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The Vermont Supreme Court reversed a trial court order that had the effect of precluding class arbitration where the parties’ agreement was silent on the issue. The trial court based its ruling on the then-recent U.S. Supreme Court decision in Stolt-Nielsen SA v. AnimalFeeds Int’l Corp. However, on appeal, the Vermont Supreme Court reversed, holding that the trial court’s involvement was premature, as it was not based on a timely vacatur or confirmation action, as required to invoke a court’s jurisdiction under the Vermont Arbitration Act. The defendant bank failed to timely challenge the arbitrator’s pre-Stolt-Nielsen decision allowing class arbitration, and failed to re-raise the issue of arbitrability with the arbitrator in light of Stolt-Nielsen. Bandler and Bandler & Co. v. Charter One Bank, No. 2011-249 (VT Oct. 5, 2012).

This post written by John Pitblado.

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In an arbitration dispute brought in the Western District of Wisconsin over the inability of the parties to choose an arbitrator for reinsurance disputes, the court found that venue was improper and transferred the case to the Southern District of New York under 28 U.S.C. § 1404. Petitioners sought an order compelling the respondent to comply with the method for choosing arbitrators provided for in the arbitration agreement and respondent counterclaimed asking the court to choose an arbitrator since the parties could not agree on one. Respondent also argued that venue was not proper as to petitioners claims because the arbitration agreements included an agreement to hold arbitrations in New York, but argued at the same time that it should be allowed to assert its counterclaim in Wisconsin because it related to appointing an umpire under 9 U.S.C. § 5, which does not include a venue limitation, rather than enforcing an arbitration agreement under 9 U.S.C. §4, which includes a venue limitation. The court determined that the transfer of all claims was appropriate because the Seventh Circuit held in Haber v. Biomet that § 4 requires district courts to enforce forum selection clauses in arbitration agreements and that the counterclaim could not be tried separately from petitioners’ claims because the claims were too intertwined. Employers Ins. Co. of Wausau v. Arrowood Indemnity Co., Case No. 12-283 (USDC W.D. Wis. Oct. 26, 2012).

This post written by Abigail Kortz.

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In a three-way dispute between Exxon, BP, and a provider of drilling services over the alleged breach of an assignment agreement, a federal appeals court reversed based on the lower court’s improper resolution of a “lapse” in the parties’ ineffective two-party arbitrator selection procedures. The agreement provided that the dispute would be arbitrated before three arbitrators appointed in accordance with the rules of the Arbitration and Conciliation Act of 1990. ACA’s procedures, however, address a two-party dispute, in which each party selects an arbitrator, with the third selected by the arbitrators themselves.

When the three-way dispute arose in this case, and the parties could not agree on how the two-party arbitration selection process could be implemented, suit was filed in federal court under the New York Convention and the FAA. The court found that the arbitration agreement procedure reached a “mechanical breakdown” or “lapse,” and that it would order the appointment of five arbitrators. While the appellate court agreed with the district court’s determination that it was entitled to intervene under the FAA, it reversed the process that the district court instituted, holding that the FAA limited the court to enforce the underlying arbitration agreement, which in this case provided for only three arbitrators. On remand, the appellate court recommended a procedure for the district court to “consider” to achieve the equitable appointment of three arbitrators in a three-party dispute context. BP Exploration Libya Ltd. v. Exxonmobil Libya Ltd., No. 11-20547 (5th Cir. July 30, 2012).

This post written by Michael Wolgin.

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