases added)); John T. Brady & Co.

18   v. Form-Eze Sys., Inc., 623 F.2d 261, 264 (2d Cir.) ("This court

19   has generally refused to second guess an arbitrator's resolution

20   of a contract dispute."), cert. denied, 449 U.S. 1062 (1980).

21             As for whether the panel misapplied the "custom and

22   usage" rule, we have held that "the misapplication . . . of . . .

23   rules of contract interpretation does not rise to the stature of

24   a 'manifest disregard' of law."    Amicizia Societa Navegazione v.

25   Chilean Nitrate & Iodine Sales Corp., 274 F.2d 805, 808 (2d

26   Cir.), cert. denied, 363 U.S. 843 (1960).   And determinations of

                                       27
1    custom and usage are findings of fact, Mentor Ins. Co. (U.K.) v.

2    Brannkasse, 996 F.2d 506, 513 (2d Cir. 1993), which federal

3    courts may not review even for manifest disregard, Wallace, 378

4    F.3d at 193.

5              The arbitration panel, after summarizing Stolt-

6    Nielsen's argument with respect to custom and usage,

7    "acknowledge[d] the forcefulness with which [it was] presented,"

8    but concluded that it failed to "establish that the parties to

9    the charter agreements intended to preclude class arbitration."

10   Clause Construction Award 7.    The panel thus considered Stolt-

11   Nielsen's arguments and found them unpersuasive.    Its conclusion

12   does not "contradict[] an express and unambiguous term of the

13   contract or . . . so far depart[] from the terms of the agreement

14   that it is not even arguably derived from the contract."

15   Westerbeke, 304 F.3d at 222.    It therefore did not evidence

16   manifest disregard of the law.

17             c.     State Law
18             Third, the arbitration panel did not manifestly

19   disregard New York State law.    See Stolt-Nielsen, 435 F. Supp. 2d

20   at 387.

21             The district court noted that New York State law, much

22   like federal maritime law, requires courts to interpret ambiguous

23   contracts by reference to "industry custom and practice," id.

24   (citation and internal quotation marks omitted); it takes a

25   "narrow view of what can be read into a contract by implication,"

26   id. at 387.    The district court concluded that to whatever extent

                                      28
1    state law applied, it would require the arbitration panel to

2    construe the arbitration clauses not to permit arbitration on

3    behalf of a class.    Id.

4              We agree with the district court's observation that

5    state law follows a "custom and practice" canon of construction

6    where the terms of a contract are ambiguous.    See Evans v. Famous

7    Music Corp., 1 N.Y.3d 452, 459-60, 775 N.Y.S.2d 757, 762, 807

8    N.E.2d 869, 873 (2004).14   But it is also state law that the

9    courts'

10             role in interpreting a contract is to
11             ascertain the intention of the parties at
12             the time they entered into the contract. If
13             that intent is discernible from the plain
14             meaning of the language of the contract,
15             there is no need to look further. This may
16             be so even if the contract is silent on the
17             disputed issue.
18   Id. at 458.   Here, the arbitration panel may have concluded that

19   even though the arbitration clauses are silent on the disputed

20   issue of whether class arbitration is permitted, their silence

21   bespeaks an intent not to preclude class arbitration.    That

22   reading, which is at least "colorable," is consistent with Evans.

23             The district court also cited myriad New York cases

24   that take a narrow view of what can be read into a contract or

25   arbitration clause by implication.    See Stolt-Nielsen, 435 F.

26   Supp. 2d at 386-87.    But none of these cases purports to

27   establish a rule regarding the interpretation of an arbitration



          14
            Evans was cited in AnimalFeeds's arbitration brief, in the
     Clause Construction Award, and in the district court's opinion.
     See Stolt-Nielsen, 435 F. Supp. 2d at 386.
                                     29
1    clause that is silent on the issue of class arbitration.      Indeed,

2    the cases largely beg the question whether contractual silence

3    means that the parties did not intend to allow class actions or

4    did not intend to bar them.    Because no state-law rule of

5    construction clearly governs the question of whether class

6    arbitration is permitted by an arbitration clause that is silent

7    on the subject, the arbitrators' decision construing such silence

8    to permit class arbitration in this case is not in manifest

9    disregard of the law.   See Cheng v. Oxford Health Plans, Inc., 45

10   A.D.3d 356, 357, 846 N.Y.S.2d 16, 17-18 (1st Dep't 2007) (per

11   curiam) (determining arbitration panel did not exhibit manifest

12   disregard of law when it concluded that "defendants could not

13   successfully demonstrate that New York law prohibited class

14   arbitrations").

15             2.   Stolt-Nielsen's Glencore/Boeing Argument.   The

16   district court did not reach another argument made by Stolt-

17   Nielsen in support of vacating the Clause Construction Award for

18   manifest disregard of the law.    According to Stolt-Nielsen, this

19   court's decisions in Glencore, Ltd. v. Schnitzer Steel Products,

20   189 F.3d 264 (2d Cir. 1999), and United Kingdom v. Boeing Co.,

21   998 F.2d 68 (2d Cir. 1993), along with the Seventh Circuit's

22   decision in Champ v. Siegel Trading Co., 55 F.3d 269 (7th Cir.

23   1995), prohibit class arbitration unless expressly provided for

24   in an arbitration agreement.    These cases do lend support to

25   Stolt-Nielsen's underlying argument regarding the correct

26   interpretation of the arbitration clauses at issue.    We do not

                                      30
1    think, however, that they establish law that is so clearly and

2    plainly applicable that we are compelled to conclude that the

3    arbitration panel willfully ignored it, thereby manifestly

4    disregarding the law.

5               In Boeing, the United Kingdom was a party to two

6    distinct contracts with two different parties giving rise to two

7    separate arbitration proceedings.      Boeing, 998 F.2d at 69.

8    Because the two disputes arose from a single incident, the

9    district court, on the motion of the United Kingdom, ordered

10   consolidation of the arbitration proceedings even though neither

11   arbitration clause expressly permitted consolidation.       Id.   We

12   reversed, because "a district court cannot order consolidation of

13   arbitration proceedings arising from separate agreements to

14   arbitrate absent the parties' agreement to allow such

15   arbitration."   Id.

16              The facts of Glencore are similar.       The petitioner was

17   involved in two separate arbitration proceedings arising from

18   separate contracts with two different parties.       Glencore, 189

19   F.3d at 265-66.   The district court in that case refused to

20   consolidate the arbitration proceedings but ordered a joint

21   hearing.   Id. at 266.   Again we reversed, because "Boeing's

22   conclusion that there is no source of authority in either the FAA

23   or the Federal Rules of Civil Procedure for the district court to

24   order consolidation absent authority granted by the contracts

25   giving rise to the arbitrations applies with equal force to a

26   court's order of joint hearing."      Id. at 267.

                                      31
1              In Champ, the Seventh Circuit affirmed a district

2    court's order denying class arbitration where the arbitration

3    agreements were silent on that issue.     Champ, 55 F.3d at 277.

4    The court relied in large part on our decision in Boeing

5    prohibiting consolidation under such circumstances; it "f[ou]nd

6    no meaningful basis to distinguish between the failure to provide

7    for consolidated arbitration and class arbitration."     Id. at 275.

8              These decisions are not binding in this case.     After

9    they were decided, the Supreme Court ruled in Green Tree

10   Financial Corp. v. Bazzle ("Bazzle II"), 539 U.S. 444 (2003),

11   that when the parties agree to arbitrate, the question whether

12   the agreement permits class arbitration is generally one of

13   contract interpretation to be determined by the arbitrators, not

14   by the court.   Id. at 452-53.   Boeing, Glencore, and Champ had

15   been grounded in federal arbitration law to the effect that the

16   FAA itself did not permit consolidation, joint hearings, or class

17   representation absent express provisions for such proceedings in

18   the relevant arbitration clause.      See Glencore, 189 F.3d at 267;

19   Champ, 55 F.3d at 275; Boeing, 998 F.2d at 71.     Bazzle II

20   abrogated those decisions to the extent that they read the FAA to

21   prohibit such proceedings.   See Bazzle II, 539 U.S. at 454-55

22   (Stevens, J., concurring) ("[t]here is nothing in the Federal

23   Arbitration Act that precludes . . . the Supreme Court of South

24   Carolina" from determining "as a matter of state law that class-

25   action arbitrations are permissible if not prohibited by the

26   applicable arbitration agreement").     After Bazzle II, arbitrators

                                      32
1    must approach such questions as issues of contract interpretation

2    to be decided under the relevant substantive contract law.      See

3    id. at 450 (noting that state law normally governs contract

4    interpretation).

5              Boeing, Glencore, and Champ are instructive insofar as

6    they view the silence of an arbitration clause regarding

7    consolidation, joint hearings, and class arbitration as

8    disclosing the parties' intent not to permit such proceedings.

9    See Glencore, 189 F.3d at 267 ("There is nothing in the terms of

10   the agreements before the district court that provided for joint

11   hearing."); Champ, 55 F.3d at 275 ("The parties' arbitration

12   agreement makes no mention of class arbitration."); Boeing, 998

13   F.2d at 74 ("If contracting parties wish to have all disputes

14   that arise from the same factual situation arbitrated in a single

15   proceeding, they can simply provide for consolidated arbitration

16   in the arbitration clauses to which they are a party.").   But

17   they do not represent a governing rule of contract interpretation

18   under federal maritime law or the law of New York.   And it is the

19   governing rules of contract interpretation that arbitrators must

20   consult according to Bazzle II.

21             As noted, Stolt-Nielsen has cited no federal maritime

22   law or New York State law establishing a rule of construction

23   prohibiting class arbitration where the arbitration clause is

24   silent on that issue.15   The arbitration panel's decision to

          15
             Nor is Champ adhered to in every jurisdiction. See Jean
     R. Sternlight, As Mandatory Binding Arbitration Meets the Class
     Action, Will the Class Action Survive?, 42 Wm. & Mary L. Rev. 1,
                                     33
1    construe the contract language at issue here to permit class

2    arbitration was therefore not in manifest disregard of the law.

3              IV.   Stolt-Nielsen's Claim That the Arbitrators
4                    Exceeded Their Authority

5              In addition to asserting that the arbitration panel

6    acted in manifest disregard of the law, Stolt-Nielsen contends

7    that the arbitration panel "exceeded its authority."   Appellees'

8    Br. 18.   Although the district court did not reach this claim, it

9    was preserved for appeal.16

10             The FAA provides for vacatur of arbitration awards

11   "where the arbitrators exceeded their powers."   9 U.S.C.

12   § 10(a)(4).   We may disregard, in this instance, the post-Hall

13   Street view that arbitrators may "exceed their powers" when they

14   manifestly disregard the law; we have rejected Stolt-Nielsen's

15   "manifest disregard" claim.   The remainder of "[o]ur inquiry

16   under § 10(a)(4) . . . focuses on whether the arbitrators had the

17   power, based on the parties' submissions or the arbitration




     67-69 & n.260 (2000)(noting that state courts in California and
     Pennsylvania have allowed class arbitration "even though the
     arbitration clause is silent"); see also Keating v. Superior
     Court, 31 Cal.3d 584, 613, 183 Cal. Rptr. 360, 378, 645 P.2d
     1192, 1210 (1982), rev'd on other grounds sub nom. Southland
     Corp. v. Keating, 465 U.S. 1 (1984); Dickler v. Shearson Lehman
     Hutton, Inc., 408 Pa. Super. 286, 296, 596 A.2d 860, 864-65
     (Super. Ct. 1991).
          16
             We perceive no need to remand for the district court    to
     consider this claim in the first instance, as it has been
     briefed, entails no findings of fact, and is a pure question    of
     law we review de novo. See Ohio Bureau of Employment Servs.     v.
     Hodory, 431 U.S. 471, 482 (1977); United States v. Canfield,    212
     F.3d 713, 721 (2d Cir. 2000).

                                     34
1    agreement, to reach a certain issue, not whether the arbitrators

2    correctly decided that issue."   DiRussa, 121 F.3d at 824; see

3    also Hoeft, 343 F.3d at 71; Westerbeke, 304 F.3d at 219-20.

4              Here, the arbitration panel clearly had the power to

5    reach the issue of whether the Vegoilvoy agreement permitted

6    class arbitration.   The parties expressly agreed that the

7    arbitration panel "shall follow and be bound by Rules 3 through 7

8    of the American Arbitration Association's Supplementary Rules for

9    Class Arbitrations," Class Arbitration Agreement 3.     Rule 3 of

10   the Supplementary Rules provides that "the arbitrator shall

11   determine as a threshold matter, in a reasoned, partial final

12   award on the construction of the arbitration clause, whether the

13   applicable arbitration clause permits the arbitration to proceed

14   on behalf of or against a class."     Because the parties

15   specifically agreed that the arbitration panel would decide

16   whether the arbitration clauses permitted class arbitration, the

17   arbitration panel did not exceed its authority in deciding that

18   issue –- irrespective of whether it decided the issue correctly.

19                               CONCLUSION
20             For the foregoing reasons, the judgment of the district

21   court is reversed and the cause remanded to the district court

22   with instructions to deny the petition to vacate.17


          17
             Because we reverse the district court's "manifest
     disregard" holding and reject Stolt-Nielsen's claim that the
     arbitrators exceeded their authority, we need not and do not
     consider AnimalFeeds's assertion that denial of the petition is
     required on public policy grounds, viz., that class arbitration
     is necessary to vindicate important statutory rights under the
     Sherman Antitrust Act.

                                      35
