Confirmation / Vacation of Arbitration Awards

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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Comity

Corporacion Mexicana de Mantenimieneto Integral v. Pemex-Exporacion y Produccion, Case No. 1:10-cv-00206 (USDC S.D.N.Y. Aug. 27, 2013) (confirming $400 million Mexican arbitration award; refusing to enforce Mexican judgment nullifying award; Mexican judgment “violated basic notions of justice in that it applied a law that was not in existence at the time the parties contract was formed and left [the party in arbitration] without an apparent ability to litigate its claims”)

Manifest Disregard/Exceeding Authority

Dewan v. Walia, Case No. 12-2175 (4th Cir. Oct. 28, 2013) (vacating judgment that confirmed award in favor of former employee and remanding to district court with instructions to vacate the award; award was “manifest disregard of the law; “neither linguistic gymnastics, nor a selective reading of Maryland contract law, could support [the arbitrator’s] conclusion that the Release was enforceable but that [employee’s] claims were arbitrable anyway”)

Wells Fargo Advisors, LLC v. Watts, Case No. 12-1464 (4th Cir. Oct. 1, 2013) (affirming order confirming award for unpaid balance on employee loan; reversing ruling vacating arbitration panel’s grant of attorney’s fees; no fraud or manifest disregard of the law; “a court must defer to arbitrators’ factual findings on attorneys’ fees even if the arbitrators do not explain a basis for the precise amount”)

Walter v. Mark Travel Corp., Case No. 6:09-cv-01019 (USDC D. Kan. Sept. 18, 2013) (confirming $1.1 million award; denying motion to vacate award; court properly compelled arbitration against assignee of signatory; request for court to revisit order compelling arbitration was untimely; arbitrators did not exceed powers, nor was there a manifest disregard of the law)

Neshgold LP v. New York Hotel & Motel Trades Council, Case No. 1:13-cv-02399 (USDC S.D.N.Y. Sept. 19, 2013) (denying motion to vacate; granting motion to confirm award; award finding liability against employer in labor dispute did not exceed arbitrator’s authority, nor violate public policy; award determining relief due to labor union did not reflect manifest disregard of the law)

Phoenix Bulk Carriers, Ltd. v. American Metals Trading, LLP, Case No. 1:10-cv-02963 (USDC S.D.N.Y. Oct. 31, 2013) (granting motion to confirm award in favor of carrier against iron supplier; denying motion to vacate award; panel did not act in manifest disregard of the law nor exceed its authority because award was based on panel’s interpretation of shipping contract and findings of fact)

Evident Partiality/Fraud

DuBois v. Macy’s Retail Holdings, Inc., Case No. 12-3980-cv (2d Cir. Oct. 4, 2013) (affirming judgment denying pro se motion to vacate award rejecting claim for employee discrimination; confirming the award and granting dismissal of complaint; appellant failed to present any evidence to support the claim that the award was obtained through corruption, fraud, or undue means, that arbitrator exhibited evident partiality, or that arbitrator exceeded his powers)

Stone v. Bear, Stearns & Co., Case No. 12-2827 (3d Cir. Oct. 29, 2013) (affirming order denying petition to vacate FINRA award that rejected claim for millions of dollars in losses under investment; granting cross-petition to confirm the award; no evidence of exceeding powers or evident partiality against appellant based on arbitrator’s undisclosed family relation to well-connected finance professor)

Venue

First State Insurance Co. v. National Casualty Co., Case No. 1:13-cv-00704 (USDC S.D.N.Y. Sept. 27, 2013) (transferring venue of petition to confirm the arbitration panel’s final order regarding interpretation of reinsurance contract; forum selection clause in arbitration agreement unambiguously selected venue; clause was “unambiguous and specifically excludes alternative venue for the petition to confirm the final order”)

This post written by Michael Wolgin.

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In Lagstein v. Certain Underwriters at Lloyd’s of London, No. 03-01075 (9th Cir. June 10, 2010), a $900,000 insurance bad faith case, the Ninth Circuit reversed the vacatur of an arbitration award of over $6 million, including hefty punitive damages, holding that the award was not excessive and that the vacator was not supported by the Federal Arbitration Act. Recently revisiting the issue of the proper interest to be awarded, the Ninth Circuit held that an explicit award of interest on the award’s contract damages “d[id] not foreclose … awarding interest on the remaining portions of the arbitration award.” Applying state law for post-award, pre-judgment interest and federal law for post-judgment interest, the court then ordered Lloyd’s (1) to pay interest on all of the damage awards from award date until judgment satisfaction and (2) to pay interest on post-award, pre-judgment interest from the date of the court’s opinion until satisfaction. Lagstein v. Certain Underwriters at Lloyd’s of London, No. 2:03–01075 (9th Cir. Aug. 5, 2013).

This post written by Kyle Whitehead.

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Arbitrator Exceeding Powers

Prime United Inc., v. Sears Holdings Management Corp., Case No. 12 C 5364 (N.D. Ill. July 16, 2013) (vacatur denied where arbitrator did not exceed powers in offsetting claimant’s damages by respondent’s counterclaim award)

Golden Temple of Oregon, LLC. v. Puri, Case No. 3:11-cv-01358 (D. Ore. Aug. 7, 2013) (vacatur granted, arbitrator exceeded powers or imperfectly executed them by failing to consider impact of license agreement in trademark dispute)

Manifest Disregard of Law

Physicians Insurance Capital, LLC v. Praesidium Alliance Group, LLC, Case No. 4:12-CV-1789 (N.D. Ohio July 18, 2013) (granting motion to confirm, denying vacatur, finding no manifest disregard of the law).

Arbitration Procedure

Bridgeport Ventures LLC v. PanAm Management Group, Inc., No. 11-13971 (11th Cir. July 30, 2013) (affirming decision confirming award, finding district court had diversity jurisdiction, and respondent’s petition to vacate untimely)

Pochat v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., Case No. 12-22397 (S.D. Fla. Aug. 23, 2013) (granting motion to confirm, but modifying award to allow offset for counterclaim amount)

Evident Partiality

Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Trust, Kochav S.A.R.L., No. 12-3247 (2d Cir. Aug. 30, 2013) (affirming decision to confirm award where no evident partiality, no refusal to consider material or pertinent evidence).

This post written by John Pitblado.

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