A US District Court has confirmed an arbitration award entered in an NASD arbitration in unusual circumstances: Petitioner failed to present any evidence in an attempt to force a postponement of the final hearing. The Panel denied the request for a postponement, at which time counsel for Petitioner left the hearing. The Panel reconvened the next day to permit Petitioner to offer evidence, which it failed to do. The Panel later dismissed the claims for lack of evidence. The Court found that Petitioner's failure to proceed was not misconduct by the Panel. Kober v. Kelly, Case No. 06-3341 (USDC S.D.N.Y. July 18, 2006).
Confirmation / Vacation of Arbitration Awards
Arbitration award confirmed over objection of regulator
In Koken v. Cologne Reinsurance (Barbados) Ltd., Case No. 98-0678 (USDC M.D. Pa. Aug. 23, 2006), a District Court reaffirmed its earlier decision that an arbitration provision was binding upon the Insurance Commissioner of Pennsylvania, acting as the liquidator of American Integrity Insurance Company, rejecting an argument based upon the McCarran-Ferguson Act. The Court declined to vacate the majority of the award under the manifest disregard of law standard, holding that “an erroneous interpretation by the arbitration panel does not warrant a finding of manifest disregard,” but vacated one paragraph of the award as being in manifest disregard of law, becuase it continued an insurance coverage past the time provided for by an unambiguous Pennsylvania statute.
District Court refuses to vacate arbitration award
In Hilb Rogal & Hobbs Co. v. Golub, Case No. 05-574 (USDC E.D. Va. Aug. 18, 2006), a non-insurance case, a District Court refused to vacate an arbitration award under the manifest disregard of law standard, holding that “[t]he mere fact that an arbitration panel reached a legal conclusion in error is not sufficient for vacatur.”
Vacation of arbitration awards due to failure to follow arbitration agreement
Two opinions recently have addressed the issue of whether an arbitration award should be vacated when the arbitrators fail to follow the arbitration agreement.
- In Martin v. Wells Fargo Financial, Inc., 2006 WL 2466945, Case No. 05-00003 (9th Cir. Aug. 25, 2006), the Court of Appeals affirmed a District Court decision vacating an arbitration award “because the underlying arbitrations were not conducted in accordance with the terms of the parties' arbitration agreement.” This unreported opinion is not available on Pacer, and it does not reveal what the Court of Appeals viewed as the deficiencies in the arbitration.
- In Allstate Ins. Co. v. Superior Court, 2006 WL 2473419 (Cal.Ct.App. Aug. 29, 2006), the Court reversed the vacation of an award on the basis that the panel rendered a “reasoned” award when the arbitration agreement provided that the award should not state reasons. Instead of vacating the award, the Court directed that the “reasons” be stricken from the confirmed award as surplusage.
Court addresses standard for vacating awards under the Foreign Arbitral Awards Convention
In a non-insurance matter, a District Court denied a motion to vacate an arbitration award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Among the grounds alleged for vacating the award was an undisclosed “relationship” between two of the three arbitrators. HSN Capital LLC v. Productora Y Comercializador de Television, S.A., Case No. 05-1769 (M.D. Fla. July 5, 2006). This case contains a good statement of the standards for vacating an arbitration award under the Foreign Arbitral Awards Convention.