... If the parties fail to reach settlement of their dispute, controversy or claim by means of negotiations, such dispute, controversy or claim shall be referred to arbitration in Tampa, Florida in accordance with the rules of the Society of Marine Arbitrators (hereinafter referred to as "the SMA") and the procedures set forth below.... The dispute shall be settled by a sole arbitrator..., on the basis of the provisions of the present Contract as well as the laws of the State of Florida. The award shall be rendered in accordance with the Arbitration Rules of the SMA and be final and binding upon both parties. The award shall contain the amount and the apportionment of the Arbitration costs.
Thus, the SMA Arbitration Rules govern the proceeding and the laws of Florida, as well as the terms of the Contracts, govern the dispute. (The parties waived the requirement that the arbitration hearing take place in Tampa.)
First, Claimant moved to exclude certain evidence — including any evidence relating to the defenses of "price protection," and delayed or defective product — on the basis of the parol evidence rule. I denied the motion, noting that the substantive implication of granting said motion would be to "gut" the defense of Respondent and that I was not willing to do so just before the hearing. I also noted that "Section 21 of the SMA Arbitration Rules states that the ‘rules of evidence used in judicial proceedings need not be applied;’ although the parol evidence rule is not viewed as an evidentiary rule, Section 21 reflects a leniency with respect to the admission of evidence that will be applied with respect to this issue." Finally, however, I reserved on the issue of whether the Contract should be interpreted and applied without any reference to parol or extrinsic evidence, particularly when such evidence is allegedly being introduced to contradict a clear term in the Contract.
Second, Claimant moved that the scope of the hearing not include any counter-claims based on the theories of "price protection," delayed product or defective product. I granted the motion to the extent of disallowing any counter-claims on these theories, but I did not preclude Respondent from litigating defenses based on such theories (subject to the above reservation regarding the applicability of the parol evidence rule) and from seeking offsets on these theories. The basis of this ruling was that Respondent never gave notice - prior to its pre-hearing memorandum, served on August 30, 2018 - that it was litigating any counter-claims or affirmatively seeking damages.
Third, Claimant moved to exclude the testimony (on behalf of WS AG) of Joginder Saini on the basis that Saini’s testimony would be parol evidence and would otherwise be irrelevant. Respondent described Saini as a fact witness who would be testifying to the issue of the "price protection" he allegedly received from WS AG. I denied this motion, subject to Saini only testifying as a fact witness to his own experience and subject to the above reservation regarding the applicability of the parol evidence rule.
1. During the hearing, I allowed into evidence the just referenced contracts between the parties that were not put at issue by Claimant. ECTUS objected only on the basis that these contracts constitute parol evidence as they were being introduced to contradict the terms of the Contracts upon which Claimants did sue. I reserved on the parol evidence objection, as I had prior to the hearing, and allowed the contracts offered by Respondent to be made part of the record and allowed Ms. Ganske to testify to them.
2. I also allowed into the record the documents that Respondent attached to the contracts that came from its files and related to the transaction reflected in the contract. These documents were arguably business records so Claimant did not object on the basis of hearsay, but objected on the basis that they were parol evidence. I reserved on the parol evidence objection and allowed the documents to be made part of the record and allowed Ms. Ganske to testify to them.
3. The contracts, and attachments, are WS AG Exhibits 1 to 73.
4. Many of the particular versions of the contracts referenced in the prior paragraphs did not have the signature of either one or the other or both parties. (Respondent argued that the absence of the signature reflected the fact that the course of dealing of the parties did not attach much importance to written contracts.) I allowed Claimant, after the hearing, to put into evidence other versions of the same contracts with the signatures of both parties. (I note below the significance of the fact that all these contracts did appear to have been executed.) These executed versions of contracts in WS AG Exhibits 1 to 73 are ECTUS Exhibits 30 to 84.
5. Many of the contracts referenced in paragraph 1 had notes on them written by Ms. Ganske for purposes of this hearing regarding the circumstances of the contract. Some of these notes consisted of dates taken from the contract itself or the documents attached to it; some of the notes reflected her own conclusions. In response to an objection by Claimant at the beginning of the hearing, I allowed the notes to be used by Ms. Ganske during her testimony to refresh her recollection, if she needed them for that purpose, and reserved on the objections to admissibility based on lack of foundation and hearsay. I also reserved, as also noted above with respect to the contracts and the other documents offered by Respondent, on an objection to the notes based on the notes being parol evidence.
6. Ms. Ganske used the notes to refresh her recollection with respect to some of the contracts. In order to shorten her testimony, as the two-day hearing was coming to an end, Respondent again moved to have the notes admitted as evidence of the course of dealing between the parties (and that these exhibits be reviewed by the Arbitrator independently of Ms. Ganske’s testimony). Claimant objected on grounds of parol evidence, relevancy, and as being outside the scope of the arbitration; while Claimant also objected on grounds of hearsay, it acknowledged that the notes were not subject to a hearsay objection to the extent that they were "consistent with the backup" documentation they summarized. I ruled that the notes were admissible, subject to a) the understanding that her conclusions in the notes represent only her conclusions — in other words, that this is how she would testify had she the time to testify on all of the contracts Respondent offered — and b) the objection to the notes based on the notes being parol evidence, on which I reserved.
7. After the hearing, Respondent sought to have admitted additional notes and other documents in order to supplement the record regarding the alleged course of dealing between the parties. In response to an objection, by email dated September 23, 2018, I ruled that:
"At the end of the hearing on September 7, 2018, and after discussion among counsel and the Arbitrator, I formally closed the record, subject to only one exception — the submission by EuroChem [ECTUS] of the executed versions of the same contracts that had previously been submitted by WS AG.... Accordingly, because the record was closed, the exhibits newly submitted by WS AG are not admitted into the record.... (But, note, as discussed, one possible outcome of this matter is that a) I rule against [ECTUS] on the parol evidence issue and b) re-open the record for more evidence by WS AG regarding off-sets. I am not signaling that this is the likely outcome, but just affirming the off-the-record discussion we had on this issue towards the end of the September 7 session (as well as the meaning of the reference in the transcript that "all issues" should be briefed). As noted, it is also possible that I will rule that either [ECTUS] is correct on the parol evidence issue and/or WS AG had the opportunity to put in its necessary proof at the hearing on the offsets but did not do so.)"
Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented:
(1) By course of dealing or usage of trade (s. 671,205) or by course of performance (s. 672,208); and
(2) By evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.
Fla. Stat. § 672,202.
1. Claimant has established liability against WS AG on Claimant’s claim for breach of contract under the nine Contracts and, alternatively, under Claimant’s claim for account stated;
2. Claimant’s request for liquidated damages is denied;
3. Claimant is entitled to compensatory damages of $14,283,519.42;
4. Claimant is entitled to pre-judgment interest on the $14,283,519.42. This pre-judgment interest is to be calculated pursuant to sections 687.01 and 55.03 of the Florida Statutes, at the statutory interest rate of 6.09%, commencing from June 1, 2017 until the effective date of this Partial Final Award. Claimant is to provide the Arbitrator with a calculation of how much interest accrues each day. Claimant is also entitled to said prejudgment interest from the effective date of this Partial Final Award until the date of confirmation of what will be a Final Award or until the date of payment, whichever is sooner;
5. If Claimant wishes to seek reimbursement of its attorneys’ fees and costs, it shall submit a brief, on or before fourteen (14) calendar days after the actual issuance by JAMS of this Partial Final Award, explaining the basis of its entitlement to same, setting forth the specific amounts claimed and explaining why said amount is reasonable. Respondent may respond (both to the request for reimbursement of Claimant’s attorneys’ fees and costs, and to Claimant’s calculation of pre-judgment interest, on or before fourteen (14) calendar days after the service on it by Claimant of the just described submission. No reply shall be filed unless leave is given to Claimant to file a reply, nor shall oral argument be had unless requested by the Arbitrator; and
6. All other claims, by either party, are denied.
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