Confirmation / Vacation of Arbitration Awards

NINTH CIRCUIT: NO “MANIFEST DISREGARD OF THE LAW” WHERE ARBITRATORS MAY HAVE INTERPRETED LAW DIFFERENTLY

January 26, 2011 by Carlton Fields

On October 7, 2009, we reported on See More Light Investments v. Morgan Stanley DW Inc., Case No. CV 08-580 (USDC D. Ariz. July 29, 2009), in which a court vacated an arbitration award for “manifest disregard of the law” based on the failure to apply the Cuban Assets Control Regulations (CACR), which the arbitrators had initially recognized as applicable law. On January 14, 2011, the Ninth Circuit Court of Appeals reversed, holding that the CACR is not “well defined, explicit, and clearly applicable” to the transaction at issue because the arbitrators may have concluded that the CACR should not apply based on its provisions, or simply “interpreted the CACR differently, then the district court did.” See More Light Investments v. Morgan Stanley DW Inc., No. 09-16953 (9th Cir. Jan. 14, 2011).

This post written by Michael Wolgin.

ALABAMA COURT OF CIVIL APPEALS AFFIRMS CONFIRMATION OF ARBITRATION AWARD

January 19, 2011 by Carlton Fields

Three prospective buyers of certain multi-million dollar beach condo properties, who paid twenty percent down, but later refused to purchase the condos due to alleged deficiencies, brought suit against the owner/builder, who allegedly improperly retained a portion of the down payment. The parties arbitrated their dispute pursuant to the arbitration provision in the purchase agreement, and the plaintiffs were awarded compensatory and punitive damages on a conversion claim. However, disputing the damages calculation, the plaintiffs brought an action in court seeking to vacate the damages award in favor of a higher figure. The trial court generally confirmed the arbitration award, with only a slight modification based on a computational error. The appellate court affirmed, reiterating the principles of deference codified in the Federal Arbitration Act, and rejecting “manifest disregard of the law” as a proper basis on which to challenge an arbitration award. Kitchens v. Turquoise Properties Gulf, Inc., No. 2090791 (Ala. Civ. App. Nov. 12, 2010) (opinion not available without charge).

This post written by John Pitblado.

ARBITRATION ROUND-UP

January 11, 2011 by Carlton Fields

Exceeding Arbitrator’s Authority:

Controlotron Corp. v. Siemens Energy & Automation, Inc., Case No. 09 CV 03112 (USDC S.D.N.Y. Dec. 23, 2010) (denying motion to vacate award; granting motion to confirm award; arbitrator did not exceed authority by permitting amendment of claim and failing to make formal “written findings of fact and conclusions”)

Twin City Yellow Taxi, Inc. v. Farm Bureau Mutual Insurance Co., Case No. A10-775 (Minn. Ct. App. Dec. 28, 2010) (affirming denial of motion to vacate award; insufficient evidence that arbitrator exceeded powers; no evidence of evident partiality; defense not raised below is waived)

William Shirk v. Chicago Title Insurance Co., Case No. B222195 (Cal. Ct. App. Dec. 28, 2010) (affirming confirmation of award; award not procured by fraud; arbitrator did not exceed powers by reserving jurisdiction to decide future indemnity claims)

Class Arbitration:

Louisiana Health Service Indemnity Co. v. Gambro A B, Case No. 05-1450 (USDC W.D. La. Dec. 21, 2010) (denying motion to vacate order compelling class arbitration or limit order to only individual claims; distinguishing Stolt-Nielsen because panel applied FAA law rather than “policy choices”)

Imperfect Execution:

Ewers v. Genuine Motor Cars, Inc., Case No. 1:10 CV 1247 (USDC N.D. Ohio Dec. 10, 2010) (confirming award; denying motion to vacate or modify award; arbitrator did not imperfectly execute powers for failure to provide reasons for award that exceeded treble damages; “arbitrators are not required to explain their decisions” and agreement provided that no written opinion should issue; no manifest disregard of the law)

Consent Award:

American Heritage Life Insurance Co. v. Southwest Reinsure Inc., Case No. 3:10-cv-01040 (M.D. Fla. Nov. 23, 2010) (confirming $3,500,000 consent award)

Finality:

Sensordynamics AG Entwicklungs – UND Produktionsgesellschaft v. Memsco, LLC, Case No. 08-56803 (9th Cir. Dec. 29, 2010) (denying petition to confirm foreign arbitration award; award subject to change is not final and generally not appealable)

This post written by Michael Wolgin.

SWISS RE ARBITRATION AWARD CONFIRMED BY DISTRICT COURT

January 10, 2011 by Carlton Fields

OneBeacon Insurance Company filed a motion to vacate an arbitration award in favor of Swiss Re. OneBeacon argued that the award should be vacated because the arbitrators were guilty of misconduct by refusing to permit necessary discovery and hear certain evidence. The dispute between the parties was governed by a Multiple Line Reinsurance Treaty contract which is an excess loss reinsurance contract containing an arbitration clause. The court denied OneBeacon’s motion to vacate and confirmed Swiss Re’s motion to confirm, finding that the arbitration panel acted reasonably in construing the term “occurrence” under the treaty and that the panel’s discovery and evidentiary decisions were within its discretion. OneBeacon American Insurance Co. v. Swiss Reinsurance Am. Corp., Case No. 09-11495 (USDC D. Mass. Dec. 23, 2010).

This post written by John Black.

APPEALS COURT DERAILS ATTEMPT TO VACATE ARBITRATION AWARD

December 21, 2010 by Carlton Fields

Burlington Northern and Santa Fe Railway Company (BNSF) and the Public Service Company of Oklahoma (PSO) entered into a long-term agreement in 1985 pertaining to the transport of coal. A dispute about rates arose and the matter was submitted to arbitration, as per the parties’ agreement. The arbitration provision was limited to rate disputes. The panel awarded PSO the rate decrease it sought, and BNSF thereafter moved to vacate the award in federal district court, arguing the panel (1) exceeded its authority by deciding matters outside the scope of the submission; and (2) incorrectly interpreted the contract in manifest disregard of the law. The district court ultimately confirmed the award, and BNSF revived its arguments on appeal to the Tenth Circuit Court of Appeals. The Tenth Circuit affirmed, finding that BNSF was merely seeking to alter its burden by disguising the issue as one of arbitrability, when really it was seeking review of the decision on the merits. Applying the correct standard of “extreme deference” to the panel’s decision on the merits, the court affirmed the district court’s ruling confirming the panel’s award. Burlington Northern and Santa Fe Railway Co. v. Public Service Company of Oklahoma, No. 09-5133 (10th Cir. Dec. 10, 2010).

This post written by John Pitblado.