September 9th, 2009
Authority of Arbitrators, Awards, Grounds for Vacatur, Reinsurance Arbitration, United States Court of Appeals for the Seventh Circuit
The Seventh Circuit recently decided an important case concerning what happens when Party A asks its party-appointed arbitrator to resign, the agreement is silent on how the vacancy should be filled, the remaining two arbitrators devise and implement a procedure for appointing a replacement, Party B (whose arbitrator did not resign) reserves its right to challenge the replacement procedure, and the Panel ultimately renders an award in favor of Party A. The Court held that the Panel did not exceed its powers by adopting and implementing — in the face of the agreement’s silence, and in the absence of Party B seeking court intervention under Federal Arbitration Act Section 5 – a procedure that allowed Party A to replace its party-appointed arbitrator and continue with the arbitration. See WellPoint, Inc. v. John Hancock Life Ins. Co., ___ F.3d ___, slip op. (7th Cir. August 7, 2009) (Slip op. here). Continue Reading »
June 28th, 2009
Association of Insurance and Reinsurance Run-Off Companies (AIRROC), Authority of Arbitrators, Awards, Grounds for Vacatur, Practice and Procedure, Reinsurance Arbitration, United States District Court for the Southern District of New York, functus officio
Arbitration clauses in reinsurance contracts typically recognize either expressly or impliedly that an arbitration proceeding has a beginning and an end. The process usually begins with a demand for arbitration and the selection of an arbitration panel, and ends with the arbitrators holding a hearing on the merits and issuing a final award. At that point the parties generally expect that the arbitrators will step down, and that any future dispute will be the subject of a new arbitration proceeding, perhaps with a different panel. Continue Reading »
June 19th, 2009
Awards, California State Courts
On June 14 we reported on the $4.1 billion arbitration award recently confirmed by a California state court, and provided our readers with some links to other articles on the subject. (Post available here.) Since that time we have been told that the defendants did not cross-move to vacate or otherwise respond to the motion to confirm, at least in any meaningful fashion. We have not verified that assertion, but if true, there would not appear to be any meaningful ground for an appeal. Continue Reading »
June 14th, 2009
Authority of Arbitrators, Awards, California State Courts, Commercial and Industry Arbitration and Mediation Group
Arbitration fans following the blogosphere — or participating in LinkedIn’s Commercial and Industry Arbitration and Mediation Group (here) – have no doubt heard about the $4.1 billion arbitration award recently confirmed by a California state court. Check out the coverage in Victoria Pynchon’s Settle It Now Negotiation Blog, here and here, and Victoria VanBuren’s Disputing blog, here. These posts feature a news article, related links and copies of the judgment and arbitration award. One of Victoria Pynchon’s posts includes a very amusing video clip from Cabaret, featuring Liza Minelli!
The award arose out of an employment dispute between Paul Chester, the former chief operating officer of iFreedom Communications, Inc., and iFreedom and its founder, Timothy Ringgenberg. Mr. Chester claimed, and JAMS arbitrator William F. McDonald, a retired judge, agreed, that iFreedom did not receive commissions, back wages and other benefits due him under his employment agreement, and that he was fired without cause after he confronted his employer about this. The compensatory component of the award is roughly $1 billion, which Arbitrator McDonald trebled based on iFreedom’s alleged bad faith. The award is quite lengthy (27 pages), and provides a detailed breakdown of the various claims and corresponding damages. The award states that the damages are ” appropriate to punish and make an example of defendants.” (Query whether “making an example of Defendants” is a proper subject of private arbitration. ) Continue Reading »
May 29th, 2009
Arbitrability, Authority of Arbitrators, Awards, Grounds for Vacatur, Practice and Procedure, United States Court of Appeals for the Second Circuit
Introduction
Victoria VanBuren’s May 4, 2009 guest post, Hall Street Meets S. Maestri Place: What Standards of Review will the Fifth Circuit Apply to Arbitration Awards Under FAA Section 10(a)(4) after Citigroup? (available here), looked at the scope of Section 10(a)(4) in the Fifth Circuit after Hall Street Assoc. v. Mattel, Inc., 128 S. Ct. 1396 (2008) and Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349 (5th Cir. 2009). Today we look at the scope of Section 10(a)(4) in the Second Circuit after Hall Street met Pearl Street in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. filed Mar. 26, 2009 (No. 08-1198), in which the Second Circuit said that, notwithstanding its prior case law suggesting otherwise, “manifest disregard of the law” is not an independent basis for vacating an arbitration award foreclosed by Hall Street, but one encompassed within Section 10(a)(4)’s prohibition against arbitrators “exceed[ing] their powers. . . .” As we shall see, the Second Circuit justified that holding by taking a more expansive view of Section 10(a)(4) than it previously had, a view that may also permit challenges based on “manifest disregard of the agreement.” Continue Reading »
May 8th, 2009
Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, New York Court of Appeals, United States Court of Appeals for the Second Circuit, United States Supreme Court
We recently critiqued ReliaStar Life Ins. Co. v. EMC National Life Co., ___ F.3d ___ (2009) (Raggi, J.), in which the United States Court of Appeals for the Second Circuit held that an arbitration panel was authorized to award under the bad faith exception to the American Rule attorney and arbitrator fees to a ceding company in a case where the parties had agreed that each “shall bear the expense of its own arbitrator. . . and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.” We believe that the majority opinion did not faithfully apply New York’s strict rules of contract interpretation and construction, which the parties expressly agreed would apply. You can find our critique here, and a report on the case here. Continue Reading »
May 4th, 2009
Awards, Grounds for Vacatur, Guest Posts, United States Court of Appeals for the Fifth Circuit
Introduction
I am delighted to be invited to guest-blog today by Philip J. Loree Jr. of the Loree Reinsurance and Arbitration Law Forum. I was thrilled that Phil jumped right on it when I suggested that we should guest-post on each others blogs in the near future.
Phil did an outstanding job discussing the Arbitration Fairness Act of 2009 (read the post here) last week as a guest-blogger at Disputing. He suggested that I explore the topic of “manifest disregard of the law,” in light of the United States Supreme Court decision Hall Street Associates, LLC v. Mattel, Inc. 128 S.Ct. 1396 (2008), and the Fifth Circuit ruling in Citigroup Global Markets, Inc. v. Bacon, ___ F.3d ___ (5th Cir. 2009). So, after conquering some initial, mild trepidation about my first guest-blogging experience, here I am. Continue Reading »
May 4th, 2009
Awards, Guest Posts, United States Court of Appeals for the Fifth Circuit
Today we are honored and delighted to feature “Hall Street Meets S. Maestri Place: What Standards of Review will the Fifth Circuit Apply to Arbitration Awards Under FAA Section 10(a)(4) after Citigroup?”, a guest-blog post submitted by Victoria VanBuren, the blogmaster of Disputing, an excellent ADR blog. We look forward to featuring more of her posts in the future.
Victoria is an up and coming young attorney who works for Dispute Resolution Expert Karl Bayer. Based in Austin, Texas, Karl’s team focuses on litigation, arbitration, and mediation of intellectual property, environmental, and health care disputes. (Learn more about Karl Bayer’s practice here and read Victoria’s bio here.) Victoria, a graduate of the University of Texas School Of Law, is currently pursuing a degree in computer science, and is a member of several ADR and other legal-services-oriented associations. Victoria has done a wonderful job keeping Disputing loaded with up-to-date cases, legislation, and relevant articles on matters pertinent to arbitration and other forms of dispute resolution. Her efforts are particularly impressive when you consider that she graduated from law school only a few years ago, is an active networker and business developer, and is pursuing a computer science degree on top of all of that. Keep your eyes on this rising star! Continue Reading »
May 1st, 2009
Awards, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure
Introduction
Today we briefly review the limitation periods applicable to applications to vacate, modify, correct and confirm arbitration awards. Our discussion is limited to domestic awards falling solely under Chapter 1 of the Federal Arbitration Act and is not intended to be exhaustive. In a future Nuts & Bolts feature we will discuss the rules applicable to nondomestic awards falling under Chapters 2 and 3 of the Federal Arbitration Act. Our discussion is also limited to the rules that apply in federal courts within the United States Court of Appeals for the Second Circuit in diversity cases where the Federal Arbitration Act governs arbitration matters and New York law governs all other matters. The rules may be interpreted differently by other circuits and, even within the Second Circuit, outcomes may vary depending on which state’s law applies.
Limitation periods under the Federal Arbitration Act and New York’s arbitration statute are construed quite strictly and practitioners should carefully abide by them. Sometimes it is unclear whether a limitation period has accrued or been tolled. In that event practitioners should err on the side of caution. If there is a question whether the period for filing an application has accrued, assume that it has, and file and serve your papers within the shortest allotted period. If there is a question whether the period has been tolled, assume that it has not, and do whatever it takes to toll it. Continue Reading »
April 28th, 2009
Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, New York Court of Appeals, United States Court of Appeals for the Second Circuit
Introduction
We recently reported on ReliaStar Life Ins. Co. v. EMC National Life Co., ___ F.3d ___, ___ (2009) (Raggi, J.) (blogged here), in which the United States Court of Appeals for the Second Circuit held that an arbitration panel was authorized to award under the bad faith exception to the American Rule attorney and arbitrator fees to a ceding company in a case where the parties had agreed that “[e]ach party shall bear the expense of its own arbitrator. . . and related outside attorneys’ fees, and shall jointly and equally bear with the other party the expenses of the third arbitrator.” This post takes a critical look at ReliaStar.
The Second Circuit is one of the most influential and respected Circuit Courts of Appeal in the United States, yet on occasion even this prestigious court renders a decision that is open to question. ReliaStar is one of those decisions. The majority opinion lost sight of what the parties agreed about the arbitrators’ power to award attorney fees. Rather than adhere to the plain meaning of the parties’ agreement as required by New York law, the Court construed an unambiguous limitation on arbitral authority to mean something other than what it said.
No doubt that the Court believed that its decision would encourage resort to arbitration by construing arbitral authority broadly. But the Court would have done a far better job encouraging resort to arbitration had it simply enforced the parties’ agreement as written. One of the most attractive features of arbitration is that parties get to dictate how they want their dispute decided, including, among other things, how best to allocate the costs, fees and expenses of deciding it. But that feature falls by the wayside if courts cannot be relied upon to enforce arbitration agreements as written. Continue Reading »
