Digests of Cases Discussing AAA Rules (Alphabetical) - AAA Yearbook on Arbitration and the Law - 27th Edition
Author(s):
Stephen K. Huber
Ben H. Sheppard Jr.
Page Count:
108 pages
Media Description:
1 PDF Download
Published:
September, 2015
Description:
Originally from AAA Yearbook on Arbitration and the Law - 27th Edition
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21st Century Financial Services, L.L.C. v, Manchester Financial
Bank, 747 F.3d 331 (5th Cir. 2014)
Sufficiency of Notice of Arbitration
Organizers of Bank (which never came into existence) sought to
vacate the arbitration award because they did not receive adequate notice
of the arbitration proceedings. Both the district court and the 5th Circuit
rejected these claims, because people associated with the Bank received
actual or constructive notice of the arbitration proceeding.
The AAA case manager sent several notices about the arbitration to
multiple persons associated with the Bank project, including counsel.
After a preliminary hearing, at which no appearance was made by Bank,
further notice was made to persons associated with Bank. Several
responded, and noted that the Bank never came into existence. The
proceeding did not result in a default award; the tribunal required 21st
Century to prove up its claim.
Bank argued that 21st Century failed to comply with the Agreement
by not sending the notice of the arbitration proceedings via certified or
registered mail to a specified La Jolla address. The arbitral panel
disagreed, noting that any technical deficiency was overcome because
Bank had actual notice of the arbitration proceeding. See, Bernstein
Seawell & Kove v. Bosarge, 813 F.2d 726 (5th Cir. 1987). Other Circuits
agree that defective notice can be overcome by actual or constructive
notice.
Adam Technologies Int’l S.A. de C.V. v. Sutherland Global
Services, Inc., 729 F.3d 443 (5th Cir. 2013)
ICDR Articles 6, 7, 8, & 36; Disqualification of Party-Appointed
Arbitrator
Sutherland sought AAA arbitration with Adam under their Master
Services Agreement (MSA), and the court so ordered. The parties turned
to mediation by attorney Phillip Spellane, who had previously
represented Sutherland in a labor dispute (a fact disclosed to Adam).
Mediation did not produce a settlement, so the parties proceeded to
arbitrator selection under the MSA.
The parties sought to create a three arbitrator panel, with one
selected by each party, and those two arbitrators selection the third.
Adam appointed Spellane as its arbitrator. This appointment was
challenged by Sutherland due to Spellane’s former participation in the
dispute, and his ex parte communications with the parties. The ICDR
ruled for Sutherland. Despite two extensions, Adam declined to appoint
an alternate arbitrator, whereupon the ICDR appointed a second
arbitrator who then worked with Sutherland’s arbitrator to select the third
arbitrator.
Adam argued that its failure to appoint a substitute arbitrator
constituted a breakdown in the appointment process, so the district court
should have appointed an arbitrator under section 5 of the FAA. The
Fifth Circuit rejected this approach.
Here, there was no mechanical breakdown that required thecourt’s intervention. Instead, it was Adam’s own noncompliancewith the ICDR’s procedural requirements that prompted theICDR to appoint an arbitrator, an appointment which the ICDRdetermined was in accordance with its rules. Article 36 of theICDR Rules states an arbitral tribunal or administrator shallinterpret these rules. … [N]o lapse occurred under Section 5.
As for the presumption that procedural questions are to be decided
by the arbitrator, Adam argued that the contract provided otherwise.
However, the contract incorporated the ICDR Rules, which address the
challenging and replacing of arbitrators.
Agility Public Warehousing Co. K.S.C. v. Supreme Foodservice
GmbH, 810 F.Supp.2d 703 (S.D.N.Y. 2011)
ICDR; New York Convention; Confirmation of Arbitration Award
Supreme was the prime vendor under a contract with the United
States to supply food and other supplies to U.S. forces in several Middle
East countries (Zone 1). The agreement called for a monthly fee of 3.5
percent of net revenues. Supreme could terminate Agility, but it still
would be obligated to pay a “post-termination fee” of 1.75 percent of
monthly net revenue for the life of the prime contract.
monthly net revenue for the life of the prime contract.