The case concerned two purchase orders whereby defendant BJB LLC dba Agri Trading (Agri Trading) agreed to purchase corn oil from plaintiff Hardy Industrial Technologies, Inc. (Hardy). A dispute arose and was submitted for arbitration pursuant to language in the purchase orders incorporating the American Fats and Oils Association, Inc.’s (AFOA) trade rules. A three-member panel of the AFOA Arbitration Tribunal issued its award finding in favor of Agri Trading that both purchase orders were invalid.
Hardy moved to vacate, modify, or correct the arbitration award, principally relying on “evident partiality” on the part of the arbitrators, namely, that the arbitrators were biased in favor of Agri Trading. In support of its motion, Hardy argued that the arbitrators were biased because Agri Trading was a member of the AFOA but Hardy was not, and because the president of Agri Trading attended AFOA meetings with the arbitrators, worked on AFOA committee meetings, served on the AFOA Board of Directors, and socialized with them.
The Court rejected this argument, finding that Hardy failed to establish that the alleged partiality was direct, definite, and capable of demonstration, or that specific facts existed which indicated improper motives on the part of the arbitrators. The Court reasoned that Hardy’s claim was “one of institutional bias, which, at best, establishes an appearance of bias.” Furthermore, the Court noted that the AFOA’s arbitration rules, which required that three-member panels be comprised of one arbitrator designated as a buyer, one as a seller, and one as other, undermined Hardy’s argument that the arbitrators were biased. As such, the Court denied Hardy’s motion to vacate and affirmed the arbitration award. Hardy Indus. Tech., LLC v. BJB, LLC, Case No. 1:12-cv-3097 (USDC N.D. Ohio Dec. 16, 2016).
This post written by Gail Jankowski.
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