On May 28, 1987, ANERA and ISAI entered into such a service contract, SC No. 656/87 ("the Service Contract"), on behalf of the eight participating members, including Pacific Champion. Under the Service Contract, ISAI agreed to ship and ANERA agreed to carry a minimum of 1,000 FEUs of mixed commodities from ports in the Far East to several ports or points in the United States during the period from May 30, 1987, to May 29, 1988. ISAI agreed to pay a deficit charge -- deadfreight liability -- of $ 1,435 per FEU if it did not meet 85% of its minimum quantity commitment of 1,000 FEUs.
On May 29, 1988, when the Service Contract expired, ISAI had shipped only 307.75 FEUs, thus failing to meet 85% of its minimum quantity commitment. In October of 1989, ISAI was notified that it owed ANERA $ 993,378.75 in deadfreight liability. n3 Counsel for ANERA notified ISAI that ISAI was liable for this amount by certified mail or Federal Express again on May 10, 1990, July 26, 1990, and August 13, 1990, and that ANERA would proceed to arbitration, as provided for in paragraph 17(a) of the Service Contract, if the liability was not satisfied. On November 12, 1991, ANERA demanded arbitration, and on April 10, 1992, Michael Terazawa, the president of ISAI, informed counsel for ANERA that ISAI had received the demand. Despite notices from the arbitrator by certified mail on June 11, 1992, July 12, 1992, August 15, 1992, and September 18, 1992, ISAI did not appear. On October 31, 1992, the arbitrator awarded ANERA $ 1,251,346.10, which ISAI did not pay. On January 11, 1993, ANERA notified ISAI that ISAI's right to collect a proportionate share of the liquidated damages from Pacific Champion had been automatically assigned and transferred to ANERA. On the same date, ANERA notified Pacific Champion of the arbitral award and demanded that Pacific Champion pay its proportionate share, 10% of the award.
On January 22, 1993, ANERA filed a petition to confirm the arbitral award against ISAI in this district. On March 31, 1993, a default judgment in the amount of $ 1,295,348.81 was entered against ISAI.
ANERA now seeks to collect Pacific Champion's proportionate share of the liquidated damages.
n3 The deadfreight liability was calculated as follows:
Minimum Quantity Commitment: 1000.00 FEUs
- Quantity Shipped: 307.75 FEUs
= Deadfreight 692.25 FEUs.
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