Confirmation / Vacation of Arbitration Awards

COURT OF APPEALS VACATES $185 MILLION ARBITRATION AWARD WHERE CLAIMANT FAILED TO ABIDE BY TREATY’S PREREQUISITE OF BRINGING A LAWSUIT IN THE ARGENTINEAN COURTS

April 16, 2012 by Carlton Fields

The United States Court of Appeals for the D.C. Circuit has vacated an arbitration award in excess of $185 million issued against the Republic of Argentina and in favor of a British company, BG Group, PLC, that had invested in gas distribution in Argentina. It reversed a district court order that, as we reported earlier, had confirmed the award. The court cited BG Group’s failure to abide by a provision in the governing Bilateral Investment Treaty between Argentina and the U.K. requiring disputes to be submitted to an Argentinean court and litigated for eighteen months without resolution before an arbitration could be commenced. The appellate court further rejected the arbitration panel’s decision that it would be “senseless” to comply with this provision, which the panel based on an opinion, rendered by a former Argentinean Attorney General and Minister of Justice, that it could take six years to resolve BG Group’s claims in the Argentinean courts. The court of appeals further held that the district court erred in determining that the arbitrators properly decided the threshold question of arbitrability because there was no clear and unmistakable evidence that the arbitrators should decide the issue where the precondition of bringing the dispute to court had not been met. Republic of Argentina v. BG Group, PLC, No. 11-7021 (D.C. Cir. Jan. 17, 2012).

This post written by Ben Seessel.

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SECOND CIRCUIT ORDERS DISMISSAL OF SUIT TO CONFIRM A PERUVIAN ARBITRATION AWARD IN NEW YORK ON FORUM NON CONVENIENS GROUNDS

April 4, 2012 by Carlton Fields

The Peruvian arbitration awarded over $21 million in connection with a consulting agreement for engineering studies on water and sewage services in Peru. A Peruvian statute, however, significantly limited the amount the consultant could recover from the Peruvian government. Consequently, the consultant filed a petition to confirm the award in U.S. district court in New York, where the consultant hoped to collect the full amount of the award from Peruvian assets located there. The lower court denied dismissal of the petition, in part, due to the policy supporting international arbitration under the Panama Convention. Over a vigorous dissenting opinion, the Second Circuit panel majority reversed, holding that “the cap statute is a highly significant public factor warranting [forum non conveniens] dismissal.” The court acknowledged: “Although enforcement of [international] awards is normally a favored policy of the United States and is specifically contemplated by the Panama Convention, that general policy must give way to the significant public factor of Peru’s cap statute.” Figueiredo Ferraz v. Republic of Peru, No. 09-3925 (2d Cir. Dec. 14, 2011).

This post written by Michael Wolgin.

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ARBITRATION ROUND-UP

March 29, 2012 by Carlton Fields

Manifest disregard

Bangor Gas Co., LLC v. H.Q. Energy Services (U.S.), Inc., No. 1:11-cv-457-NT (USDC D. Me. Mar. 1, 2012) (granting motion to confirm, no manifest disregard).

Total Landscaping Care, LLC v. Tower Cleaning Systems, Inc., No. 10-6542 (USDC E.D. Pa. Mar. 1, 2012) (denying vacatur, no manifest disregard).

Duferco S.A. v. Tube City IMS, LLC, No. 11-886 (2d Cir. Mar. 8, 2012) (affirming denial of vacatur, no manifest disregard).

Exceeding Scope

W & J Harlan Farms, Inc. v. Cargill, Inc., No. 1:09-CV-113-WTL-TAB (USDC S.D. Ind. Mar. 6, 2012) (granting motion to confirm, arbitrators did not exceed scope, no manifest disregard).

Primed, Inc. v. Dallas General Life Insurance Co., No. 8:11-cv-2002-T-33AEP (USDC M.D. Fla. Feb. 28, 2012) (denying vacatur, arbitrators did not exceed powers).

JPMorgan Chase Bank, N.A., No. 10-17562 (9th Cir. Feb. 29, 2012) (affirming denial of vacatur, arbitrators did not exceed scope)

Failure to hear pertinent and material evidence

LJL 33rd Street Associates, LLC v. Pitcairn Properties, Inc., No. 11-Civ-6399 (USDC S.D.N.Y. Feb. 15 2012) (denying vacatur, no failure to hear pertinent and material evidence)

Jurisdiction / Venue / Procedure

JDS Uniphase Corp. v. Finisar Corp., No. 11-1213 (USDC W.D. Pa. Mar. 5, 2012) (granting motion to dismiss, no independent subject matter jurisdiction conferred by FAA) (appeal docketed March 9, 2012).

Marlowe v. IDS Property Casualty Insurance Co., No. 2011AP2067 (Wis. Ct. App. Mar. 13, 2012) (reversing trial court, remanding to arbitrators for ruling on discovery issues).

Rain CII Carbon, LLC v. ConocoPhillips Co., No. 11-30669 (5th Cir. Mar. 9, 2012) (affirming ruling denying vacatur for lack of “reasoned award” attack on award issued without findings of fact and law).

Grynberg Production Corp. v. Susman Godfrey, LLP, No. 10-1248 (10th Cir. Feb. 16, 2012) (affirming denial of motion to compel re-arbitration of matters encompassed by original award).

Bridgepoint Ventures, LLC v. PanAm Management Group, Inc., No. 11-10021 (11th Cir. Mar. 2, 2012) (affirming proper subject matter jurisdiction of trial court that granted motion to confirm where complete diversity existed at time of filing).

Local 36 Sheet Metal Workers’ International Association AFL-CIO v. Whitney, No. 11-1781 (8th Cir. Mar. 6, 2012) (reversing denial of vacatur where non-appearing party in arbitration challenged jurisdiction for lack of contract between parties for first time in proceeding to enforce the award).

This post written by John Pitblado.

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COURT COMPELS PRODUCTION OF REINSURANCE TREATIES, BUT NOT RELATED COMMUNICATIONS

March 7, 2012 by Carlton Fields

In a discovery dispute involving requests for documents related to an insurer’s reinsurance treaties, a court compelled the production of the treaties, but reserved ruling on the production of related communications, subject to additional briefing on relevance. The court held that reinsurance policies themselves are discoverable without showing relevance. Communications regarding reinsurance, however, require a showing that the documents are relevant to alleged insurer bad faith. The assumption “that reinsurance decisions do not involve questions of policy interpretation is especially applicable when the reinsurance is treaty insurance.” Isilon Systems, Inc. v. Twin City Fire Insurance Co., Case No. 2:10-cv-01392 (USDC W.D. Wash. Feb. 15, 2012).

This post written by Michael Wolgin.

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MISSISSIPPI SUPREME COURT ISSUES “TRUE-UP” DECISION IN KATRINA LITIGATION

March 6, 2012 by Carlton Fields

As a result of Hurricane Katrina, the Mississippi Windstorm Underwriting Association sustained losses well in excess of its reinsurance. The Association assessed its members to cover the loss based on their percentages of wind and hail insurance premiums written in the previous calendar year. Several companies then complained that the Association had incorrectly reported the previous year’s figures and were given a one-time opportunity to submit correct data (a true-up). Some members, most of whom did not submit corrected data, appealed the assessment following the true-up. The Mississippi Supreme Court reviewed the lower court’s grant of relief to the members. The Court affirmed the lower court’s decision on two issues: finding that grouping was permitted and that reinsurance was allocated properly. The Court, however, reversed and remanded on the following issues: whether MWUA had authority to set and enforce a true-up deadline, the mandatory nature of voluntary credits and farm-property exclusions, whether assessments are akin to privilege taxes, and the mobile-home reporting issue. Further, because the lower court lacked authority to order the Association to adopt new rules, the Court reversed and rendered that part of the judgment below. Mississippi Windstorm Underwriting Assoc. v. Union Nat’l Fire Ins. Co., No 10-00076 (Miss. Jan. 26, 2012).

This post written by John Black.

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