Posts Tagged ‘Federal Arbitration Act’

« Older Entries
Newer Entries »

Hall Street Meets Pearl Street: Stolt-Nielsen and the Federal Arbitration Act’s New Section 10(a)(4)

May 29th, 2009 Arbitrability, Authority of Arbitrators, Awards, Grounds for Vacatur, Practice and Procedure, United States Court of Appeals for the Second Circuit 11 Comments »

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 »

Arthur Andersen LLP v. Carlisle: The United States Supreme Court Says that Non-Signatories Can Enforce Arbitration Agreements Whenever State Law Would Permit them to Enforce Contracts Generally

May 12th, 2009 Appellate Practice, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Sixth Circuit, United States Supreme Court 1 Comment »

Introduction

The Second Circuit and other courts have recognized that signatories may enforce under Sections 3 and 4 of the Federal Arbitration Act  arbitration agreements against non-signatories whenever common-law principles of contract and agency would permit such enforcement, and that non-signatories may enforce arbitration agreements against signatories at least under an estoppel theory, and possibly under other theories of contract and agency.  See, e.g., Ross v. American Express Co., 547 F.3d 137, 143 & n.3 (2d Cir. 2008); Ross v. American Express Co., 478 F.3d 96, 99 (2d Cir. 2007); Astra Oil Co. v. Rover Navigation, Ltd., 344 F.3d 276, 279-80 & n.2 (2d Cir. 2003); Thomson-CSF, S.A. v. American Arbitration Assoc., 64 F.3d 773, 776-80 (2d Cir. 1995).  The Second Circuit likewise allows interlocutory appeals from the denial of  Section 4 motions to compel arbitration, or Section 3 motions to stay litigation in favor of arbitration, brought by or against non-signatories.  See, generally, 478 F.3d at 99.

Certain other circuits have held that nonsigatories may not invoke Section 3 or 4 based on an estoppel theory, or at least cannot appeal on an interlocutory basis the denial of an estoppel-based Section 3 or 4 application.  See, e.g., DSMC Inc. v. Convera Corp., 349 F.2d 679, 683-84 (D.C. Cir. 2003) (then Roberts, J.); Re Universal Service Fund Tel. Billing Practice Litigation v.Sprint Communications Co., 428 F.3d 940, 945 (10th Cir. 2005) (limiting holding to whether Court of Appeals had appellate jurisdiction at interlocutory stage).  These Courts have relied on Section 3’s and 4’s requirement that the relief sought must be “under” a written agreement to arbitrate, and their determination that an estoppel claim by a non-signatory is not one “under” a written agreement to arbitrate.    

Arthur Andersen:  Issues and Holding

On May 4, 2009, in Arthur Andersen LLP v. Carlisle, ___ U.S. ___ (2009) (Scalia, J.), the United States Supreme Court resolved the circuit split in favor of the courts permitting non-signatories to avail themselves of Federal Arbitration Act Sections 3 and 4.  There were two issues before the Court:

  1. Whether the federal appellate courts have jurisdiction under Federal Arbitration Act Section 16(a) to review denials of stays of litigation requested by litigants who were not parties to the arbitration agreement; and
  2. Whether Federal Arbitration Act Section 3 can ever mandate a stay sought by a nonsignatory to an arbitration agreement.

The Court held that federal appellate courts have jurisdiction to review appeals from denials of stays sought by non-signatories and that Section 3 can mandate a stay where applicable state law allows the enforcement of an agreement by or against a non-signatory.   Justice Souter dissented in an opinion joined by Chief Justice Roberts and Justice Stevens.  Continue Reading »

Recent United States Supreme Court Decision May Further Undermine ReliaStar Life Ins. v. EMC National Life Co. Holding

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 1 Comment »

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 »

The Senate Weighs in With Its Own Arbitration Fairness Act

May 7th, 2009 Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court 1 Comment »

On April 29 — a/k/a “Arbitration Fairness Day” – – Senator Russ Feingold (D-WI) introduced the Senate’s version of the Arbitration Fairness Act of 2009 (S. 931).  The Senate’s version  tracks the House version in many respects, but there are some important differences between the two. 

The Senate Arbitration Fairness Act adds a Chapter 4 to the Federal Arbitration Act, rather than amending Section 2 of Chapter 1.  This Proposed Chapter 4 consists of two sections:  Section 401, entitled “Definitions”; and Section 402, entitled “Validity and Enforceability.”  Proposed Section 402(a) states:  “In General – Notwithstanding any other provision of this title, no predispute arbitration agreement shall be valid or enforceable if it requires arbitration of an employment, consumer, franchise, or civil rights dispute.”  Proposed Section 402(b) provides: 

(1)  IN GENERAL – An issue as to whether this chapter applies to an arbitration agreement shall be determined under Federal law.  The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to arbitrate to which this chapter applies shall be determined by the court, rather than the arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement. 

(2)  COLLECTIVE BARGAINING AGREEMENTS – Nothing in this chapter shall apply to any arbitration provision in a contract between an employer and a labor organization or between labor organizations, except that no such arbitration provision shall have the effect of waiving the right of an employee to seek judicial enforcement of a right arising under a provision of the Constitution of the United States, a State constitution, or a Federal or State statute, or public policy arising therefrom.  Continue Reading »

Nuts & Bolts: Limitation Periods for Motions to Vacate, Modify, Correct and Confirm Domestic Arbitration Awards Falling Under Chapter 1 of the Federal Arbitration Act

May 1st, 2009 Awards, Nuts & Bolts, Nuts & Bolts: Arbitration, Practice and Procedure Comments Off on Nuts & Bolts: Limitation Periods for Motions to Vacate, Modify, Correct and Confirm Domestic Arbitration Awards Falling Under Chapter 1 of the Federal Arbitration Act

Introduction

Today we briefly review the limitation periods applicable to motions 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 non-domestic 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, among other things, which state’s law applies.

Limitation periods for motions to vacate or for other forms of relief 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 »

ReliaStar Life Insurance Co. v. EMC National Life Co.: Critical Analysis of an Important Reinsurance Arbitration Decision

April 28th, 2009 Arbitrability, Authority of Arbitrators, Awards, Life Reinsurance, New York Court of Appeals, United States Court of Appeals for the Second Circuit 3 Comments »

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 »

Coming Soon: Guest Blogging, Some Interesting Posts, and Arbitration Fairness Day

April 26th, 2009 General, Legislative Developments, Life Reinsurance, United States Court of Appeals for the Second Circuit Comments Off on Coming Soon: Guest Blogging, Some Interesting Posts, and Arbitration Fairness Day

From time-to-time the Loree Reinsurance and Arbitration Law Forum will be featuring guest bloggers.  We are honored that Victoria Van Buren of Disputing has accepted our invitation to guest blog, and expect within the next week or so to feature her post concerning Fifth Circuit standards of review under Section 10(a)(4) of the Federal Arbitration Act in the wake of Citigroup Global Markets, Inc. v. Bacon, ___ F.3d ___ (5th Cir. 2009), in which the Court held that manifest disregard of the law is no longer an independent ground for vacatur under the Federal Arbitration Act.  We expect that Victoria will be submitting other guest blog posts in the future, and look forward to featuring them.  We shall also be inviting others to guest blog here at the Forum.   Continue Reading »

Arbitration Fairness Act or Lawyers’ Full Employment Act?

April 18th, 2009 Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court Comments Off on Arbitration Fairness Act or Lawyers’ Full Employment Act?

What Does the Arbitration Fairness Act of 2009 Have to Say About Commercial and Industry Arbitration Involving Sophisticated Parties? 

 Part V:  Summing Up

This is the final part of our multi-part post on the Arbitration Fairness Act of 2009 (the “Fairness Act”).  We did not address all aspects of the Fairness Act, but focused our attention on whether the Act may change the status quo in arbitrations involving only sophisticated, commercial entities. 

So what does the Arbitration Fairness Act of 2009 have to say about commercial and industry arbitration involving sophisiticated parties?  If you have been following our last six posts, you know the answer is not clear, and that the only thing that can be said with any degree of certainty is that the Fairness Act will result in litigation between sophisticated parties concerning the continuing viability of two fairly settled principles of arbitration law — severability and what we refer to as the Own Jurisdiction Rule.  That may be good news to some and bad news to others.  Continue Reading »

What does the Arbitration Fairness Act of 2009 Have to Say About Commercial and Industry Arbitration Involving Sophisticated Parties? (Part IV)

April 16th, 2009 Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court Comments Off on What does the Arbitration Fairness Act of 2009 Have to Say About Commercial and Industry Arbitration Involving Sophisticated Parties? (Part IV)

Will the Arbitration Fairness Act of 2009 Apply to Nondomestic Agreements and Awards Falling Under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards?

Introduction

In Parts I and II we discussed how the Arbitration Fairness Act of 2009 (the “Fairness Act”)  will likely lead to litigation concerning whether, and if so, to what extent, Proposed Section 2(c) abrogates: (a) the severability doctrine; and (b) the rule that arbitrators may determine their own jurisdiction if the parties clearly and unmistakably agree, with that determination subject only to deferential judicial review (the “Own Jurisdiction Rule”).    In Parts IIIA-C  we discussed two constructions of Proposed Section 2(c):  one that would abrogate severability and the Own Jurisdiction Rule in all cases falling under Chapter 1 of the FAA  (the “Broad Construction”); and one that would limit the scope of Proposed Section 2(c) to Chapter 1 cases where one of the parties contends that the arbitration agreement requires arbitration of a consumer, employment, franchise or statutory civil rights dispute (the “Narrow Construction”). 

In this Part IV we consider whether Proposed Section 2(c) of the Fairness Act applies to agreements and awards falling under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” or the “Convention”), which are governed by Chapter 2 of the FAA.  While the matter is not entirely free from doubt, Proposed Section 2(c) of the Fairness Act will probably be construed not to apply to awards and agreements falling under the New York Convention.  Thus, the doctrine of severability and the Own Jurisdiction Rule will probably continue to apply in cases falling under FAA Chapter 2, even if courts adopt the Broad Construction of the Fairness Act in cases governed by Chapter 1.       Continue Reading »

What does the Arbitration Fairness Act of 2009 Have to Say About Commercial and Industry Arbitration Involving Sophisticated Parties? (Part IIIC)

April 11th, 2009 Arbitrability, Authority of Arbitrators, Legislative Developments, United States Supreme Court 1 Comment »

Part IIIC:  Is the Narrow Construction Sustainable?

Introduction

In Part IIIB  (here) we discussed in general terms the “Narrow Construction” of the Arbitration Fairness Act of 2009 (the “Fairness Act”), which would limit the scope of Proposed Section 2(c) to situations where the party resisting arbitration claims that the arbitration agreement requires predispute arbitration of consumer, franchise, employment or statutory civil rights disputes.   We also set forth the five premises on which the Narrow Construction is based.  This Part IIIC addresses the validity of those premises.  [Because this post  frequently refers to Proposed Section 2 and its subsections, we have reproduced at the end the pertinent parts of Proposed Section 2.]

 The Narrow Construction is fairly complex.  A court choosing it would have to determine each of its five premises to be valid.  In addition, the validity of Premise 3 is interlinked to that of Premise 5:  Premise 3 is easier to accept when viewed without regard to Premise 5 and Premise 5 is harder to accept when viewed in isolation from Premise 3.  If a court believes that Premise 3 is reasonable, but has reservations about its validity, when it considers Premise 3 in conjunction with Premise 5, it may conclude that both are invalid.  But if it is confident that Premise 3 is valid, that confidence might lead it to conclude that Premise 5 is valid.  These are important considerations that a party advocating one construction or the other should take into account in structuring its argument.   Continue Reading »

« Older Entries
Newer Entries »