Favorable arbitration awards are wonderful things, but they are not self-enforcing. Sometimes the other side voluntarily complies, but if not, there is really not much of anything the arbitrator can do to help.
Arbitrators are not judges and thus do not have the authority to garnish wages, seize property, foreclose on encumbered property, freeze bank accounts, impose contempt sanctions and so forth. Parties can delegate to arbitrators broad adjudicatory and remedial authority, but that is relevant only to the nature and scope of their awards, and does not confer power on the arbitrators to enforce their awards coercively.
Apart from its potential preclusive effect in subsequent litigation, an arbitration award stands on the same footing as any other privately prepared legal document, such as a contract. It may be intended by the arbitrators and at least one of the parties to have legal effect, but it is up to a court to say what legal effect it has, and, if necessary, to implement that legal effect through coercive enforcement. A judgment, by contrast, is an official decree that not only can be coercively enforced through subsequent summary proceedings in the same or other courts (including courts in other states and federal judicial districts), but is, to some extent, self-enforcing. A judgment, for example, can ordinarily be filed as a lien on real property, and applicable state or federal law may, for example, authorize attorneys to avail their clients of certain judgment-enforcement-related remedies without prior judicial authorization.
But that doesn’t mean you’re out of luck; it means you need a court to enter judgment on the award, that is, to “confirm” it. Once an award has been reduced to judgment, it can be enforced to the same extent as any other judgment. See, e.g., 9 U.S.C. § 13 (Under Federal Arbitration Act, judgment on award “shall have the same force and effect, in all respects, as, and be subject to all the provisions of law relating to, a judgment in an action; and it may be enforced as if it had been rendered in an action in the court in which it is entered”); Fla. Stat. § 682.15(1)( “The judgment may be recorded, docketed, and enforced as any other judgment in a civil action.”); N.Y. Civ. Prac. L. & R. § 7514(a) (“A judgment shall be entered upon the confirmation of an award.”).
The Federal Arbitration Act (the “FAA”), and most or all state arbitration statutes, authorize courts to confirm awards in summary proceedings. State arbitration-law rules, procedures, limitation periods and the like vary from state to state and frequently from the FAA, and state courts may apply them to FAA-governed awards (provided doing so does not frustrate the purposes and objectives of the FAA).
But let’s keep things simple, and take a brief look at the FAA’s requirements for confirmation applicable in federal court when there is no prior pending action related to the arbitration, and there are no issues concerning federal subject matter jurisdiction, personal jurisdiction, sufficiency or service of process, venue (i.e., whether suit should have been brought in another federal judicial district) or the applicability of the FAA. We’ll also discuss how applications to confirm are supposed to be summary proceedings, why timing of an application is important, and how courts go about deciding them.
FAA Confirmation Requirements
Like most other issues arising under the FAA, whether a court should confirm an award depends on what the parties agreed. Section 9 of the FAA, which governs confirmation of awards, says—with bracketed lettering added, and in pertinent part: “[A] If the parties in their agreement have [B] agreed that a judgment of the court shall be entered upon [C] the award made pursuant to the arbitration, and [D] shall specify the court, then [E] at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and [F] thereupon the court must grant such an order unless [G] the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title.” 9 U.S.C. § 9. Items [A] through [D] above each concern party consent as evidenced by the parties’ arbitration agreement.
The key substantive requirements for obtaining confirmation are thus:
- The existence of a written pre- or post-dispute arbitration agreement falling under Section 2 of the FAA ([A], above; 9 U.S.C. § 2);
- Consent to confirmation in a particular court, or at least in any court of competent jurisdiction ([B] and [D], above); and
- A final arbitration award resulting from the parties’ submission of a dispute or disputes to arbitration pursuant to the arbitration agreement ([A] and [C], above). (As respects what constitutes a final award, see L. Reins. & Arb. Law Forum post here.)
The key procedural requirements specific to confirmation are:
- The party seeking confirmation must apply for it “within one year after the award is made. . .” ([E], above); and
- The “court must grant” confirmation “unless the award is vacated, modified or corrected” under Section 10 or 11 of the FAA ([F] and [G], above).
Applications to Confirm are Summary Proceedings
There are at least two other important procedural considerations pertinent to applications or motions to confirm. First, like all other applications for relief under the FAA, an application to confirm an award is a summary or expedited proceeding, not a regular lawsuit. Rule 81(a)(6)(B) of the Federal Rules of Civil Procedure provides that the Federal Rules “to the extent applicable, govern proceedings under the following laws, except as these laws provide for other procedures. . . (B) 9 U.S.C., relating to arbitration. . . .”
Section 6 of the FAA “provide[s] for. . . procedures” other than those applicable to ordinary civil actions because it requires applications for relief under the FAA to be made and heard as motions:
§ 6. Application heard as motion
Any application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise . . . expressly provided [in the FAA].
9 U.S.C. § 6.
An action commenced to confirm an award is, of course, “[a]n application to the court” under the FAA, and thus, unless the FAA otherwise provides, must be “made and heard in the manner provided by law for the making and hearing of motions. . . .”
What courts usually expect to see the award proponent file and serve is not a summons and complaint, but a summons, notice of application or notice of petition, an application or petition, a brief in support (which in most cases need not be longer than a few pages or so) and any affidavits or certifications that may be required (typically an affidavit or certification from counsel, the client or another appropriate person authenticating the agreement, award and any other pertinent documents is all that’s necessary in this context). The summons, notice of application and petition should, among other things, inform the other party of the date responding papers are due under applicable motion rules. The petition or application is usually in the form of a pleading (including jurisdictional allegations, allegations about the applicability of the FAA and so forth). The brief should set forth the legal basis for the application, including the basis for federal subject matter jurisdiction and the reasons the FAA applies.
A party opposing a motion to confirm should oppose it like it would any other motion, provided there are good grounds for doing so. Assuming there are no issues concerning the timeliness of the application or the existence of an arbitration agreement, then generally the only grounds for opposing the application are those set forth in FAA Sections 10 and 11, which govern applications to vacate awards and applications to modify or correct them. Those grounds are limited and generally difficult to establish. (See, e.g., L Reins. & Arb. Law Forum posts here, here, here, here, here, here, here, here, here, here & here.) If the opposing party believes there are such grounds, then ordinarily it will raise them by cross-application or cross-motion.
Timing Considerations
The second procedural consideration relates to the timing of the application. While a party applying to confirm an award has one year to make its application, a party that wants to vacate, modify or correct one has to assert its grounds within three-months. See 9 U.S.C. § 12. If the party seeking confirmation makes its application after that three-month period elapses, then the opposing party cannot, as a matter of law, assert Section 10’s or 11’s grounds for vacating, modifying or correcting an award, even as affirmative defenses to the application to confirm. See, e.g., Florasynth, Inc. v. Pickholz, 750 F.2d 171, 175-76 (2d Cir. 1984).
If a party can afford to wait a few months before making is application to confirm, the other party may not, for whatever reason, make a timely application to vacate, modify or correct the award. All else equal, that increases the likelihood that that obtaining confirmation will be relatively quick, easy and inexpensive.
If the opposing party makes a timely application to vacate, modify or correct the award, then the party seeking confirmation still stands to save some money. The award challenger will have to pay the filing fee (which is currently $400.00 in the U.S. District Courts for the Southern and Eastern Districts of New York) and the costs associated with preparing a summons, filing a copy of the petition by hand and completing the initial paperwork associated with commencing an action. But all the award proponent has to do is e-file a properly supported cross-motion, allowing the challenging party to bear the costs the award proponent would have had to bear had it been the party who commenced the action. The additional cost that the party seeking confirmation will have to incur to oppose the motion to vacate, modify or correct the award is a wash, because the opposing party would presumably have made the motion anyway had the party seeking confirmation been the party that commenced the proceeding.
Forcing the putative award challenging party to commence a proceeding within three-months if it is going to challenge the award can also be strategically beneficial. As a practical matter, if the putative challenging party believes its chances of obtaining vacatur, modification or correction of the award are slim (and usually they are), then it might choose to forgo its challenge, particularly if challenging the award would require it to commence an action that may border on the frivolous.
By contrast, if the award proponent commences early on a proceeding to confirm the award, then it is probably more likely that the putative award challenger will err in favor of challenging the award, provided the timely challenge at least barely passes the “red-face test.” Parties hauled into court to defend a confirmation proceeding generally will assert whatever colorable claims and defenses they believe they might have, even when the only ones they may have are pretty weak, and especially when the only other viable option is to admit defeat. That is all the more the case when the stakes are relatively high, the claims and defenses are at least colorable and delaying the proverbial day of reckoning might work in the award challenger’s favor, even though the odds are that ultimately the award will be confirmed. So sometimes it is better not to wake a sleeping bear, even if you’re well armed and the bear is on its last leg.
Another potential strategic benefit of holding off on a motion to confirm for a few months may be realized irrespective of the other party’s perception of the merits of its challenge. The challenging party’s lawyers might mistakenly assume that their client can raise vacatur, modification or correction grounds as affirmative defenses to an application to confirm made after expiration of the three-month limitation period, something that happens more frequently than one might think. For example, a person who is more familiar with New York State arbitration-law practice than with the FAA could easily make that kind of mistake, because under New York arbitration law, which is governed by Article 75 of the New York Civil Practice Law and Rules, if a confirmation proceeding “is commenced after the 90-day period, but within the one-year period. . . .[,] a party may, by cross motion to vacate, oppose the petition for confirmation on any of the grounds in CPLR 7511 even though his time to commence a separate proceeding to vacate or modify under CPLR 7511(a) has expired.” Lyden v. Bell, 232 A.D.2d 562, 563 (2d Dep’t 1996) (citations omitted); see, e.g., 1000 Second Avenue Corp. v. Pauline Rose Trust, 171 A.D.2d 429, 430 (1st Dep’t 1991) (“an aggrieved party may wait to challenge an award until the opposing party has moved for its confirmation”).
Although in a number of cases it may make sense for an award proponent to postpone its application to confirm until after expiration of the three-month limitations period, that is not necessarily true in all cases. Sometimes, for example, the award proponent needs to obtain a judgment as soon as possible and may thus opt to seek confirmation immediately. Or there may be more than one potential federal or state forum in which an action to confirm or vacate an award might properly be brought, and the award proponent may, for whatever reason, want a federal court within a particular district to preside over the confirmation proceeding.
How Courts Ordinarily Decide Motions to Confirm
As previously discussed confirmation- or vacatur-related applications, supporting affidavits, cross-applications, responses and replies are presented to the court in the form of motions. And like most other motions, courts ordinarily decide them on the papers, sometimes holding oral argument. Occasionally one cross-moving to vacate can make a successful application for some limited discovery, an evidentiary hearing, or both. To do so, however, the party seeking discovery and a hearing must show “clear evidence of impropriety” by one or more of the arbitrators. Andros Compania Maritima, S.A. v. Marc Rich & Co., 579 F.2d 691, 701, 702 (2d Cir. 1978). Accordingly, the parties must ordinarily establish their competing claims for confirmation and vacatur through their affidavits, documentary evidence and briefs, without any fact development through discovery or an evidentiary hearing. In most cases, that is a relatively simple task for the party seeking confirmation, but a difficult one for the party requesting vacatur.
If there is a cross-motion to vacate (or a cross-motion to confirm if the party seeking vacatur is the first to file), each side usually gets to respond to the other side’s motion or application and submit a reply in support of its own motion or application. If the briefing schedule is properly set, that usually means each side files two sets of papers (the second set is a combined response and reply). If there is no motion or cross-motion to vacate, then the other side simply responds to the motion to confirm and typically the party seeking confirmation gets to file reply papers, if necessary.
Accordingly, the briefing can ofen be completed within two months or less. Once the briefing is complete, the case is submitted (subject to the possibility of oral argument), and the Court will decide the competing motions and issue an opinion, order and judgment. (Sometimes local rules call for the parties to submit proposed judgments or the court may request that they do so.)
If the motion to vacate is not particularly persuasive, then typically the party seeking confirmation will receive judgment in its favor in a relatively short period, depending on the state of the assigned judge’s docket. If the motion or cross-motion to vacate has more substance, then it might (or not) take the court longer to decide it.
In a large majority of (but not all) cases, the motion to vacate will be denied and the motion to confirm granted. Appeals to the appropriate Circuit Court of Appeals are not unusual in cases involving the grant or denial of a motion to vacate, but all other things being equal, if the only motion made was one to confirm, and there are no potentially controversial issues presented, then an appeal is unlikely.
Some Parting Tips for those Contemplating Confirmation of an Arbitration Award
While we have accurately portrayed the confirmation process as ordinarily a relatively straightforward procedure, we speak from the standpoint of lawyers who are familiar with, and experienced in, arbitration law, practice and procedure. Its relative simplicity does not mean that it is supposed to be a “do-it-yourself” process, and, in any event, this article is not intended to be a practice and procedure guide for pro se litigants.
So if you need to confirm an arbitration award, make sure you are represented by counsel. On that score you should either ask the attorney or law firm that represented you in the arbitration to represent you, or retain an arbitration lawyer for that purpose.
Whenever you hire an attorney (or ask your attorney to undertake more work), you should manage your costs. One of the attractive features of FAA-related litigation is that, for the most part, it can generally be divided into a series of discrete projects. The preparation, service and filing of the papers might be one discrete project. Where a motion to vacate is made, preparation, service and filing of the responding papers would be another, which, with the right briefing schedule, may be combined with the reply papers in support of the application to confirm as one submission. Preparing for and handling the oral argument, if any, might be another discrete project.
That means that motions to confirm may be good candidates for alternative billing arrangements. For example, you might be able to obtain a fixed-fee for each discrete project, which is set once the lawyer can make a reasonable estimate of the time required to complete it.
If no motion to vacate is made, you should expect that the fees you will have to pay to be lower. Whether you are charged on a fixed-fee, fee-cap or hourly basis, the additional fee you should expect to pay will likely depend on the motion itself, as all such motions are not created equal. Briefing a motion to confirm in a case where the other party has no legitimate defenses or only a few weak ones obviously takes less effort than it does when the other party asserts some potentially viable grounds for vacatur, especially where those grounds are fact-intensive, raise legal questions that are not necessarily settled or both.
In terms of whether you want the lawyer or firm that represented you in the arbitration proceeding to handle the post-arbitration FAA litigation, you’ll need to consider whether they (or others in their firm) are experienced in handling FAA enforcement proceedings, and what your fee will likely be. If you believe you might be able to save some money by hiring a reasonably priced arbitration lawyer or firm, then you can either hire one for the limited purpose of assisting your existing counsel with the confirmation proceedings, or handling all of the required FAA enforcement work, including any appeals. One of those two options might be particularly attractive if you anticipate a motion to vacate that might have some merit and want the benefit of an arbitration lawyer who has experience making and opposing such motions. Such a lawyer should, in exchange for a reasonable fee, be able to devise what appears to be the best strategy and present to the court your arguments in a clear, concise and fully-supported manner.
Tags: Andros Maritima S.A. v. Marc Rich & Co, Arbitration Lawyer, Confirming Awards, Enforcing Awards, FAA Motion Practice, FAA Practice and Procedure, Federal Arbitration Act, Federal Arbitration Act Section 10, Federal Arbitration Act Section 11, Federal Arbitration Act Section 12, Federal Arbitration Act Section 13, Federal Arbitration Act Section 2, Federal Arbitration Act Section 6, Federal Arbitration Act Section 9, Federal Rules of Civil Procedure, Florasynth v. Pickholz, Judgments on Awards, Limitation Periods on Vacating and Confirming Awards, Requirements to Confirm Award, Rule 81(a)(6)(B), Vacating Awards
