Appealing an Arbitration Award: Early Planning and Agreement Are Key

Kim Taylor, Esq.

Kim Taylor, Esq.

by: Kimberly Taylor, Esq.

One of the fundamental tenets of arbitration is finality.  Parties who choose arbitration over litigation typically want assurance that when an award has been issued, the matter is concluded.  As a result, the Federal Arbitration Act states that arbitration awards can be vacated only under four very specific circumstances:  (1) if the award is “procured by corruption, fraud or undue means”; (2) if the arbitrator exhibits evident partiality; (3) if the arbitrator is guilty of misconduct in refusing to postpone a hearing or refusing to hear material evidence, or engages in other acts that prejudice either party; or (4) if the arbitrators “exceeded their powers, or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made” (9 U.S.C. § 10).  Many state statutes are similar.

“Manifest disregard of the law” was long recognized as a means of vacating an arbitration award, if the arbitrator was found to have known of a controlling and well-defined legal principle but failed to follow it when rendering the award.  But that doctrine was called into question in Hall Street Associates, LLC v. Mattel, Inc., in 2008, and several federal courts have held that manifest disregard is no longer a valid basis to vacate an award.  Attempts to expand the scope of judicial review beyond the grounds set forth in the Federal Arbitration Act have generally not been successful, and the Supreme Court (in Hall Street) and other courts have rejected the notion of private parties compelling courts to engage in the arbitration process.  In other words, parties cannot agree to a private arbitration process with the right of a traditional appeal to the court system.

In most cases where parties have submitted a dispute to arbitration, they are content with finality, even if they are at odds with the final outcome.  The certainty afforded by the decision, along with the reduction in time and costs, makes that a sound bargain.  But in some cases where the stakes are high, giving up the right of appellate review can be a daunting proposition for everyone.  Vacating awards under the statutory grounds is rare, and odds are that a final arbitration award will be confirmed by a reviewing court.

With some planning and a carefully worded agreement, parties can realize all the benefits of arbitration (cost and time savings, finality, confidentiality, etc.) while providing for an appellate process.  When drafting such an agreement, consideration should be given to several points, including (1) requiring a reasoned decision by the initial tribunal; (2) defining the issues that can be reviewed on appeal; (3) where the appellate tribunal will be seated; (4) the number and qualifications of the arbitrator(s); (5) the method of appointment of the arbitrators; (6) what constitutes the record on appeal; (7) deadlines; (8) whether there is to be oral argument; and (9) evidentiary standards.

To learn more about arbitration planning, please read the full article from by clicking here.

JAMS Foundation presents the Sixth Annual Warren Knight Award to Mediators Beyond Borders International

Warren Knight Award

Warren Knight Award

The JAMS Foundation’s Sixth Annual Warren Knight Award has been presented to Mediators Beyond Borders International, along with a $25,000 grant. The award recognizes MBB’s work with grassroots collaborations and local leaders around the world to promote mediation and develop programs with lasting impact. The organization received the award at the ABA Dispute Resolution Conference in Miami.

MBB was founded in 2006 by a group of visionary mediators seeking to foster international peace and justice through initiatives emphasizing mediation advocacy, service and capacity-building. Working in partnership with local leaders, communities, universities, professional associations and nonprofit organizations around the world, often in areas adversely affected by war, civil conflict or natural disaster, MBB’s teams of experienced mediators and trainers donate their time, energy and resources to support programs that positively impact the culture of conflict prevention and resolution worldwide.

MBB currently has active projects regarding climate change as well as in-country conflict prevention and resolution programs in Columbia, Ecuador, Israel, Kenya, Liberia, Nepal and Sierra Leone.

“We thank the JAMS Foundation for its recognition and very generous contribution to MBB,” said Prabha Sankaranarayan, Incoming President and CEO and Founding Member. “This grant will allow us to promote mediation, dialogue and other conflict resolution processes in areas and among groups that might otherwise not have access to these processes. We are grateful for the support and partnership from JAMS to build a peaceable world.”

“MBB’s work is perfectly aligned with the mission of the JAMS Foundation and we are proud to partner with them to increase mediation advocacy, awareness and training in much needed areas,” said David Brandon, managing director of the JAMS Foundation. “We are thrilled to support their efforts and are confident that it will help further the development of mediation internationally.”

Hon. H. Warren Knight (Ret.) was the founder of JAMS, which he created in January 1979. Judge Knight was considered a pioneer in the ADR and legal communities and was instrumental in introducing and furthering ADR, including mediation and arbitration, within the legal community in California and throughout the United States.

Role of the E-discovery Liaison

Viggo Boserup, Esq.

Viggo Boserup, Esq.

by Viggo Boserup, Esq.

With today’s prevalence of electronic documents, e-discovery is easily the largest single line item in any company’s litigation budget.  It can often consume more than half the allotted funds and even exceed the actual dollar amount at issue in the dispute.  Ironically, since more than 90 percent of all cases filed eventually settle, the budget for e-discovery can often approach 100 percent of the cost of a litigated matter.

With so much money at stake, the role of technical experts to guide parties through the e-discovery process is becoming more and more essential.  The e-discovery liaison can play a significant role in helping parties and their counsel navigate a process that is often at odds with the typical adversarial system of litigation.  Due to the unique quality of information that is contained in electronic form, transparency in the process of preservation, collection, processing, review and production is critical.  That means that planning is critical and requires a high degree of cooperation among all parties, which is more easily facilitated by a technical expert.

The value of an e-discovery liaison is evident from the very first meeting between parties and counsel on discovery issues.  Whether that meeting is the Rule 26 (f) meet-and-confer or its state law equivalent, it is likely the most critical event in the discovery process and should be approached with careful planning.

To learn more about the importance of the e-discovery liaison’s role, please read the full article from by clicking here.

Securities Litigators Who Do Not Understand Insurance Coverage Could Pay Dearly

Jeffrey Grubman, Esq.

Jeffrey Grubman, Esq.

by Jeffrey Grubman, Esq.

There was a time not that long ago when lawyers representing parties in securities litigation and arbitration did not have to concern themselves too much with insurance coverage issues.  Federal and state statutory securities and common law claims were routinely filed against large investment banks, trust companies, commercial banks, savings and loans, insurance companies, broker-dealers and public companies.  Collectability was not a concern with these large companies.  It was also much easier than it has become to bring securities class actions, and plaintiffs’ lawyers understandably focused on deep pockets.

The world of securities and financial markets litigation has changed dramatically since the financial market meltdown of 2008-2009.  Nobody would have imagined in the 1990s or early 2000s that Lehman Brothers and Bear Stearns would go out of business and some of the largest brokerage/investment banking firms in the world would merge with commercial banks to stay alive.  In addition, compliance tools and supervision have improved at the major broker-dealers and large investment banks.  Consequently, there have been far fewer quality claims to file against these large companies in recent years.

Instead, plaintiffs’ lawyers have focused their energies on smaller broker-dealers and registered investment advisors who do not have the same compliance tools or manpower to supervise their employees and registered representatives.  A sizeable number of these smaller financial services firms have sold a variety of speculative private placements to their client bases, many of which were focused on real estate.  Consequently, when the real estate market declined dramatically, so did these illiquid investments.

Many of these smaller financial services companies purchase errors and omissions insurance policies or require their registered representatives/agents to do so.  Because these companies tend to be thinly capitalized and product failures typically result in a large number of claims filed against them, the claims are often uncollectible without insurance coverage.

To continue learning more about the importance of understanding insurance coverage, please read the full article from by clicking here.