Reinsurance Focus

Parties to a contract for the sale of steel pipe brought cross-motions to vacate, modify and correct an arbitration award conducted according the International Dispute Resolution Procedures of the AAA’s International Centre for Dispute Resolution. The arbitrator issued an amended award, which was challenged in District Court by both parties. The District Court vacated the amended award and confirmed the original award. Appellant T.Co. Metals appealed the judgment to the Second Circuit arguing that the arbitrator acted in manifest disregard of the law and exceeded his powers. Appellee Dempsey Pipe & Supply filed a motion for fees.

The Second Circuit agreed with the district court’s refusal to vacate the damage award to Dempsey finding that the arbitrator did not manifestly disregard the law in interpreting the Supreme Court’s recent decision in Hall Street Assoc. LLC v. Mattel, Inc., 128 S. Ct. 1396 (2008). The Court determined, however, that the district court erred in applying the functus officio doctrine to the arbitrator as he was acting on the parties’ petitions for reconsideration and revised the award pursuant to his interpretation of the arbitral rules the parties had agreed upon. Accordingly, the Second Circuit vacated the order confirming the arbitrator’s original award and remanded the case so that the amended award may be confirmed. Dempsey’s motion for fees was denied. T.Co. Metals, LLC v. Dempsey Pipe & Supply, Inc., Case No. 08-3894 (2d Cir. Jan. 14, 2010).

This post written by John Black.