Confirmation / Vacation of Arbitration Awards

COURT AWARDS DAMAGES AND PREJUDGMENT INTEREST IN LONG-RUNNING RETROCESSION DISPUTE

April 7, 2014 by Carlton Fields

Republic Insurance was a fronting company for a syndicate of reinsurers which obtained retrocessional coverage from Group Des Assurance Nationales under LMX quota share contracts over a number of years. As we reported in an August 20, 2013 post, the Court granted summary judgment in Republic’s favor. Thereafter, the parties disputed the damages, offset, and method of prejudgment interest calculation. The Court has now ruled on those issues, awarding Republic the full amount of damages claimed, declining to award Group Des Assurance Nationales an offset against premiums paid, and awarding prejudgment interest dating back to the contract years at issue, which roughly doubled the award. Republic Insurance Co. v. Banco De Seguros Del Estado, No. 10-C-5039 (USDC N.D. Ill. March 20, 2014).

This post written by John Pitblado.

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ARBITRATION ROUND-UP

April 3, 2014 by Carlton Fields

Arbitration Procedure

Trustees of the New York City District Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund v. Alliance Workroom Corp., No. 13-Civ-5096 (USDC S.D.N.Y. Dec. 11, 2013) (arbitration award confirmed, treating unopposed petition to confirm as summary judgment motion based on unopposed record, granting attorneys fees incurred in unopposed action to confirm arbitration award).

Thai-Lao Lignite (Thailand) Co., Ltd. v. Government of the Lao People’s Democratic Republic, No. 10-CV-5256 (USDC S.D.N.Y. Feb. 6, 2014) (vacating award based on ruling in parallel action in Malaysian Court of Appeal, based on New York Convention for the Enforcement of Foreign Arbitral Awards).

McAlpine v. Priddle, No. S-14891 (Alaska Feb. 21, 2014) (affirming confirmation of award in criminal defense attorney fee agreement, agreement not procured by fraud, not barred by public policy)

Lakeshore Engineering Services, Inc. v. Target Construction, Inc., No. 13-14498 (USDC E.D. Mich. Feb. 27, 2014) (no waiver, contract and arbitration agreement binding and enforceable)

Exceeding Powers

Renard v. Ameriprise Fin. Svcs., Inc., No. 13-CV-555 (USDC E.D. Wis. Mar. 6, 2014) (arbitrators did not exceed powers, award not procured by fraud, no failure to hear pertinent evidence)

Manifest Disregard

Schafer v. Multiband Corp., No. 13-1316 (6th Cir. Jan. 6, 2014) (reversing district court’s order granting vacatur of award, where award was contrary to precedent, but nevertheless “reasoned” and therefore not in manifest disregard of the law).

Abu Dhabi Investment Authority v. Citigroup, Inc., No. 13-1068-cv (2d Cir. Feb. 19, 2014) (no manifest disregard in application of New York law in choice-of-law dispute)

Evident Partiality

Ometto v. ASA Bioenergy Holding A.G., Nos. 12-4022, 13-225 (2d Cir. Jan 7, 2014) (affirming denial of petition to vacate award, no evident partiality based on claim of arbitrator’s failure to disclose information; no manifest disregard of law)

Scope of Arbitration Agreement

Aetrex Worldwide, Inc. v. Sourcing For You Limited, No. 13-3933 (3d Cir. Jan. 23, 2014) (denying motion to compel arbitration where arbitration agreement contained exception for injunction actions, which applied even after injunction request denied and withdrawn)

Neuronetics, Inc. v. Fuzzi, No. 13-1506 (3d Cir. Jan. 24, 2014) (affirming grant of motion to confirm, issue regarding non-payment of contract for sale of healthcare products within scope of arbitration agreement).

Unconscionability

Kirby v. Lion Enterprises, Inc., No. 12-C-47 (W. Va. Mar. 7, 2014) (reversing decision affirming confirmation of award and remanding with instructions to develop record on issue of unconscionability)

This post written by John Pitblado.

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SUPREME COURT HOLDS THAT ARBITRATORS, NOT COURTS, ARE TO INTERPRET A TREATY’S ARBITRATION PREREQUISITE

March 17, 2014 by Carlton Fields

The United States Supreme Court has held that arbitrators, not courts, bear the primary responsibility for interpreting and applying a local litigation requirement of an investment treaty between the United Kingdom and Argentina that operated as a condition precedent to arbitration. BG Group plc, a British firm that had invested in an Argentine entity, sought arbitration for a dispute arising out of that treaty. Argentina claimed that the arbitrators lacked jurisdiction over the dispute because BG Group had not complied with the treaty’s requirement that the dispute first be submitted to an Argentinean court for consideration. The arbitrators concluded that they had jurisdiction finding, in part, that Argentina’s conduct in enacting new laws that hindered recourse to its judiciary had excused BG Group’s failure to comply with the treaty’s local litigation requirement. The arbitrators then found in favor of BG Group and awarded it $185 million in damages.

After decisions by the federal district and appellate courts, both of which were reported here previously, the Supreme Court held that the treaty’s local litigation requirement was a procedural condition precedent to arbitration and that, absent a contrary intent reflected in the treaty itself, the interpretation and application of that procedural provision should be decided by the arbitrators and that decision should be reviewed with considerable deference. The fact that the document at issue was a treaty rather than an ordinary contract did not change the Court’s analysis, a position on which the dissent strongly disagreed. The Court concluded that the arbitrators’ jurisdictional determination was lawful and the judgment of the Court of Appeals to the contrary was therefore reversed. BG Group PLC v. Republic of Argentina, No. 12-138 (U.S. March 5, 2014).

This post written by Renee Schimkat.

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FOREIGN ARBITRATION AWARD CONFIRMED UNDER INTERNATIONAL TREATY

March 6, 2014 by Carlton Fields

A federal U.S. district court recently confirmed a foreign arbitration award obtained by a Belizean telecommunications company against the Government of Belize in arbitral proceedings held before a tribunal appointed by the London Court of International Arbitration (“LCIA”). Factually, the case involved agreements between the company and Belize, wherein the company paid money in exchange for certain tax benefits and investment return guarantees associated with its telecommunications improvement plan. When Belize later refused to comply with the agreements, the company (i) requested arbitration before the LCIA, pursuant to the agreements, (ii) won declaratory and monetary relief upon Belize’s default, and (iii) assigned the monetary portion of the award to Belize Social Development, a British Virgin Island organization. Legally, the court first held that the arbitration award was governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”) (of which the Federal Arbitration Act is a codification) because England (where the arbitration took place) and the United States are both parties to the Convention. The court emphasized that, under the Convention, it should confirm the foreign award absent a finding that an enumerated exception to enforcement specified in the Convention applies. The court methodically deconstructed and denied Belize’s procedural arguments, including lack of subject-matter jurisdiction, lack of standing, forum non conveniens, international comity, and failure to join a required party under F.R.C.P. 19, and then turned to the exceptions to the Convention proffered by Belize, again ruling in favor of the company. The Convention arguments revolved around the following: (i) failure to produce copies of the arbitral award and accommodation agreements (Art. IV(1)); (ii) invalidity of accommodation agreements (Art. V(1)(a)); (iii) inappropriateness of arbitration (Arts. V(1)(c) and V(2)(a)); (iv) suspension of the award by a “competent authority” (Art. V(1)(e)); and (v) public policy (Art. V(2)(b)). None of these arguments was found to be meritorious, and the court confirmed the arbitral award. Belize Social Development Ltd. v. Government of Belize, Case No. 09-2170 (RJL) (D.D.C. Dec. 11, 2013).

This post written by Kyle Whitehead.

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ARBITRATION ROUND-UP

January 8, 2014 by Carlton Fields

Scope of Arbitration

Citigroup, Inc. v. Abu Dhabi Investment Authority, Case No. 1:13-cv-06073 (USDC S.D.N.Y. Nov. 25, 2013) (dismissing action to enjoin arbitration; granting motion to compel arbitration; defense of res judicata based on prior confirmation of arbitration award is an issue for arbitration panel)

Unconscionability

Lombardi v. Kahaly, Case No. 11-56752 (9th Cir. Dec. 2, 2013) (reversing denial of motion to compel arbitration of claims for injunctive relief under California Unfair Competition Law and Consumer Legal Remedies Act; following precedent holding that FAA preempts California unconscionability law and that “effective vindication” exception does not apply to state statutes; arbitration agreement not unconscionable for nonmutuality)

Lombardi v. Twyman, Case No. 10-56602 (9th Cir. Dec, 2, 2013) (reversing order that denied motion to compel arbitration based on unconscionability of class waiver arbitration provision; following Concepcion and American Express; arbitration agreement not substantively unconscionable for nonmutuality, nor procedurally unconscionable for alleged penalty for rejecting arbitration agreement)

Due Process

Staples v. Morgan Stanley Smith Barney, Case No. 6:13-cv-00013 (USDC D. Mont. Oct. 28, 2013) (confirming FINRA award; finding proper service of process by FINRA; no corruption, fraud, undue means, or arbitrator bias, misconduct, or exceeding of powers)

Labor Disputes

Northern New England Telephone Operations LLC v. Local 2327, International Brotherhood of Electrical Workers, AFL-CIO, Case Nos. 13-1167, 13-1186 (1st Cir. Nov. 12, 2013) (affirming confirmation of award and denial of Rule 11 costs and fees; panel did not exceed authority in LMRA arbitration by wrongfully adding/subtracting terms in interpreting the relevant collective bargaining agreement)

Reyco Granning LLC v. International Brotherhood of Teamsters, Local Union No. 245, Case No. 13-1002 (8th Cir. Nov. 15, 2013) (reversing district court’s order granting summary judgment in favor of union and confirming award on collective bargaining agreement; directing court to grant employer’s motion for summary judgment and vacate arbitration award; arbitrator exceeded authority by looking to contract negotiations to discern intent with respect to unambiguous contract language)

Concurrent Proceedings

Alstom Chile S.A. v. Mapfre Compania de Seguros Generales Chile S.A., Case No. 1:13-cv-02416 (USDC S.D.N.Y. Oct. 31, 2013) (compelling arbitration and permanently enjoining defendant from prosecuting related tort proceedings in Chile; holding that broad arbitration clause for all disputes “arising out of or relating to” agreement covered both breach of contract and tort claims; finding that failure to comply with requirement to negotiate dispute did not bar enforcement of arbitration provision)

This post written by Michael Wolgin.

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