Confirmation / Vacation of Arbitration Awards

COURT CONFIRMS AWARD OVER ARGUMENTS OF “MANIFEST DISREGARD,” “EVIDENT PARTIALITY,” AND “CORRUPTION”

November 25, 2014 by Carlton Fields

A transported liquid chemical had been found degraded after shipping from Texas to South Korea. The chemical company contended that the shipper was responsible for the losses as samples taken from the chemical prior to its transport tested satisfactorily. The dispute went to arbitration where the panel determined that the company failed to show that the chemical was damaged aboard the ship, and denied the claim. The chemical company attempted to vacate the award but the court found there was no manifest disregard of the law, because the petitioners could not show error beyond a possible erroneous interpretation of the Carriage of Goods by Sea Act, and in any event, “there [was] no indication the majority [of the panel] knew that was not the law but chose to hold petitioners to a different standard.” The court also found there was no misconduct by one of the arbitrators who failed to disclose that he was suffering from a terminal brain tumor at the time of his service on the panel, notwithstanding potential arbitration rule or ethics code violations. The nondisclosure did not cause prejudice and did not rise to “evident partiality or corruption” or misconduct under the FAA, under which “an arbitrator is under no duty to disclose medical conditions.” Finding no reason to vacate the award, the court ordered the award confirmed and granted the respondents’ motion to award attorney’s fees and costs incurred in connection with the motion to vacate. Zurich American Insurance Co. v. Team Tankers A.S., Case No 13cv8404 (USDC S.D.N.Y. June 30, 2014).

This post written by Michael Wolgin.

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COURT DENIES PETITION FOR ORDER CONFIRMING FINAL ARBITRATION AWARD AND ENTRY OF JUDGMENT

November 19, 2014 by Carlton Fields

In First State Ins. Co. v. Nationwide Mutual Ins. Co., No. 13-cv-11322-IT (U.S.D.C. D. Mass. Oct. 21, 2014), a petition for an order to confirm a final arbitration award and entry of judgment was denied. The court determined that although labeled a “Final Award,” the arbitration panel expressed no intention to resolve all claims submitted in the demands for arbitration. Instead, the award focused on the plaintiff’s motion regarding contract interpretation, which directed the parties back to the panel with a proposed schedule leading to a hearing on remaining matters. Moreover, although the panel proceeded to address the issues in phases, the parties did not jointly agree to bifurcation of the arbitration. Rather the record in the case showed that the defendant objected to bifurcation of the issues at an organizational meeting with plaintiff and the panel when it argued that the panel should consider all of the issues before it at the same time.

This post written by John Pitblado.

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COURT CONFIRMS ARBITRATION PANEL’S INTERIM AWARD REQUIRING REINSURER TO POST SECURITY FOR CEDENT’S CLAIMED LOSSES

October 23, 2014 by Carlton Fields

A federal district court has confirmed an arbitration panel’s interim award requiring Allied Provident, as reinsurer, to post security for unreimbursed losses and expenses that its cedent claims are due under the parties’ reinsurance agreement. The court first considered whether it even had the power to confirm the panel’s interim award because generally a court does not have the authority to review an interlocutory ruling by an arbitration panel. The court found, however, that an exception to that rule exists when a panel has granted an award of temporary equitable relief, such as a security award, separable from the merits of the arbitration. The court therefore found that it had the power to confirm the interim award and rejected all of Allied Provident’s arguments to vacate it.

The court also denied Allied Provident’s request to stay the interim award and to disqualify the entire arbitration panel. The court directed Allied Provident to appoint a new party arbitrator, as its arbitrator had resigned due to health reasons, so the proceedings could continue. Companion Property and Casualty Insurance Co. v. Allied Provident Insurance Inc., Case No. 13-CV-7865 (USDC S.D.N.Y. Sept. 26, 2014).

This post written by Renee Schimkat.

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COURT DENIES MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

September 16, 2014 by Carlton Fields

In prior proceedings, Glory Wealth obtained an England arbitration award against Industrial Carriers, Inc. (ICI) and a confirmation of the award in the United States District Court for the Southern District of New York.

Glory Wealth instituted an admiralty case in the Eastern District of Virginia to attach a vessel to satisfy the confirmed arbitration award, naming ICE and Freight Bulk PTE, Inc. (FBP) as defendants. FBP moved to vacate the arbitration confirmation judgment of the Southern District of New York, relying on Rule 60(b)(4), Fed.R.Civ.P., contending the New York judgment was void for lack of jurisdiction. The Virginia district court held that FBP could not collaterally attach the New York confirmation judgment, since FBP was not a party to the New York proceeding. Strong elements of judicial estoppel appear to have influenced the Virginia district court’s decision, since the court noted that FBP had repeatedly denied any status as ICI’s alter ego, yet in the motion at bar to dismiss Glory Wealth’s action, FBP contended it had standing as a party to the New York case to move to vacate the New York judgment. Flame S.A and Glory Wealth Shipping PTE Ltd. v. Industrial Carriers, Inc., Vista Shipping, Inc. and Freight Bulk PTE, Inc., Case No. 2:13-cv-658 (U.S.D.C., E.D. Va., July 17, 2014).

This post written by Kelly A. Cruz-Brown.

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ARBITRATION AWARD ROUNDUP

July 30, 2014 by Carlton Fields

Following is a selection of some of the recent decisions concerning requests to confirm, vacate or modify arbitration awards:

Evident Partiality / Fraud

Mohammad Z. Alim v. KBR, Inc., Case No. 13-11094 (5th Cir. June 5, 2014) (affirming district court’s denial of motion to vacate arbitration award, finding plaintiff had waived his partiality argument by failing to raise the known information prior to the arbitration hearing; summarily rejecting all claims that award was procured through fraud or undue means; and affirming district court’s decision to compel arbitration in the first instance);

Tenaska Energy, Inc., et al. v. Ponderosa Pine Energy, LLC, Case No. 12-0789 (Tex. Jan. 7, 2014) (reinstating trial court’s order vacating arbitration award because of arbitrator’s evident partiality and failure to disclose relevant information; rejecting claim of waiver as to partiality issue as information was never disclosed and therefore not known prior to arbitration; and ordering a new arbitration).

Exceeding Authority / Failure to Consider Evidence

Hungry Horse, LLC v. E Light Electric Services, Inc., Case No. 13-1425 (10th Cir. June 19, 2014) (affirming district court’s denial of motion to vacate, concluding arbitration panel had acted within its broad authority afforded under the parties’ arbitration agreement when issuing its award);

American Postal Workers Union, AFL-CIO v. U.S. Postal Service, Case No. 13-2579 (2d Cir. June 6, 2014) (reversing district court’s decision which had granted motion to vacate arbitral award on the basis that arbitrator exceeded his powers by applying the doctrine of collateral estoppel; holding that arbitrator’s decision to use collateral estoppel based on a prior administrative decision was not in excess of his powers; and remanding with instructions to confirm award);

Why Nada Cruz, L.L.C. v. Ace American Ins. Co., Case No. 13-20644 (5th Cir. June 3, 2014) (affirming district court’s confirmation of award which had dismissed arbitration due to untimeliness, finding arbitrator did not exceed his powers by concluding that the request for arbitration was dilatory under the parties’ agreement, and rejecting argument that arbitrator failed to hear pertinent evidence);

Seed Holdings, Inc. v. Jiffy Int’l As, et al., Case Nos. 13-CV-2284 and 13-CV-2755 (USDC S.D.N.Y. March 24, 2014) (denying motion to vacate award, and granting motion to confirm award, finding no evidence that arbitrators exceeded their authority; rejecting arguments that arbitrators failed to consider certain evidence and that arbitrators manifestly disregarded the law; and denying motions to remand or stay court actions based on jurisdictional grounds);

West Liberty Foods, L.L.C. v. Moroni Feed Co., Case No. 4:10-CV-00146 (USDC S.D. Iowa March 6, 2014) (denying plaintiff’s motion to vacate prejudgment interest awarded to defendant in arbitration, finding award to be a “reasoned award” and within arbitrator’s authority; denying defendant’s request to reimburse attorney’s fees incurred in response to plaintiffs’ alleged “bad faith” actions in filing and arguing its motion to vacate; and confirming remainder of arbitration award).

Manifest Disregard

Berkshire Wilton Partners, LLC v. Bilray Demolition Co., Inc., Case No. 2013-191 (R.I. June 9, 2014) (vacating lower court’s judgment which had vacated an arbitration award; rejecting arguments that arbitrator had manifestly disregarded both the law and the plain language of the parties’ release; and remanding with instructions to enter judgment in favor of party who had been awarded damages in arbitration);

Aerotel, Ltd. v. IDT Corp., Case No. 13-3085 (2d Cir. June 3, 2014) (affirming district court’s declination to vacate arbitration award where panel had awarded plaintiff some, but not all, lost profits sought and had declined to order specific performance under the parties’ contract; finding panel “was unquestionably applying the governing law” and therefore there were no grounds to vacate);

A&G Coal Corp., et al. v. Integrity Coal Sales, Inc., Case No. 13-2411 (2d Cir. May 9, 2014) (affirming district court’s confirmation of arbitration award, finding no support that the arbitrator manifestly disregarded the law or the parties’ agreements to justify vacatur).

This post written by Renee Schimkat.

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