December 15, 2009

Arbitral Discretion to Refuse Tactical Adjournment Requests

One of the dilatory tactics commonly employed by litigants in the arbitration process is the tactical request for adjournment of hearings. Many arbitrators, reluctant to invite a challenge to the award based on alleged procedural unfairness, will succumb to adjounment request even if it is transparently tactical and dilatory.

Arbitrators whose instincts are to resist such tactics will surely take comfort in a recent decision from the federal court in the Southern District of New York. (Bridgepointe Master Fund v. Biometrx, 2009 U. S. Dist. LEXIS 115678 (S.D.N.Y. Dec. 11, 2009)). Here, the Court rejected a motion to vacate the award based on the panel’s refusal to adjourn a hearing on the merits that was scheduled on two business days’ notice. The Court found that the movant had made “a tactical choice to absent itself from the arbitration” from the outset, and that its conduct had included: the CEO’s declaring his intention to file bankruptcy rather than defend the case; conscious refusal to participate in any aspect of the proceedings; failure to respond to the AAA’s request for an update on the plans for a bankruptcy filing; non-attendance at a pre-hearing procedural meeting; and failure to avail itself of the panel’s invitation to renew the request for adjournment on the first day of the merits hearings.

While this record of non-participation is more ample than what the arbitrator may confront in many cases, the Court held that the same legal standard applies — i.e. “barely
colorable justification” — to a motion to vacate based on refusal to postpone a hearing (FAA Section 10(a) (3)) as to motions to vacate based on other Section 10 grounds. Thus the arbitrator has substantial discretion to keep the hearings on schedule and the courts will show great deference.

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