Arbitration / Court Decisions

UK HIGH COURT REFUSES TO STAY PROCEEDINGS DESPITE CONCURRENT ACTION IN TEXAS

July 31, 2013 by Carlton Fields

MacDermid Offshore Solutions LLC (“MacDermid”) sued Niche Products Limited (“Niche”) in Texas for misleading advertising. Soon thereafter, Niche sued MacDermid in the Patents County Court (“PCC”) in England under the British cause of action for malicious falsehood. Both intellectual property proceedings turned on whether a particular type of oil product was different. MacDermid filed an application with the PCC, requesting that the proceedings be heard in Texas. The PCC dismissed the application, and MacDermid appealed.

The High Court of Justice, Chancery Division, dismissed the appeal on the grounds that the judge had applied the correct test in holding that the claim should be heard in the English jurisdiction, despite a concurrent action in Texas. The High Court noted that the test remains whether the foreign jurisdiction is clearly more appropriate. The existence of prior foreign proceedings is not decisive, though it may be a factor to be taken into account, and the weight to be attached to such proceedings is a matter of judgment. MacDermid Offshore Solutions LLC v. Niche Products Ltd, [2013] EWHC 1493 (Ch) (May 6, 2013).

This post written by Brian Perryman.

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COURT HOLDS THAT PRECLUSIVE EFFECT OF PRIOR ARBITRATION SHOULD BE DECIDED BY ARBITRATOR

July 30, 2013 by Carlton Fields

National Casualty, Wausau and Swiss Re reinsured OneBeacon under a multiple line excess cover program. When disputes arose OneBeacon arbitrated with Swiss Re, and lost. OneBeacon then demanded arbitration with National Casualty and Wausau with respect to the same reinsurance program, but that proceeding broke down over disputes concerning the selection of an umpire to complete a three arbitrator panel. National Casualty and Wausau then filed a lawsuit against OneBeacon, seeking a declaration that the prior arbitration award and the doctrine of collateral estoppel barred OneBeacon’s second arbitration, and seeking the court’s assistance in the appointment of the umpire. The court granted OneBeacon’s motion to dismiss the preclusion claim on the basis that the preclusive effect of a prior arbitration in a subsequent arbitration should be decided by the arbitrator and not by the court.

The reinsurers had put forth a senior official of Swiss Re as their umpire candidate, to which OneBeacon objected, on the basis that the candidate was not impartial and was not qualified to serve. The court found OneBeacon’s challenge to the as yet unselected umpire candidate premature under the terms of the Federal Arbitration Act, which provides that challenges to arbitrators should be entertained by courts only after the issuance of an arbitration award. National Cas. Co. v. OneBeacon American Ins. Co., Case No. 12-11874 (USDC D. Mass. July 1, 2013).

This post written by Brian Perryman.

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FIFTH CIRCUIT RULES JUDICIAL ESTOPPEL BARS CHEVRON’S CHALLENGE TO ECUADOR’S REQUEST FOR DISCOVERY

July 29, 2013 by Carlton Fields

Chevron Corporation and the Republic of Ecuador have been engaged in contentious litigation for nearly two decades in various courts over alleged environmental contamination of oil fields in Ecuador. An Ecuadorian court finally issued a multi-billion dollar judgment against Chevron, prompting Chevron to file for arbitration under the rules of the U.S.-Ecuador Bilateral Investment Treaty (“BIT”). For use in the BIT arbitration, Ecuador applied for ancillary discovery from an individual, John Connor, and his company, GSI Environmental, in the Southern District of Texas pursuant to 28 U.S.C.A. § 1782. Section 1782 authorizes district courts to assist discovery efforts of litigants before foreign and international tribunals, and includes private international arbitration.

The Fifth Circuit has previously held, in Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880 (5th Cir. 1999), that an international arbitration tribunal is not a “foreign or international tribunal” under § 1782. The district court, compelled by this precedent, denied the discovery request. Ecuador appealed, arguing that Chevron was judicially estopped to contend that the BIT arbitration was not an “international tribunal.” The Fifth Circuit agreed after finding that Chevron had deliberately taken inconsistent positions on the availability of § 1782 discovery” and that “if Chevron is permitted to shield itself under Biedermann against Ecuador’s current discovery request, it will have gained an unfair advantage over its adversary.” The Court thus concluded that Chevron was judicially estopped from asserting its legally contrary position and stated, “we need not and do not opine on whether the BIT arbitration is in an ‘international tribunal.’” Republic of Ecuador v. Connor, Nos. 12-20122, 12-20123, 2013 WL 539011 (5th Cir. Feb. 13, 2013).

This post written by Brian Perryman.

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MOTIONS TO DISMISS CAPTIVE REINSURANCE LAWSUIT DENIED

July 25, 2013 by Carlton Fields

A federal district court granted in part and denied in part various motions to dismiss filed by defendants HSBC and private insurers Genworth, Republic, and Mortgage Guaranty. Plaintiffs alleged that HSBC Mortgage, through HSBC Reinsurance, conspired with various private mortgage insurers to create a captive reinsurance scheme. The scheme, which involved private insurers paying HSBC reinsurance premiums for little, if any, assumption of risk allegedly circumvented the kickback prohibitions of the Real Estate Settlement Procedures Act. Plaintiffs further alleged that the premium payments were made by the private insurers for business referrals. Though the RESPA allegations would otherwise be barred by the statute of limitations, the court declined to dismiss those claims, citing the doctrine of equitable tolling. The court also declined to dismiss plaintiffs’ additional claim for unjust enrichment. Only United Guaranty’s motion to dismiss was granted, as plaintiffs failed to show that United Guaranty actually insured the mortgages in question. Moriba BA v. HSBC USA, Inc., Case No. 2:13-cv-00072-PD (USDC E.D. Pa. June 27, 2013).

This post written by Brian Perryman.

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ARBITRATION AWARD CONFIRMATION ROUNDUP

July 24, 2013 by Carlton Fields

Disagreement over result

Bailey Brake Farms, Inc. v. Trout, No. 2011-CA-00610 (Ms. S.C. May 23, 2013) (mere disagreement with the result of arbitration is not a ground for vacating an arbitration award)

Leeward Constr. Co. v. American Univ. of Antigua College of Medicine, Case No. 12-6280 (USDC S.D.N.Y. Mar. 26, 2013) (mere disagreement with the result of arbitration is not a ground for vacating an arbitration award)

Evident partiality

Bain Cotton Co. v. Chestnutt Cotton Co., No. 12-11138 (5th Cir. Je. 24, 2013) (dewnial of discovery by arbitrator did not amount to evident partiality)

Antietam Industries, Inc. v. Morgan & Keegan Co., Case No. 12-1250 (USDC M.D. Fl. Mar, 25, 2013) (lack of disclosure by arbitrator did not amount to evident partiality, nor was arbitrator misbehavior or exceeding powers demonstrated)

Exceeding authority

Donnelly v. Jewel of Kahana, LLC, Case No. 12-00347 (USDC D. Ha. Mar. 28, 2013)(using the completely irrational test, the arbitrator did not act in excess of authority; improper arbitrator bias was not shown; mere disagreement with arbitration result is not a basis for vacating an award)

E*Trade Securities, LLC v. Nash, Case No. 12-1766 (USDC M.D. FL. Mar. 12, 2013)(arbitrator did not exceed authority by deciding issue when the parties waived their right to have the issue determined by a court)

Jurisdiction

Liu v. Mar, Case No. 13-685 (USDC N.D. Ill. April 10, 2013) (motion to confirm arbitratin award dismissed for lack of subject matter jurisdiction because no basis for federal jurisdiction was articulated other than the Federal Arbitration Act, which does not provide a basis for the exercise of jurisdiction)

Manifest disregard

Bartlett Grain Co. v. Sunburst Farms Partnership, Case No. 13-1152 (USDC D. Ks. July 5, 2013)(avoids quesion of whether the doctrine of manifest disregard of law survives Superme Courtt’s Hall Street Associates opinion by finding that manifest disregard not demonstrated)

Stipulation

Berkley Ins. Co. v. Excalibur Reinsur. Corp., Case No. 13-2633 (USDC S.D. N.Y. May 15, 2013) (arbitration award concerning reinsurance dispute confirmed by stipulation)

Untimely request to vacate

Glaser v. Legg, Case No. 12-805 (USDC D. D.C. Mar. 11, 2013) (petition to vacate arbitration award denied as untimely under the Federal Arbitration Act; Petitioner barred from raising arguments in support of vacating award as affirmative defenses to cross-petition to confirm the award)

This post written by Rollie Goss.

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