Originally from the AAA Yearbook on Arbitration and the Law - 30th 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.