Confirmation / Vacation of Arbitration Awards

An NASD arbitration panel entered an award in favor of Wachovia Securities. When the pending case was dismissed, Wachovia filed a separate action for confirmation of the award pursuant to the Federal Arbitration Act. The defendant opposed confirmation on the basis that the FAA requires that a request for confirmation be filed within one year of the date of the award. The Court disagreed, finding that binding Eighth Circuit law held that the one year period was permissive, and not mandatory, and that it would not enforce the bar since Wachovia had moved to confirm the award in the prior action, prior to its dismissal. Wachovia Securities, LLC v. Riddle, Case No. 06-233 (USDC D. Neb. July 26, 2006). The Court noted that there was a conflict on this issue between different panels of the Eighth Circuit.

In an action filed by an insurance agent against John Hancock Mutual Life and two affiliates, Patten v. Signator Insurance Agency, Inc., Case No. 05-1148 (4th Cir. March 13, 2006), the United States Court of Appeals for the Fourth Circuit vacated a District Court decision denying a motion to vacate an arbitration award filed by an insurance agent, finding that the arbitration award failed to draw its essence from the governing arbitration agreement and was made in manifest disregard of law. The Court found that the arbitrator disregarded an unambigous provision in the agreement containing an arbitration clause by implying a one year statute of limitation into the arbitration agreement, where the agreement did not contain any limitation agreement, but an earlier, superceded agreement, did contain a one year limitation provision. Applicable law provided either a three or a six year limitation period.

A District Court confirmed an arbitration award in a non-reinsurance context in Lebeau v. Oppenheimer & Co., rejecting contentions that the award should be vacated because, inter alia, the arbitrators did not allow sufficient discovery, did not adequately disclose conflicts and demonstrated bias. One interesting finding is that under the Federal Arbitration Act, one may waive such objections by raising them for the first time in the context of motions to confirm or vacate a later award, rather than raising them in the arbitration, at the time of the alleged misconduct. Lebeau v. Oppenheimer & Co., Case No. 05-5876 (USDC E.D. Pa. June 23, 2006).

In a non-reinsurance case, the United State Court of Appeals for the Fifth Circuit affirmed a District Court decision denying a request to vacate an arbitration award, which was based upon the contention that the arbitration panel committed misconduct by denying a request for a continuance of the final hearing that was submitted the day before the scheduled hearing. Laws v Morgan Stanley, 2006 WL 1579542, case no. 05-20626 (5th Cir. Je. 9, 2006).

In a non-reinsurance securities arbitration, the United State Court of Appeals for the Fifth Circuit has held that although courts “do not hesitate to vacate an award when an arbitrator is not selected according to the contract-specified method …” any departure from the terms of the parties' agreement in this case was trivial, not warranting vacatur of the arbitration award. Bulko v Morgan Stanley, 1006 WL 1460022, case no. 05-10242 (5th Cir. May 30, 2006).