Southern District of New York Confirms Arbitration Award Finding Force Majeure Clause Did Not Apply to Excuse Performance Under Charter

Pioneer Navigation Ltd. entered into a charter contract with Chemical Equipment Labs Inc. to ship road salt from Venezuela to the United States. The charter contained a force majeure clause and an arbitration clause. The vessel bearing the road salt shipment that was the subject of the charter never received authorization to depart from Venezuela. Chemical Equipment Labs communicated to Pioneer that it believed the Venezuelan government's failure to authorize the salt shipment constituted a force majeure event that excused its performance under the charter. Pioneer disagreed and initiated arbitration.

In a 2-1 decision, the arbitration panel majority found in favor of Pioneer, noting that the "record of events ... is replete with on-scene references to the lack of proper export documentation as the reason for the stoppage and offloading of the Vessel's cargo." Thus, the majority concluded that the force majeure clause did not apply because Chemical Equipment Labs did not "carr[y] its burden of establishing that an export permit and authorization were in place for this shipment and that the facts and circumstances leading to the Venezuelan Authorities' intervention were not unforeseeable and not beyond its control."

Pioneer then petitioned to confirm, and Chemical Equipment Labs moved to vacate, the arbitration award. The magistrate judge issued a report and recommendation recommending that Pioneer's petition be granted and Chemical Equipment Labs' motion be denied. Chemical Equipment Labs objected to the report and recommendation and largely recycled arguments that it made before the magistrate judge. Because the magistrate judge's thorough and well-reasoned report and recommendation did not misstate the law or otherwise contain clear error, the district judge granted Pioneer's petition to confirm the arbitration award, denied Chemical Equipment Labs' motion to vacate the arbitration award, and confirmed the final award.

Pioneer Navigation Ltd. v. Chemical Equipment Labs, Inc., No. 1:19-cv-02938 (S.D.N.Y. Mar. 3, 2020).