Confirmation / Vacation of Arbitration Awards

COURT HOLDS NEW YORK CONVENTION COVERS DOMESTIC AWARDS THAT ARE “FOREIGN IN CHARACTER”

June 24, 2010 by Carlton Fields

A U.S. District Court has denied the Republic of Argentina’s motion to vacate a $185 million dollar arbitration award in favor of a British investor in Argentinean gas distribution. The award was made in an arbitration under the United Nations Commission on International Trade Law Rules, as provided in the Argentina-United Kingdom bilateral investment treaty.

As an initial matter, the court determined that it had proper subject matter jurisdiction over the matter under Chapter 2 of the FAA, also known as the Convention On The Recognition And Enforcement Of Foreign Arbitral Awards. Specifically, the court rejected Argentina’s arguments based on the Convention’s reciprocity clause, finding that an award made in the U.S. between a U.K. investor and a foreign state fell within the New York Convention as an award “not considered as domestic.” The court then rejected each of Argentina’s merits-based arguments, finding that the Court of International Arbitration did not exceed its powers in rejecting a challenge to one of the arbitrators based on bias, that the panel’s decisions were based on plausible constructions of the bilateral investment treaty, and that the panel did not otherwise abuse its powers. Republic of Argentina v. BG Group PLC, Case No. 08-485 (USDC D.D.C. June 7, 2010).

This post written by Michael Wolgin.

UK Court Determines that Arbitrators Correctly Applied US, UK Law

June 3, 2010 by Carlton Fields

In a dispute stemming from various reinsurance claims arising from the Claimant’s participation in an excess of loss reinsurance program which protected the Respondent’s casualty book of business, IRA Brasil Resseguros challenged an arbitration panel’s ruling in favor of CX Reinsurance Company before the UK High Court of Justice, Queen’s Bench Division. Mr. Justice Burton granted leave to hear four issues on appeal: (1) the standard of proof required for a reinsured to prove his case under a “double proviso” follows settlements clause; (2) the correct approach to considering the question of proof of loss under such a follow settlements clause; (3) what proof is required in relation to a “losses occurring during” clause; and (4) the test for whether a loss was a loss “arising out of an event.” The court, after considering and applying both UK precedent (for issues 1 and 2) and US case law (for issues 3 and 4) determined that the arbitrators had correctly applied applicable law and dismissed the appeal accordingly. IRB Brasil Resseguros SA v. CX Reinsurance Co. Ltd., Case No. 2010 Folio 12 (Q.B. May 7, 2010).

This post written by John Black.

HALL STREET ASSOCIATES DOES NOT BAR A REMAND TO AN ARBITRATION PANEL FOR CLARIFICATION OF THE AWARD

May 20, 2010 by Carlton Fields

A trial court’s judgment confirming an arbitration award and awarding certain pre- and post-judgment interest to the defendant insurance companies was unsuccessfully appealed, the appellate court determining that an earlier remand to the arbitration panel was proper because, among other things, nothing in the United States Supreme Court’s ruling in Hall Street Associates, L.L.C. v. Mattel, Inc. precluded that procedure. On appeal, the plaintiff contended that the trial court: (1) improperly remanded the matter to the arbitration panel for clarification of its award; (2) improperly confirmed the arbitration award as clarified; and (3) abused its discretion in awarding pre- and post-judgment interest.

On the first point, the plaintiff contended that Hall Street Associates overruled the body of precedent permitting a remand to an arbitration panel for clarification of an award. This contention was rejected, as the issue in Hall Street Associates was whether parties to an arbitration proceeding could, by contractual agreement, supplement the statutory grounds for vacating an arbitration award. Hall Street Associates did not concern the procedure at issue, a remand for clarification of an arbitration award. On the second point, plaintiff argued that the arbitration panel imperfectly executed its powers, so that the clarified arbitration award did not conform to the submission. The appellate court noted, however, that courts will not review the evidence nor, where the submission is unrestricted, will they review the arbitrators’ decision of the legal questions. The submission at issue was unrestricted. On the third point, the plaintiff claimed the trial court abused its discretion in awarding pre- and post-judgment interest. The decision, however, of whether to grant interest is an equitable determination within the trial court’s discretion. The trial court’s reasoning was sound: “Although it does not appear that the plaintiff made its motions and appeals in bad faith, the plaintiff would receive an unfair advantage if it were allowed to retain this money while the defendants were deprived of its use and the opportunity to earn interest upon it for the past six years.” The judgment was confirmed in full. Hartford Steam Boiler Inspection & Insurance Co. v. Underwriters at Lloyd’s, Case No. AC 30162 (Conn. App. Ct. May 11, 2010).

This post written by Brian Perryman.

Southern District of New York Confirms FINRA Arbitration Award

May 17, 2010 by Carlton Fields

Following an initial FINRA arbitration award holding Steven Singer liable to Hartford Financial Holdings for compensatory damages, Mr. Singer filed Chapter 7 bankruptcy. After a complicated procedural history, the Bankruptcy Court granted relief from the automatic stay and allowed Hartford to proceed with this action in US District Court for the Southern District of New York. In its petition, Hartford asked the District Court to confirm the arbitration award, and for a determination that the award is nondischargeable under § 523(a) of the Bankruptcy Code, or alternatively for a remand to the FINRA arbitration panel so that it may clarify the award. As an additional alternative, Hartford asked the Court to review FINRA arbitration hearings to determine whether the award is dischargeable.

The District Court confirmed the initial arbitration award but denied all of Hartford’s other requests for relief. In particular, the Court determined that a determination of whether the award was nondischargeable would violate the automatic stay. Further, the Court denied modification or remand finding that the award was not an evident miscalculation nor was it indefinite or ambiguous. Pursuant to New York statute and FINRA, 9% interest per annum was set on the award. Hartford Financial Holdings, Inc. v. Singer, Case No. 08-2459 (S.D.N.Y. May 4, 2010).

This post written by John Black.

Various Rulings with Respect to Arbitration Awards

May 13, 2010 by Carlton Fields

Attorneys’ Fees:

Steinberg v. Morgan Stanley & Co., Case No. 06-02628 (USDC S.D. Cal. Apr. 5, 2010) (granting motion to confirm the arbitration award, finding that the arbitrator’s use of the lodestar method, rather than the percentage recovery method, to allocate fees between law firms was not completely irrational).
Janney Montgomery Scott LLC v. Tobin, Case No. 07-11197 (USDC D. Mass. Mar. 10, 2009) (allowing a motion for attorneys’ fees and costs following an order denying the petition to vacate the final arbitration award, however, the court modified the amount of attorneys’ fees that respondent was entitled to receive).
Amerisure Mut. Ins. Co. v. Global Reinsurance Corp. of Am., Case No. 08-42242 (Ill. App. Ct. Mar. 15, 2010) (vacating part of the order awarding attorneys’ fees because Section 155 of the Illinois Insurance Code does not authorize arbitrators to award attorneys’ fees).

Awards Upheld:

Ventress v. Japan Airlines, No. 08-15731 (9th Cir. Apr. 30, 2010) (affirming the confirmation of an award where appellant put forth only unsupported allegations of evident partiality).
Omnicare, Inc. v. RxSolutions, Inc., No. 08-01254 (9th Cir. Mar. 17, 2010) (rejecting several arguments that the arbitrator exceeded his powers and ruling the district court did not err in denying the motion to vacate).
Dunkley v. Mellon Investor Servs., No. 09-3609 (3d Cir. May 4, 2010) (affirming the district court’s denial of the motion to vacate; appellant did not satisfy his burden of demonstrating evident partiality or corruption).
Local 4-406 United Steel v. IMTT-Bayonne, Inc., Case No. 09-05380 (USDC D. N.J. Apr. 14, 2010) (denying a motion to vacate; the arbitrator did not exceed the scope of the parties’ submissions in finding that the employee’s termination was warranted based on excessive absences alone and did not disregard applicable law since the non-approved absences alone constituted a sufficient basis for termination).
Am. Tower Corp. v. Tri-State Bldg. & Supply, Inc., Case No. 09-3470 (USDC D. Md. Mar. 23, 2010) (dismissing petition to vacate award; the arbitrator, not the court, has the power to determine whether a single arbitrator is appropriate as this determination is one of procedure, not arbitrability).
Jamoua v. CCO Inv. Servs. Corp., Case No. 09-13604 (USDC E.D. Mich. Mar. 10, 2010) (granting motion to confirm award and denying application to vacate award; the award, on its face, does not demonstrate manifest disregard for the law).
Dallas MTA, LP v. Celltex Cellular, Case No. 06-15412 (USDC S.D.N.Y. Mar. 9, 2010) (denying the application to vacate part of the award because the court could infer a basis for the panel’s decision finding one defendant personally liable under the contract).
D’Adamo v. Erie Ins. Exch., Case No. 479-2008 (Pa. Super. Ct. Apr. 30, 2010) (affirming the judgments entered on the arbitration awards; the panel properly applied credits to the awards pursuant to the exhaustion clause, and the trial court properly refused to vacate or modify the arbitration awards to disallow the credits).
Twp. of Irvington v. Coregis Ins. Co., Case No. 2424-08T3 (N.J. Super. Ct. App. Div. Apr. 7, 2010) (affirming the trial court’s confirmation of an arbitration award that concluded the insurer was not obligated to provide coverage where the insured, among other things, failed to cooperate in the defense and settlement of a lawsuit).

Mixed Results:

New Jersey Reg’l Council of Carpenters v. Heartland Dev. Co., Case No. 09-178 (USDC D. N.J. Apr. 26, 2010) (granting motion to confirm award against one company, and vacating award against other company due to the other company not being a signatory to the collective bargaining agreement, then determining that a hearing on the facts is necessary to hold other company liable under the arbitration agreement).

This post written by Dan Crisp.