Confirmation / Vacation of Arbitration Awards

A Pennsylvania federal court recently confirmed an arbitrator’s decision in a wrongful termination suit which held in favor of the Philadelphia Union soccer team, finding it did not violate former head coach Piotr Nowak’s contractual rights when the team fired him in 2012.

In the order confirming the award, and denying Nowak’s motion to vacate it, the court noted that a federal court’s review of an arbitration award “gives extreme deference” to the arbitrator’s decision and does not “second guess but instead presume[s] the reasoned award is enforceable”.

In the motion to vacate the award, Nowak claimed that the arbitrator was biased and made factual judgments from what Nowak claimed was hearsay evidence in testimony by witnesses. However, the court found that the record revealed that the arbitrator did not misapply the law, noting that the award itself highlighted sufficient independent evidence supporting the arbitrator’s conclusions, including witness testimony from former players, a trainer and Nowak himself. It also found that the award, supported by ample record evidence, was not completely irrational. Finally, the court found that there was no evidence of bias or impartiality on the part of the arbitrator. Thus, because Nowak did not establish any ground for vacatur, the court denied the motion to vacate and granted the motion to confirm the arbitration award.

Piotr Nowak v. Pennsylvania Professional Soccer, LLC, et al., No. 12-4165 (E.D. Pa. Jan. 11, 2016).

This post written by Jeanne Kohler.

See our disclaimer.

Roquette Freres, S.A. and Solazyme, Inc. entered into a Joint Venture Operating Agreement (the “JVOA”), which was established for the purpose of “the research and development, manufacture, distribution, sales, marketing and support” of certain products. The JVOA contained an arbitration provision that required disputes arising out of or connected with the agreement to be resolved under the “Arbitration Rules of the Center for Public Resources in New York”.  The JVOA further provided that the arbitration be conducted “according to the laws of the State of Delaware” and that the agreement was “governed and construed in accordance with” Delaware law.

After the arbitration panel ruled in Solazyme’s favor, Roquette moved to vacate the award under Delaware law. Solazyme counterclaimed for confirmation of the award, arguing that the standard set forth in the Federal Arbitration Act (“FAA”) governed Roquette’s challenge.  As a threshold matter, the court found that because the JVOA did not specifically reference the Delaware Arbitration Act, and Roquette did not file its action in the Delaware Court of Chancery (as contemplated by the statute), the FAA controlled.  Applying the standard set forth by the FAA, the court confirmed the panel’s award and denied Roquette’s motion to vacate because:  (1) the panel’s interpretation of the time period in which to render an award, which Roquette argued had not been strictly adhered to, was a procedural issue that required broad deference under the statute and was rationally derived from the JVOA and CPR rules; (2) the panel’s consideration of extrinsic evidence was necessary to resolve the issues in dispute, and thus permissible; (3) alleged “public policy” considerations did not provide the court with a basis to vacate the panel’s ruling as a matter of law; and (4) the relief crafted by the panel, though broad in scope, was based upon the language of the JVOA, and thus within the panel’s authority.  Roquette Freres, S.A. v. Solazyme, Inc., No. 1:14-cv-01442 (USDC D.Del. Dec. 21, 2015).

This post written by Rob DiUbaldo.
See our disclaimer.

Raymond James had initiated a FINRA arbitration because Singh, a financial advisor who was a registered representative of Raymond James, had refused to indemnify Raymond James pursuant to the terms of their agreement. Following an arbitration award in favor Raymond James, Singh unsuccessfully attempted to vacate the arbitration award against him by arguing the award was a manifest disregard of the law. On appeal, the higher court also rejected Singh’s arguments, noting that unless it had “serious reservations about the soundness of the arbitrator’s reading of the contract” it could not vacate the award. The court further pointed out that it was prohibited from second guessing the arbitrators construing of the contract. Singh’s argument that the amount of the award was not justified by the evidence did not fare any better; arbitrators are not required to disclose their rationale for an award, the record showed that there was evidence presented to the panel, and the amount awarded was less than the amount sought by Raymond James. Singh v. Raymond James Financial Services, Inc., Case No. 14-3970 (2d Cir. Dec. 9, 2015).

This post written by Barry Weissman.

See our disclaimer.