Reinsurance Focus

The Second Circuit recently addressed the standard by which a court may refuse to enforce an arbitration award on the ground that the award is contrary to public policy. In a case arising out of an employment dispute, Hope Day Nursery appealed a district court decision granting the plaintiffs’ motion to confirm two arbitration awards that (1) reinstated a discharged employee with back pay; and (2) instructed Hope Day nursery to “cease and desist from hiring and/or assigning substitute teachers to work extra hours” before first offering those hours to qualified existing employees.

The Second Circuit agreed with the district court’s finding that Hope Day Nursery’s challenge to the first arbitration award was untimely. With respect to the challenge to the second arbitration award, the court explained that “[w]hile a court may ‘refus[e] to enforce an arbitrator’s award under a collective-bargaining agreement because it is contrary to public policy,’ such a refusal ‘is limited to situations where the contract as interpreted would violate some explicit public policy that is well defined and dominant…and not from general considerations of supposed public interests.’” Since Hope Day Nursery did not point to a well defined and dominant public policy that would be violated by enforcement of the collective bargaining agreement, the Second Circuit affirmed the arbitration award. District Council 1707 v. Hope Day Nursery, Case No. 06-0325-cv (2d Cir. May 4, 2007).