Confirmation / Vacation of Arbitration Awards

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.

FIFTH CIRCUIT AFFIRMS ARBITRATION AWARD IN FAVOR OF FATHER AGAINST SON

November 9, 2011 by Carlton Fields

After being fired by his father, losing the arbitration related to his termination, and having his motion to vacate the award denied, Charles Wanken appealed the motion to vacate to the Fifth Circuit Court of Appeals. Concluding Mr. Wanken’s total defeat, the Fifth Circuit affirmed the trial court’s denial of the motion to vacate and affirmed Mr. Wanken’s father’s motion to confirm. The Fifth Circuit ruled that (a) the award had not been procured by the father’s fraud, (b) there was no evidence to support Wanken’s claim that the arbitration panel failed to consider material evidence, (c) the panel was not improperly biased, (d) the panel did not exceed its powers, and (e) the district court properly considered the motion to vacate and gave proper notice to Mr. Wanken. Wanken v. Wanken, No. 11-10219 (5th Cir. Sept. 29, 2011).

This post written by John Black.

VACATUR OF AWARD BASED ON “MANIFEST DISREGARD” REVERSED IN SEVENTH CIRCUIT

November 3, 2011 by Carlton Fields

The Seventh Circuit recently reversed a lower court’s decision to vacate a portion of an arbitration award in a patent dispute that the lower court found to be a “manifest disregard of the law.” The Seventh Circuit explained that “manifest disregard” is not an independent basis for vacatur, and can only support vacatur to the extent it reflects that arbitrators “exceeded their powers” under the applicable contract. Here, the underlying arbitration was authorized to determine the inventorship of certain patents, and the lower court failed to identify any manner in which the arbitrators exceeded that contractual authority. Noting that arbitrators are free to act without issuing written opinions, the Seventh Circuit held that the lower court committed a “logical error” by inferring “from silence” that the arbitrators relied on an extra-contractual ground. “Silence,” the Seventh Circuit explained, “is just silence.” Affymax, Inc. v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., Case No. 11-2070 (7th Cir. Oct. 3, 2011).

This post written by Michael Wolgin.