February 17th, 2010
Arbitrability, Authority of Arbitrators, Practice and Procedure, United States Court of Appeals for the Ninth Circuit, United States Supreme Court
The United States Supreme Court has set for April 26, 2010 oral argument in Jackson v. Rent-a-Center West, Inc., ___ F.3d ___, slip op. (9th Cir. Sept. 9, 2009), petition for cert. granted Jan. 15, 2010 (No. 09-497) (oral argument calendar here). Jackson addresses the question who decides unconscionability of an arbitration agreement when the agreement clearly and unmistakably says arbitrators decide arbitrability. The Ninth Circuit said the court decides the question, but we think there is a reasonable chance the United States Supreme Court will reverse. We touched on some of the reasons why in prior posts, here and here.
We shall keep readers apprised of further developments as and when they occur. . . .
February 16th, 2010
Arbitrability, Authority of Arbitrators, Awards, Class Action Arbitration, Class Action Waivers, Consolidation of Arbitration Proceedings, Practice and Procedure, United States Supreme Court
I. Introduction
This is the final installment of our five-part series on the Stolt-Nielsen oral argument. It addresses the fourth issue identified in Part I (here): what the import of the agreements’ silence is or should be. It assumes the Court reaches the merits; as explained in Parts III and IV (here and here), the United States Supreme Court may take another “pass” on the question presented (the first pass was taken in Bazzle), and hold that the predicate for granting certiorari was not established because the arbitrators ruled that the agreement was not silent on class arbitration.
Part I identified two loose “coalitions” of Justices – the “Breyer Coalition” consisting of Associate Justices John Paul Stevens, Stephen G. Breyer, and Ruth Bader Ginsburg, and the “Roberts Coalition,” consisting of Chief Justice John G. Roberts and Associate Justices Antonin G. Scalia and Samuel A. Alito, Jr. The Breyer Coalition appears to be leaning toward either taking a pass or affirming the decision of the United States Court of Appeals for the Second Circuit, which upheld the arbitrators’ award imposing class arbitration, while the Roberts Coalition appears to be leaning toward reversal. We explore the import of the charter-party agreements’ silence on class arbitration from the standpoint of both coalitions. Continue Reading »
February 7th, 2010
Authority of Arbitrators, Awards, Grounds for Vacatur, Practice and Procedure, Procedural Misconduct, United States Court of Appeals for the Ninth Circuit
I. Introduction
Back in January the Ninth Circuit decided United States Life Ins. Co. v. Superior National Ins. Co., ___ F.3d ___, slip op. (9th Cir. Jan. 4, 2010), a Federal Arbitration Act Section 10(a)(3) procedural misconduct decision that affords reinsurance and other arbitrators a good deal of leeway to devise and implement nontraditional procedures for resolving complex problems. The case centered around a rather unusual procedure the arbitrators ordered and implemented to determine whether the cedents improperly handled some 12,604 contested workers compensation claims. It also concerned the authority of arbitrators to interpret the scope of the submission and to award a disgorgement of investment income remedy in addition to pre-award interest. Continue Reading »
January 12th, 2010
Awards, Evident Partiality, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure
Introduction
Part III.A of the evident partiality segment of this series discussed the parties’ reasonable expectations of neutrality. Today we consider how those expectations are enforced.
“Evident partiality” challenges typically arise out of one of two scenarios. First, there are “presumed bias” cases in which the arbitrator’s relationship to the parties or the controversy would lead a reasonable person to conclude that the arbitrator was biased, even though the challenger cannot prove actual bias. Second, there are evident partiality challenges based on allegations of actual bias. For example, suppose a neutral said on the record during the proceedings prior to deliberations: ”Party A, frankly I have distrusted your company’s business motives for many years, but hearing your witnesses’ testimony has simply confirmed what I’ve suspected all along.” While the chances of an arbitrator making such a statement (let alone on the record) are exceedingly slim to non-existent, it would provide the basis for an evident partiality challenge (which would probably succeed) based on proof of actual bias.
The difference between “presumed” and “actual” bias is simply one of proof. One is based on circumstantial evidence and the other on direct evidence. Our focus will be on “presumed bias” cases, because they arise with greater frequency. Actual bias is very difficult to prove, and if it or something approaching it can be established, then that proof would in any (or most any) event meet the standards necessary to establish evident partiality. Continue Reading »
January 6th, 2010
Authority of Arbitrators, Awards, Class Action Arbitration, Class Action Waivers, Consolidation of Arbitration Proceedings, Practice and Procedure, United States Supreme Court
Introduction
Stolt-Nielsen turns on the allocation of power between courts and arbitrators. No matter how thoroughly and neatly you parse the issues, the question that repeatedly and continuously begs for an answer is: who decides? Answer that question as it relates to one issue and it pops up again in relation to the next.
Up until Bazzle the Supreme Court did an admirable job of delineating the bounds of arbitral versus judicial authority. The lines were blurred in Bazzle, where under the peculiar facts there was a question whether the agreement precluded class arbitration. (See our Disputing guest post here.) The question required interpretation of ambiguous contract language – a task arbitrators have both the authority and the competence to perform – so it was remanded to the arbitrators. The four-Justice plurality said the question was not one of arbitrability, but concerned the “kind” of arbitration to which the parties agreed.
But many of the lower courts — including the United States Court of Appeals for the Second Circuit — read Bazzle to mean that arbitrators have the authority under a broad arbitration agreement to determine whether the parties agreed to class arbitration when their agreements say nothing about class or consolidated arbitration. That is a very different question from whether an arbitration agreement precludes class arbitration, and it is not one that the parties in Stolt-Nielsen clearly and unmistakably submitted to the arbitrators.
Stolt-Nielsen presents the United States Supreme Court with a unique opportunity to draw a sharper and stronger line between the arbitrable and non-arbitrable in cases concerning class or consolidated arbitration. Whether or not the Court will seize it is an open question, because, as explained in Part III, AnimalFeeds has articulated a plausible argument that Stolt-Nielsen has not established the predicate for the Court’s grant of certiorari: that the parties’ agreements were silent on class arbitration. If at least five justices are satisfied with the (we believe, unsatisfactory) status quo concerning class arbitration, or otherwise believe that the best course is to allow class arbitration to continue (and even flourish), then AnimalFeed’s argument may provide an interpretive path for a ruling that the case is not properly before the Court.
Today we explain why accepting AnimaFeeds’ argument would contravene the letter and spirit of the Federal Arbitration Agreement, breed further litigation, and undermine confidence in arbitration as an effective alternative dispute resolution mechanism. More to the point, we discuss why and how the Court can reach the merits of Stolt-Nielsen consistently with how Stolt-Nielsen presented the question. Continue Reading »
January 4th, 2010
Awards, Evident Partiality, Grounds for Vacatur, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure
Introduction
In this Part III of our Nuts & Bolts feature on vacating arbitration awards (Parts I and II here and here) we consider the second statutory ground for vacating an award under the Federal Arbitration Act: “where there was evident partiality…in the arbitrators…” 9 U.S.C. 10(a)(2). What constitutes “evident partiality” or arbitral bias has been the subject of numerous judicial decisions setting forth various standards and applying them to a wide range of fact patterns. The decisions are not easy to reconcile (some may, indeed, be irreconciliable) and generally the standards are of limited utility in practice. Matters are complicated by judicially-created rules concerning disclosure of potential conflicts of interest and the consequences that may or may not flow from a breach of those rules. To say “evident partiality” is an elusive subject understates the case. Continue Reading »
December 19th, 2009
Awards, Grounds for Vacatur, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure, Uncategorized
In this Part II of our Nuts & Bolt feature on vacating arbitration awards (Part I is here) we briefly look at the first statutory ground for vacating an award under the Federal Arbitration Act: where “[t]he award was procured by corruption, fraud, or undue means. . . .” 9 U.S.C. 10(a)(1). Cases vacating awards on Section 10(a)(1) are rare, probably because the circumstances that would trigger relief are themselves rare.
Section 10(a)(1) is an excellent expression of how Section 10 is designed to provide relief in situations where putting a court’s imprimatur on an award would deprive one of the parties of the benefit of its freely-bargained-for arbitration agreement. It says that corruption, fraud, or undue means in the procurement of an award, whether perpetrated by the arbitrators or a party, spoils the award (assuming the aggrieved party timely moves to vacate). There is nothing particularly controversial about that; we suspect few would contend that parties who agree to arbitrate impliedly consent to arbitration resulting in an award procured through outright chicanery. Continue Reading »
December 13th, 2009
Authority of Arbitrators, Awards, Class Action Arbitration, Class Action Waivers, Consolidation of Arbitration Proceedings, Practice and Procedure, United States Supreme Court
On December 9, 2009 the United States Supreme Court heard oral argument in the one Federal Arbitration Act case it has agreed to review this Term: Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. granted June 15, 2009 (No. 08-1198) (oral argument transcript here). Stolt-Nielsen concerns whether class or consolidated arbitration may be imposed on parties whose contracts are silent on that point, and we have written extensively about the case, including a series of guest-post articles for the Disputing blog. (Posts available here, here, here, here, here, here, here, here and here.)
This multi-part post considers what transpired at oral argument and provides our take on it. Familiarity with the background facts is presumed and, if necessary, can be gleaned here, here, and here. Continue Reading »
December 8th, 2009
Awards, Grounds for Vacatur, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure, Reinsurance Arbitration
Part I: Introduction
An arbitration award is effectively a contract resulting from a contract. Two parties agree to appoint arbitrators, submit their dispute to arbitration and abide by the award. The parties ordinarily consent to entry of judgment on the award, and it can be confirmed under Section 9 of the Federal Arbitration Act (or a state law equivalent when the Federal Arbitration Act doesn’t apply). Alternatively it may be enforced through the plenary and summary procedures applicable to ordinary contracts (subject to any special rules governing arbitration awards).
So what happens when things go awry — or at least seem to have gone awry — and the arbitration award is or appears to be fundamentally unfair, divorced from the contract or the result of fraud, bias, or some form of prejudicial misconduct on the part of the arbitrators? Section 10 of the Federal Arbitration Act provides a safety net in the form of a motion or petition to vacate the award. (State arbitration statutes and law applicable in actions to enforce arbitration awards generally provide similar recourse, but our focus here is on the Federal Arbitration Act.) Continue Reading »
December 7th, 2009
Association of Insurance and Reinsurance Run-Off Companies (AIRROC), English Law, Events, London Market, Practice and Procedure, Reinsurance Arbitration
On December 1, 2009 my friend and colleague Costas Frangeskides , a partner at Holman Fenwick Willan (”HFW” or “Holmans”), and I gave a presentation at HFW’s London offices entitled “Reinsurance Arbitration: Approaching Things Differently Either Side of the ‘Pond.’” The program was moderated by Holmans partner Andrew Bandurka, who, like Costas, focuses his practice on reinsurance and insurance dispute resolution. I have known Costas and Andrew for several years as we were co-counsel in a long-running matter handled by Holmans and my former law firm, Cadwalader, Wickersham & Taft LLP.
The presentation was designed to provide reinsurance professionals with some insights concerning the differences between U.S. and English reinsurance arbitration practice and procedure. The principal theme was that U.S. arbitration law is designed principally to enforce the parties’ arbitration agreement as written, placing it on the same footing as all other contracts, while English arbitration law favors party automony, but also imposes a greater number of policy-based norms regulating arbitration, which limit to some extent the parties’ ability to structure their dispute resolution procedure exactly as they see fit. Continue Reading »
