Confirmation / Vacation of Arbitration Awards

NINTH CIRCUIT CONFIRMS ARBITRATION AWARD IN FAVOR OF IRAN’S MINISTRY OF DEFENSE

January 4, 2012 by Carlton Fields

The US Court of Appeals for the Ninth Circuit recently issued an opinion determining that an arbitration award of the International Court of Arbitration of the International Chamber of Commerce (“ICC”) in favor of the Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran was not “contrary to the public policy” of the United States under the New York Convention. The Court of Appeals agreed with the position of the United States as amicus curiae that confirmation of the award did not violate any public policy of the United States. The Ninth Circuit noted that there was a strong presumption in favor of foreign arbitration awards and that US relations with Iran were heavily regulated. The Court of Appeals noted that there was an inherent difference between an arbitration award and a “payment” which would be prohibited under existing sanctions law related to Iran. Furthermore, the Ninth Circuit declined to refuse to confirm the award as it could be authorized by the US government’s issuance of a specific license. The Court of Appeals concluded that Cubic’s argument that the ICC award was not yet binding on the parties was without merit. The Ninth Circuit also held that the district court’s judgment is a “money judgment” subject to post-judgment interest, and that a district court had discretion to award pre-judgment interest and attorney’s fees in an action to confirm an award under the New York Convention. The Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Sys., Inc., No. 98-01165 (9th Cir. Dec. 15, 2011).

This post written by John Black.

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ARBITRATION ROUND-UP

December 13, 2011 by Carlton Fields

Manifest Disregard:

Zimmerman Ag and Cattle Co. v. Agro National, LLC, No. CV-11-29 (USDC D. Mont. Nov. 7, 2011) (denying motion to vacate, finding “mere error of law” insufficient to satisfy manifest disregard standard).

Rite Aid New Jersey, Inc. v. United Food Commercial Workers Union, Local 1360, No. 10-3558 (3d Cir. Oct. 26, 2011) (affirming denial of motion to vacate award, no manifest disregard).

New York City Dist. Council of Carpenters Pension Fund v. Star Intercom & Construction, Inc., No. 11 Civ. 03015 (USDC S.D.N.Y. Oct. 27, 2011) (granting motion to confirm arbitrator decision of default judgment against respondent, where arbitrator did not “dispense his own brand of justice,” no basis for vacatur).

Activant Solutions, Inc. v. Notoco Industries, LLC, No. C-11-02436 (USDC N.D. Cal. Oct. 26, 2011) (granting petition to confirm, no manifest disregard for arbitrator’s refusal to modify award).

Conflict of Laws:

Southern Pioneer Life Insurance Co. v. Thomas, No. 11-426 (Ark. Nov. 17, 2011) (affirming denial of motion to compel arbitration, holding FAA preempted by McCarran-Ferguson Act vis-à-vis Arkansas statute precluding arbitration of claims under insurance contracts).

Evident Partiality:

In re Wal-Mart Wage and Hour Employment Practices Litigation, No. 2:06-CV-00225-PMP-PAL (USDC D. Nev. Oct. 11, 2011) (granting motion to confirm, finding no “evident partiality” where arbitrator raised ethical issues pertaining to respondent’s counsel).

Patrizzi & Co. Auctioneers SA v. SDG Corp., No. 11-C-3589 (USDC N.D. Ill. Oct. 25, 2011) (granting motion to confirm, no “evident partiality” in allowing one party to submit evidence not on pretrial list and not the other party).

Exceeding Arbitrator’s Authority:

Verve Communications Pvt Ltd. v. Software Int’l, Inc., No. 11-1280 (USDC D.N.J. Nov. 9, 2011) (denying motion to vacate, arbitrator did not exceed authority by closing discovery period over objection and making award).

Choice Hotels Int’l v. Savannah Shakti Corp., No. DKC-11-0438 (USDC D. Md. Oct. 25, 2011) (granting motion for default, arbitrator’s default award on contract claims did not exceed scope of submission).

Class Arbitration:

Southern Communications Services, Inc. v. Thomas, 1:10-CV-2975-AT (USDC N.D. Ga. Nov. 3, 2011) (denying motion to vacate award holding class arbitration allowable, and granting class certification).

Scope of Arbitration:

Shah v. Santander Consumer USA, Inc. d/b/a Drive Financial Services, LP, No. 3:11-CV-00096 (USDC D. Conn. Nov. 16, 2011) (motion to compel arbitration granted, finding statutory claims “collateral matters” that implicate rights created under the contract).

Stay Pending Appeal / Appellate Jurisdiction:

Weingarten Realty Investors v. Miller, No. 11-20676 (5th Cir. Nov. 1, 2011) (affirming district court ruling denying stay of proceedings during pendency of appeal of decision denying motion to compel arbitration).

TransAmerica Life Insurance Co. v. Rapid Settlements, Ltd., No. 01-11-00240-CV (Tex. Ct. App. Nov. 10, 2011) (dismissing appeal for lack of jurisdiction, trial court order regarding offset to previously entered judgment non-appealable).

This post written by John Pitblado.

APPEALS COURT REVERSES TRIAL COURT’S ORDER VACATING ARBITRATION AWARD AS INSUFFICIENTLY “REASONED”

November 28, 2011 by Carlton Fields

A federal circuit court of appeals reversed a lower court order vacating an arbitration award because the arbitrators had “exceeded their powers” by purportedly failing to provide a “reasoned award” as agreed upon by the parties. Cat Charter, LLC and its principals initiated an arbitration against Multihull Technologies, Inc. and its owner to resolve a dispute involving the construction of a yacht. The parties requested a “reasoned award” from the panel. According to the district court, the arbitrators failed to deliver an award that was sufficiently “reasoned,” exceeding their powers under Federal Arbitration Act section 10(4)(a). The court of appeals analyzed what it termed the “spectrum of increasingly reasoned awards” that runs from a “standard award,” which merely announces a decision, to “findings of fact and conclusions of law,” which requires “relatively exacting” detail. The appellate court found that a “reasoned award” was somewhere in the middle of the spectrum and that the panel’s award, though “it could have provided more,” gave a sufficiently detailed explanation to be considered “reasoned.” The appeals court reinstated the award, noting that if the parties had desired more detail, they could have requested that the arbitrators provide “findings of fact and conclusions of law.” Cat Charter 11th Cir 7.13.11, No. 10-11674 (11th Cir. July 13, 2011).

This post written by Ben Seessel.

CONFIRMATION OF ARBITRATION AWARD OF ATTORNEYS FEES AND COSTS AFFIRMED ON APPEAL

November 17, 2011 by Carlton Fields

White Springs Agricultural Chemicals, Inc. and Glawson Investments Corp. had a history of property dispute litigation arising from their respective uses of neighboring properties in Florida. They stipulated to a settlement, agreeing that future disputes would be arbitrated. A dispute again arose, and Glawson demanded arbitration in accordance with the agreement. The parties arbitrated, and the panel found in Glawson’s favor, awarding attorneys fees and costs. White Springs sought to vacate the award in federal court, arguing the fee award was improper and beyond the scope of the submission. The court disagreed, confirming the award. White Springs appealed. The Eleventh Circuit affirmed, citing the agreement for the panel’s authority to award attorneys fees, and noting that, while Glawson had not initially sought fees, it was apparent the parties had submitted that issue to the arbitration panel, inasmuch as both parties briefed the issue, and the panel heard argument on the issue before issuing the award. White Springs Agricultural Chemicals, Inc. v. Glawson Investments Corp., No. 10-14532 (11th Cir. Oct. 17, 2011).

This post written by John Pitblado.

REINSURER LIMITED TO COMPLAINT’S REQUEST FOR APPOINTMENT OF NEUTRAL UMPIRE

November 14, 2011 by Carlton Fields

A dispute arose between Century Indemnity Company and Everest Reinsurance Company over reinsurance coverage for certain asbestos claims. The parties each selected an arbitrator pursuant to the procedure set forth in their reinsurance treaty. Unable to reach agreement on the selection of a neutral umpire, Everest filed an action seeking appointment of an umpire or, in the alternative, to compel Century to participate in an ARIAS neutral umpire selection process. After Everest filed its complaint, however, Century agreed to the ARIAS process as part of a global agreement involving the arbitration (the “Formosa Arbitration”), and two other pending arbitrations (the “Congoleum Arbitration” and the “Flintkote Arbitration”), mooting the issue. Everest thereafter moved to enforce the global agreement, complaining that Century had sought to consolidate the Congoleum Arbitration with another arbitration that was not part of the agreement, and in which a panel of arbitrators had already been selected, circumventing the agreed-upon panel selection process. The court denied Everest’s motion on the basis that it was outside the complaint’s scope, which merely sought appointment of a neutral umpire in the Formosa Arbitration. To obtain relief regarding the Congoleum Arbitration, Everest could file a motion with the Congoleum Arbitration panel or in the court where other motions relating to that proceeding were pending. Everest Reinsurance Co. v. Century Indemnity Co., Case No. 11-2789 (USDC D.N.J. Oct. 31, 2011).

This post written by Ben Seessel.