Confirmation / Vacation of Arbitration Awards

ARBITRATION ROUNDUP

September 12, 2012 by Carlton Fields

Accrual of Actions to Dispute Award:

International Relief and Development, Inc. v. Ladu, Case No. 12-1302 (4th Cir. June 14, 2012) (affirming order confirming award; motion to vacate filed beyond FAA’s three-month filing deadline; upholding finding that appellant had actual notice of award where no evidence suggested “definitively or firmly” that findings were mistaken);

International Brotherhood of Electrocal Workers, Local 50, AFL-CIO v. Metro Electric Engineering Technologies, Inc., Case No. 11-14333 (USDC E.D. Mich. July 25, 2012) (granting summary judgment confirming award due to expiration of statutes of limitations regarding award issued in connection with a collective bargaining agreement under the Labor Management Relations Act; letters from panel advising of defendant’s liability accrued defendant’s rights to dispute confirmation of award).

Jurisdiction:

Paralikas v. Ford Motor Credit Co., LLC, Case No. 10-3308 (USDC E.D.N.Y. June 14, 2012) (dismissing action to vacate award; FAA does not provide an independent basis for federal subject matter jurisdiction).

Class-Wide Arbitration:

Rame, LLC v. Popovich, Case No. 12-1684 (USDC S.D.N.Y. June 9, 2012) (denying petition to vacate award permitting class-wide arbitration; “manifest disregard” still viable in Second Circuit, but not present in this case; arbitrator did not exceed authority where dispute resolution agreement provided that “all claims” could be decided by arbitration).

Scope of Arbitration:

Schneider v. Thailand, Case No. 11-1458 (2d Cir. Aug. 8, 2012) (affirming order confirming award under New York Convention, notwithstanding lower court’s failure to determine “clear and unmistakable” evidence that scope of arbitration agreement would be decided by arbitrators before performing deferential review of award; because UNCITRAL Rules were incorporated in arbitration agreement, appellate court could infer intent for arbitrators to decide scope of agreement; noting “manifest disregard” inapplicable to foreign awards);

Langlais v. Pennmont Benefit Services, Inc., Case No. 11-5275 (USDC E.D. Pa. July 11, 2012) (granting motion to confirm $3.8 million award as to signatories of arbitration agreement, but only in their capacities reflected in agreement; denying motion as to non-signatories because motion to confirm “is not the proper time or procedural vehicle to make such determinations”).

Manifest Disregard/Evident Partiality:

Fund Raising, Inc. v. Alaskans For Clean Water, Inc., Case No. 09-4106 (USDC June 26, 2012) (denying fundraiser’s motion to vacate $8 million award in favor of former client environmental advocates; “manifest disregard” standard applied where arbitrator’s application of law challenged; no manifest disregard nor “complete irrationality” in, among other findings, arbitrator’s interpretation of confidentiality clause, finding of fiduciary duty, finding judicial estoppel, and awarding punitive damages for actions related to perjury);

Digitelcom, LTD v. Tele2 Sverige AB, Case No. 12-3082 (USDC S.D.N.Y. July 25, 2012) (granting motion to confirm award issued by International Centre for Dispute Resolution and granting attorney’s fees award for disingenuous motion; among other things, arbitrator did not commit “manifest disregard” nor exhibit “evident partiality”);

Trademark Remodeling, Inc. v. Rhines, Case No. 11-1733 (USDC D. Md. Aug. 6, 2012) (granting motion to enforce award; finding no evident partiality or corruption, fraud, or undue means despite defendants’ disclosure of confidential information, providing gift card to adverse witness, and manner in which hearing was conducted; no exceeding powers or “manifest disregard” for arbitrator’s use of evidence and findings beyond contract);

P.H. Glatfelter Co. v. United Steel, Paper and Forestry, Rubber Manufacturing, Energy, Allied Industrial and Service Workers International Union, Case No. 11-741 (USDC S.D. Ohio Aug. 21, 2012) (granting summary judgment vacating award issued in connection with a collective bargaining agreement under the Labor Management Relations Act; evident partiality existed where arbitrator failed to disclose that he had 6 first cousins employed at paper mill at issue in arbitration).

This post written by Michael Wolgin.

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AWARD UPHELD AGAINST FOOTBALL PLAYER’S WORKERS’ COMPENSATION CLAIM FOR FAILURE TO SUPPORT APPLICATION OF STATE LAW

August 16, 2012 by Carlton Fields

A former professional football player, whose National Football League employment contract waived application of California workers’ compensation law, sought to vacate an arbitration award that denied the player’s pursuit of California workers’ compensation benefits for injuries that allegedly occurred over the course of the player’s football career. The court rejected the player’s arguments that the award constituted a violation of California and federal labor policy, and that the award reflected a manifest disregard of California law. The player’s injuries, the court explained, could not be sufficiently tied to events occurring in California. Without a “clear” indication that a California court would apply that state’s law, the award could not be deemed to violate California and federal labor policy, which in turn precluded the player’s contention that the award violated the Constitution’s Full Faith and Credit Clause. Matthews v. National Football League Management Council, Case No. 11-5186 (9th Cir. Aug. 6, 2012).

This post written by Michael Wolgin.

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COURT CONFIRMS ARBITRATION AWARD DESPITE MANIFEST DISREGARD CLAIMS AND ARGUMENT THAT PANEL EXCEEDED ITS AUTHORITY

August 13, 2012 by Carlton Fields

This petition for vacatur followed the last of three arbitrations between American Centennial Insurance Company, a company with its principal place of business in Delaware, and Global International Reinsurance Company, a Barbados company, pursuant to a reinsurance agreement between the parties. While in runoff, ACIC changed its ownership structure through a series of reorganizations and acquisitions. In response, Global sought a reduction of its reinsurance obligations as provided for by their agreement. In the third arbitration, an award was issued in favor of Global. The losing party filed a petition to vacate the award, but the United States District Court for the Southern District of New York confirmed the arbitration panel’s order. Despite the losing party’s argument that the arbitrators had exceeded their authority and displayed manifest disregard for the law and the parties’ agreement (which had an honorable engagement clause and also required the panel to provide reasons for its order), the court held that the panel had acted within its “wide discretion.” Furthermore, the court found that, in discussing the terms of the agreement, the parties’ dispute, the findings of the earlier arbitration panels, and the rationale for awarding less than was sought, the panel went further than necessary in explaining its award since the agreement did not request detailed factual findings and conclusions of law. Thus, the petition to vacate the award was denied and the award was confirmed. American Centennial Insurance Co. v. Global International Reinsurance Co., Case No. 12 Civ. 1400 (USDC S.D.N.Y. July 9, 2012).

This post written by Brian Perryman.

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DISTRICT COURT CONFIRMS REINSURANCE ARBITRATION AWARD AGAINST TWO BRAZILIAN COMPANIES

July 30, 2012 by Carlton Fields

Several developments have occurred in the ongoing reinsurance dispute between Aurum Asset Managers and several Brazilian companies. In April, Aurum filed a petition in federal district court to confirm an amended arbitration award, entering judgment in Aurum’s favor, and granting Aurum equitable relief. On June 11th, the district court denied the award as against respondent Banco do Estado do Rio Grande do Sul. The court, however, confirmed the award as against two respondents (Bradesco Companhia de Seguros and Bradesco Auto/Re Companhia de Seguros) unless and until the court received arguments from any party opposing the confirmation prior to June 22nd. On June 26th, having not heard any arguments opposed, the court confirmed the final arbitration award and entered judgment against the two Bradesco entities. Aurum Asset Managers, LLC v. Banco do Estado do Rio Grande do Sol, No. 08-mc-102 (USDC E.D. Pa. June 12, 2012 & June 26, 2012).

This post written by John Black.

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VACATION OF ARBITRAL AWARD REFUSED DUE TO PARTY’S FAILURE TO CHALLENGE AWARD IN FOREIGN FORUM

July 23, 2012 by Carlton Fields

Parties to a stock purchase agreement between two British Virgin Islands companies arbitrated a dispute in Miami, Florida. One party was required to pay a $11 million award. The prevailing party applied to the High Court of the British Virgin Islands (“the BVI court”) for enforcement of the award, pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, while the losing party moved to vacate the award in the U.S. District Court for the Southern District of Florida. Although the BVI court offered to stay the action pending the resolution of the district court case if the losing party posted bond, the losing party failed to either provide the requested $7 million security or appeal the order. The BVI court then granted the application and entered a judgment on the award, which the losing party failed to appeal. The BVI court appointed liquidators, who collected enough funds to satisfy the judgment. The losing party then moved to reopen the vacatur proceedings, which the district court had stayed at the liquidators’ request. The district court reopened the case and granted the prevailing party’s motion to dismiss, holding that it did not have subject matter jurisdiction over the motion to vacate the award.

On appeal, the Eleventh Circuit affirmed the dismissal on other grounds, concluding that the case was prudentially moot, as the district court would be unable to provide effective relief, holding that a party may not sit idly by while an arbitration award is confirmed and only then seek to vacate it. Emphasizing the uniqueness of the facts of the present case, the court stated that the failure to act in the BVI court and consent to a stay of the district court proceeding allowed the BVI case to take precedence. Furthermore, the BVI court had indicated that vacatur in the district court would not affect its final judgment, except in the case of fraud or mistake, which, combined with losing party’s own failure to act, made the likelihood of meaningful relief in the district court virtually non-existent. Ingaseosas Int’l. Co. v. Aconcagua Investing Ltd., No. 11-10914 (11th Cir. July 5, 2012).

This post written by Rollie Goss.

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