Confirmation / Vacation of Arbitration Awards

DISTRICT COURT CONFIRMS FOREIGN ARBITRATION AWARD DESPITE PENDING PETITION IN CHINA; DEFENDANT APPEALS

January 12, 2010 by Carlton Fields

The Southern District of New York recently confirmed an arbitration award made by the China Maritime Arbitration Commission, over objections that enforcement of the award was inappropriate because the award was being challenged before the proper authority in China. This is a particularly noteworthy opinion because of the court’s willingness to confirm the arbitration award despite the fact that the defendant had filed a petition with a foreign jurisdiction to set aside the award, which means that the arbitral award was not final.

The Court confirmed the award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act (“the Convention”). Under the Convention, a court “shall confirm the award” unless one of seven enumerated exceptions applies. Applying those, in connection with the Second Circuit’s non-exhaustive list of six “competing concerns”, the court concluded that confirmation of the award was appropriate. The District Court, however, refused to award attorneys’ fees finding that the defendant had not delayed payment in bad faith.

Defendants have appealed this decision to the Second Circuit. China National Chartering Group Corp. v. Pactrans Air & Sea, Inc., Case No. 06-13107 (S.D. N.Y. Nov. 13, 2009).

This post written by John Black.

NINTH CIRCUIT AFFIRMS CONFIRMATION OF AWARD MADE THROUGH AN “UNUSUAL” ARBITRATION PROCESS

January 11, 2010 by Carlton Fields

The Ninth Circuit affirmed the confirmation of an arbitration award over the respondents objections that the process employed by the arbitration panel was unfair and resulted in an implausible interpretation of the reinsurance contracts. The petitioner, U.S. Life, contended that by closing a meeting of the panel with panel-retained workers’ compensation experts, the panel refused to hear pertinent evidence regarding the appropriateness of the respondent, Superior National, claims handling. U.S. Life also contended that the panel exceeded its authority by requiring U.S. Life to pay interest in excess of the award, pay all tendered bills, and pay all future bills within thirty days. Although noting the ex parte meeting with the experts was “unusual,” the Ninth Circuit determined that the arbitration process provided the parties with a fundamentally fair arbitration, and also that the arbitration award rested on a plausible interpretation of the governing arbitration documents. It accordingly affirmed the district court’s order confirming the award.

Of interest in this case was the district court’s order on U.S. Life’s request to waive or reduce the supersedeas bond for the appeal. The liability for the judgment was $592.8 million dollars. Although the petitioner presented evidence of “considerable financial strength,” the court found that standard practice was to set a bond amount of 1.25 to 1.5 times the amount of the judgment. The district court therefore entered a bond amount of $600 million. United States Life Insurance Co. v. Superior National Insurance Co., No. 07-55938 (9th Cir. Jan. 3, 2010).

This post written by Brian Perryman.

ROUND UP OF RECENT ARBITRATION AWARD CHALLENGES

December 9, 2009 by Carlton Fields

DMA International, Inc. v. Qwest Communications International, Inc., No. 08-1392 (10th Cir. Nov. 4, 2009) (affirming confirmation, denial of vacatur of arbitration award in fee dispute. No manifest disregard, arbitrator not partial or corrupt, no violation of public policy, arbitrator did not exceed his powers).

United Forming, Inc. v. FaulknerUSA, LP, No. 09-50073 (5th Cir. Oct. 27, 2009) (affirming confirmation, denial of vacatur of arbitration award in construction contract dispute. No conflict of interest or bias on part of arbitrators, rulings not so grossly incorrect as be “misconduct” or “misbehavior” under the FAA).

Oberwager v. McKechnie, Ltd., No. 08-1117 (3d. Cir. Oct. 20, 2009) (affirming summary judgment ruling that motion to vacate was untimely under FAA in stock purchase agreement dispute).

TSYS Acquiring Resolutions, LLC v. Electronic Payment Systems, LLC, No. CV-09-0155 (USDC D. Ariz. Oct. 22, 2009) (no manifest disregard absent demonstration that arbitrator was aware of controlling law).

Ario v. Cologne Reinsurance (Barbados) Ltd., 1-CV-98-0678 (USDC D. Pa. Nov. 13, 2009) (confirming award, no evident partiality, no manifest disregard of law).

The Householder Group v. Caughran, No. 09-40111 (5th Cir. Nov. 20, 2009) (affirming confirmation of NASD panel arbitration award, no evident partiality or bias)

Busch v. Southwest Securities, Inc., No. Civ-09-661-C (USDC W.D. Okla. Nov. 28, 2009) (confirming award in employment dispute, no arbitrator misconduct or refusal to consider material evidence).

Trustmark Ins. Co. v. Clarendon National Ins. Co., No. 09-C-1673 (USDC N.D. Ill. Nov. 20, 2009) (confirming award in reinsurance treaty dispute, refusing to consider post-award dispute as to payment obligations and “set-off” arguments as beyond purview of limited review of award under FAA).

Nat’l Union Fire Ins. Co. of Pittsburgh v. Odyssey America Reinsurance Corp., No. 05-CV-7539 (USDC S.D.N.Y. Nov. 18, 2009) (denying cross petitions for post-arbitration attorneys fees, and to vacate arbitration award of attorneys fees, respectively, relating to arbitration of reinsurance dispute).

This post written by John Pitblado.

RECENT ARBITRATION AWARDS IN FEDERAL COURT

November 5, 2009 by Carlton Fields

Over the past several months, a number of district and circuit courts have addressed the propriety of arbitration awards. This post briefly summarizes the salient factors from each case:

• Awards confirmed: Bradley v. Merrill Lynch & Co., Inc., Case No. 08-0269-cv (2d Cir. Sept. 2, 2009) (opponent failed to raise any substantial issues with the award, other than that it was unfavorable); Int’l. Brotherhood of Teamsters Local 177 v. UPS, Case No. 09-CV-0903 (D. N.J. Oct. 9, 2009) (none of the exceptions under the functus officio doctrine is applicable, and the award issued did not reflect a manifest disregard of the agreement); Silicon Power Corp. v. GE Zenith, Case No. 08-4331 (E.D. Pa. Sept. 29, 2009); Hughes v. Aloha Tower Development, Corp., Case No. CV 09-00277 (D. Haw. Sept. 9, 2009) (Aloha “bargained for the arbitrator’s interpretation award and is now bound by it”); Marketstar Corp. v. Prosper Bus. Development Corp., Case No. 2:07-CV-00132 (D. Utah Sept. 4, 2009) (also denying motion for pre-judgment interest); Fruehauf Trailer Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, Case No. 98-514 (Bankr. D. Del. Oct. 5, 2009).

• Lack of prejudice: In OneBeacon Am. Ins. Co. v. Mitchell, the Second Circuit Court of Appeals issued a summary order upholding the District Court’s determination that the petitioner was not prejudiced in the arbitration proceedings, and that the arbitration award was justified. OneBeacon Am. Ins. Co. v. Mitchell, Case No. 08-3432-cv; 08-3488-cv (2d Cir. Oct. 9, 2009).

• Remand to arbitrators: In On Time Staffing LLC v. Coast to Coast Installations, Inc., the District of New Jersey ruled on Plaintiff On Time Staffing’s Petition to Confirm the Interim Award. The Court confirmed the arbitration award against Coast to Coast, but remanded to the arbitrators for clarification as to whether the interim award is intended to be a “separate independent claim.” On Time Staffing LLC v. Coast to Coast Installations, Inc., Case No. 09-4158 (D. N.J. Oct. 8, 2009).

This post written by John Black.

SPECIAL FOCUS: THIRD CIRCUIT TELENOR DECISION REGARDING THE PRECLUSIVE EFFECT OF A COLLUSIVE FOREIGN COURT JUDGMENT AND THE NECESSITY FOR A TRIAL TO DETERMINE THE ARBITRABILITY OF A DISPUTE

November 2, 2009 by Carlton Fields

On October 26, 2009 we posted a brief item on Telenor Mobile Communications AS v. Altimo Holdings & Investments Limited, 07-4974 (2d Cir. Oct. 8, 2009), in which the Third Circuit held that: (1) the district court did not err in not holding a trial to determine whether a dispute before it was arbitrable based upon a dispute as to whether the person who signed the contract containing an arbitration provision had apparent authority to sign the document on behalf of a corporate party, when the factual record clearly demonstrated that the signer had apparent authority to do so; and (2) the district court did not act in manifest disregard of law by confirming an arbitration award that failed to give preclusive effect to a collusive judgment of a Ukrainian court adjudicating an issue before the arbitration panel. Blogmaster Rollie Goss submits a more detailed SPECIAL FOCUS post on this interesting case.

This post written by Rollie Goss.