Recent Posts

March 24, 2010

Arbitration With Nonsignatories: A New Dimension

Shipowners typically agree with their typically-offshore insurers to arbitrate disputes over coverage, and those arbitration agreements are governed by the New York Convention. And the laws of some U.S. states, including Louisiana, allow injured ship workers to bring claims in court against those insurers directly when their employers are bankrupt. Could this mean that the injured worker must arbitrate his direct action claim against the insurer, as a third-party beneficiary of the employer-insurer agreement to arbitrate? Could this mean that such direct action statutes violate the FAA to the extent they require the direct action to proceed in court? The…
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March 18, 2010

Arbitrator Responsibility for Efficiency Gains

An excellent article in the most recent issue of Arbitration International (Vol. 25, No. 4) discusses the challenges facing all participants in international arbitrations (and indeed all arbitrations) to rein in costs. The article, entitled “Inside Out: A User’s Perspective on Challenges in International Arbitration” is written by Jean-Claude Najar, General Counsel France for General Electric. I take a quote from Mr. Najar’s article as the theme for this Commentary: ” “(A)rbitral tribunals should be assessed on the robustness of their cost-saving procedures. While the parties do exercise a fair amount of control over an arbitral proceeding, arbitrators should play…
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March 11, 2010

Non-Party Evidence Under the U.S. Arbitration Act: The Trend Against “Discovery” Continues

A new federal district court decision from Dallas embraces the position of the U.S. Second and Third Circuit Courts of Appeals that the U.S. Federal Arbitration Act (“FAA”) does not permit non-party subpoenas for pre-hearing document discovery, but only permits such subpoenas if they require the non-party to appear at an arbitration hearing and to bring the documents to the hearing. In those earlier cases, the courts concluded that this result was required by the clear language of FAA Section 7. (The Second Circuit’s decision in the Life Receivables case was discussed in an Arbitration Commentaries posting on January 15,…
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March 11, 2010

Application of “Estoppel” and “Alter Ego” Theories to Nonsignatories

In a practical demonstration of how rigorous are the standards under New York law for compelling a non-signatory to arbitrate under the “estoppel” and “alter ego” doctrines, the Chief Judge of the U.S. District Court in Manhattan has issued a decision denying a motion to compel Deutsche Bank AG (“DB”) to arbitrate before a FINRA panel claims relating to the marketing of Auction Rate Securities (“ARS”). (Oppenheimer & Co. v. Deutsche Bank AG, 2010 U.S. Dist. LEXIS 19655 (S.D.N.Y. Mar. 2, 2010). The case is one of many that arose in the wake of the collapse of the ARS market….
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February 25, 2010

Reinsurance Award Vacated for Evident Partiality of Two Arbitrators

A judge in the U.S. District Court in Manhattan has vacated a reinsurance arbitration award on grounds of evident partiality of the presiding arbitrator and one party-appointed co-arbitrator. The award was signed by these two arbitrators, with the third arbitrator registering dissent. During the course of the proceedings, the two arbitrators who ultimately signed the award had been appointed to sit together on a second case. Their disclosures about the new appointments failed to mention that parties in the two cases were affiliates, that there was a common witness whose testimony had already been heard and evaluated in the second…
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February 25, 2010

Principle of Separability of the Arbitration Clause Reaffirmed

Adhering to well-settled principles concerning the separability of the arbitration clause, the U.S. Sixth Circuit Court of Appeals reversed an order that had denied a motion to compel arbitration, and held that the lower court improperly relied upon allegations of fraud in the inducement of the entire contract and that there were no sufficient allegations of fraud pertaining specifically to the agreement to arbitrate. The Court also rejected Appellee’s attempt to characterize the dispute as one involving the existence, rather than the validity, of the entire contract, and held that where the position taken is that the signatory to the…
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