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December 02, 2009

Third Circuit Reaffirms Core NY Convention Principles

The U.S. Third Circuit Court of Appeals has issued an important reaffirmation of certain core principles in the American jurisprudence of the New York Convention. In a “non-precedential” opinion that will nevertheless be very persuasive in future cases, the Court: 1. Declared, consistent with prior case law in other federal courts, that Convention Article V(1)(e)’s reference to “a competent authority of the country… under the law of which the award was made” refers “‘exclusively to procedural and not substantive law, and more precisely, to the regimen or scheme of arbitral procedural law under which the arbitration was conducted.’” Here, the…
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December 01, 2009

Exclusive State Court Jurisdiction Over Motions to Vacate Convention Awards?

Does Chapter Two of the Federal Arbitration Act confer federal subject matter jurisdiction, in a federal district court at the seat of the arbitration, over a motion to vacate a Convention award? A senior federal district judge in Chicago has raised this issue, sua sponte, in an action to vacate a Convention award that was brought to the federal court from an Illinois state court by a Notice of Removal. In a published order, the Court expressed doubt that federal subject matter jurisdiction exists, and invited the parties to brief the issue by December 9. Virginia Surety Co. v. Certain…
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November 23, 2009

Sanctions Assessed for Meritless “Manifest Disregard” Appeal

A recent decision of the U.S. Tenth Circuit Court of Appeals assesses sanctions in the form of an award of attorneys’ fees against counsel for a party appealing the confirmation of an arbitration award on grounds of “manifest disgregard of the law.” While allowing that “manifest disregard” has some continuing vitality after Hall Street Assocs. v Mattel, Inc., the Court here found the arguments foir vacatur completely meritless. The arbitration community should be encouraged at the Court’s explicit linkage of the attorney’s fee sanction issue to the very limited prospects for vacatur based on manifest disregard, and to the essential…
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November 17, 2009

The Fifth Circuit’s Reverse Preemption Decision: An “Upset Victory” for International Arbitration

An arbitration lawyer immersed in the U.S. jurisprudence of the New York Convention, but not necessarily versed in all of the nuances of the Supremacy Clause of the U.S. Constitution, might be tempted to conclude that international arbitration scored a remarkable upset victory, against long odds, in the U.S. Fifth Circuit Court of Appeals last week. (Safety Nat’l Cas. Corp. v. Certain Underwriters at Lloyd’s, 2009 U.S. App. LEXIS 24585 (5th Cir. Nov. 9, 2009)). By a vote of 15 to 3, the judges of that Court sitting en banc ruled — sustaining the original decision of a three-judge Fifth…
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November 13, 2009

New York Convention Is Not “Reverse Pre-Empted” By State Insurance Regulation Designating Judicial Forum

Our U.S. Court of Appeals for the Fifth Circuit has issued an important en banc decision, refusing to enforce a Louisiana state insurance law whose effect is to prohibit arbitration of international insurance disputes, on the basis that the Louisiana law is pre-empted by the New York Convention and Chapter Two of the Federal Arbitration Act. This outcome might on the surface appear to be unsurprising. But the federal McCarran-Ferguson Act provides that no Act of Congress shall interfere with the rights of the states to regulate the business of insurance. Therefore the Court had to struggle with the question…
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October 27, 2009

Incorporation by Reference of an Arbitration Agreement: Governing U.S. Legal Standards

According to a recent decision of the U.S. Court of Appeals for the Third Circuit, a retrocession agreement (reinsurance of reinsurance) that incorporates by reference all terms of a reinsurannce contract that contains an arbitration clause, does provide for arbitration of disputes under the retrocession contract. Further, the Court held, courts must address the question of incorporation-by-reference of an arbitration clause just as they would address the incorporation of any other contract term. To impose a more stringent legal standard for incorporation of an arbitration clause, as compared to other commercial terms, would violate the command of the Federal Arbitration…
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