Confirmation / Vacation of Arbitration Awards

U.K. COURT CONFIRMS ARBITRATION AWARD AGAINST REINSURER AND IN FAVOR OF P&C INSURER THAT PAID SUMS UNDER SETTLEMENTS

February 16, 2011 by Carlton Fields

A reinsurer challenged an arbitration award finding coverage in favor of a P&C insurer in six cases where the insurer had paid sums under compromise agreements. A U.K. court confirmed the award in favor of the P&C insurer, finding that the arbitrators’ reasoning was clear, and that their judgment was unchallengeable in law. The underlying claims by insureds involved silicon breast implant manufacturers’ liability, liability of makers of products derived from blood contaminated with HIV or AIDS, asbestos, and environmental pollution. In re Arbitration Between IRB Brasil Resseguros SA & CX Reinsurance Co., [2010] EWHC 974 (Q.B. 2010).

This post written by Ben Seessel.

THIRD CIRCUIT ACCORDS “EXTREME DEFERENCE” TO ARBITRATOR’S AWARD

February 14, 2011 by Carlton Fields

The Third Circuit Court of Appeals affirmed a district court’s ruling confirming an arbitration award in a labor dispute under a collective bargaining agreement. The Court reiterated the principles of “extreme deference” accorded to arbitrator decisions under the Federal Arbitration Act, and cited the arbitrator’s review of testimony, exhibits, briefs, oral argument and thoughtful seven-page memorandum of decision. The Court concluded by citing the district court’s statement that the case “is really nothing more than Tube City’s quibbling over the arbitrator’s interpretation of the CBA [collective bargaining agreement].” Tube City IMS, LLC v. United Steel, Paper and Forestry, Rubber, Mfg., Energy, Allied Industrial Service Workers Int’l Union, Local 5852-19, No. 10-1403 (3d Cir. Jan. 6, 2011).

This post written by John Pitblado.

MANIFEST DISREGARD OF LAW DOCTRINE NOT VIABLE IN THE EIGHTH CIRCUIT

February 10, 2011 by Carlton Fields

A U.S. district court in the Eighth Circuit has followed circuit precedent and rejected the “manifest disregard of the law” attack on an arbitration award. The court confirmed an award and denied a motion to vacate, holding that “it is well-established in the Eighth Circuit that the ‘manifest disregard of the law’ doctrine is no longer good law, and this Court is bound to follow the established law of the Eighth Circuit.” Jay Packaging Group, Inc. v. Mark Andy, Inc., Case No. 4:10MC00763 (USDC E.D. Mo. Jan. 21, 2011).

This post written by Michael Wolgin.

$185 MILLION AWARD CONFIRMED FOR LOSSES CAUSED BY ARGENTINA’S EMERGENCY LAWS ENACTED IN RESPONSE TO 2002 ECONOMIC CRISIS

February 9, 2011 by Carlton Fields

On June 24, 2010, we reported on a dispute between BG Group, a British company that invested in Argentinean gas distribution, and Argentina over losses incurred by BG Group after Argentina enacted emergency laws in response to an economic crisis in 2002. A U.S. district court has now confirmed an arbitration award in excess of $185 million over Argentina’s contention that the award violated public policy and was thus improper under the New York Convention. The court’s decision was based upon the following determinations: (1) that the panel correctly found that the governing investment treaty’s condition precedent for suit in Argentinean court to precede arbitration was invalid in light of Argentina’s emergency laws, which made it effectively impossible to comply with that condition; (2) that the arbitration was not an impermissible “derivative claim” brought by a non-party to the investment treaty because the duty that BG Group claimed Argentina violated was a duty contemplated by the treaty to extend to an investor; (3) that in calculating damages, the panel’s consideration of a transaction that occurred four years prior to the economic crisis was not improper because the panel considered it only to assist it in determining BG Group’s fair market value prior to its loss in 2002; and (4) that the award did not run afoul of the “just compensation” prong of the U.S. Takings Clause because the panel had held that no property had been expropriated by Argentina, and in any event, the panel was not an arm of the government, and a “judicial taking” is not an action under the law that is “well defined and dominant” so as to constitute a violation of public policy. Republic of Argentina v. BG Group PLC, Case No. 08-485 (USDC D.D.C. Jan. 21, 2011). This post written by Michael Wolgin.

COURT DECLINES ATTORNEYS FEES AWARD TO PREVAILING PARTY IN ARBITRATION

February 2, 2011 by Carlton Fields

Western Technology Services initiated an arbitration against Cauchos Industriales under the parties’ licensing and service agreements, and was awarded the preliminary injunction it sought terminating the contracts. Cauchos moved to vacate that award, and Westech moved for sanctions, asserting Cauchos’ motion to vacate was frivolous. Both motions were denied. However, after a final arbitration award in its favor, Westech thereafter sought to confirm the award in court, and also sought attorneys fees for its enforcement action, based alternatively on the FAA, as well as the parties’ contract. The court rejected both arguments, finding that Cauchos’ earlier attempt to vacate the award was not frivolous under the FAA’s standard for obtaining attorneys fees in an enforcement action, and finding that entitlement to attorneys fees under the contract had been considered and rejected by the arbitration panel, which decision was entitled to deference. Western Tech. Svcs. Int’l., Inc. v. Cauchos Industriales, S.A., Case No. 09-1033 (USDC N.D. Tex. Nov. 16, 2010).

This post written by John Pitblado.