The Supreme Court of the United States decided two cases in its latest term regarding the availability of class arbitration, a cutting-edge issue for domestic and international arbitration alike. In addition to addressing class arbitration, the Sutter case could well resolve ongoing judicial confusion regarding the availability of “manifest disregard of the law” as grounds for vacatur under § 10(a)(4) of the Federal Arbitration Act (FAA).
In Sutter, a health insurance company (Oxford) sought to vacate an arbitrator’s award authorizing class arbitration under § 10(a)(4) of the FAA. The Court unanimously upheld the arbitrator’s decision. Even though it characterized the arbitrator’s decision as possibly a “grave error,” the Court made it clear that erroneous contractual interpretations are an insufficient basis for vacatur under § 10(a)(4). Instead, § 10(a)(4) permits courts to vacate arbitral awards only “when the arbitrator strayed from his delegated task of interpreting a contract, not when he performed that task poorly.”
While the arbitration clause in Sutter did not expressly mention class procedures, the arbitration clause in Italian Colors specifically prohibited class arbitration. In Italian Colors, merchants who accept American Express cards sought to file a class action antitrust lawsuit and void the class arbitration waiver contained in their agreement with American Express. The Court rejected the argument that the waiver was unenforceable for the economic burdens it imposed on potential antitrust plaintiffs by forcing them to litigate their cases individually. It emphasized that courts must “rigorously enforce arbitration agreements according to their terms, including terms that specify with whom [the parties] choose to arbitrate their disputes.”
While these two cases have seemingly divergent implications for the availability of class arbitration, they should reassure those considering Miami (and generally, the U.S.) as the seat of their international arbitration. Both cases reflect the FAA’s overriding policy of respecting arbitral agreements: in the former by refusing to substitute judicial judgment for that of the arbitrator, and in the latter by enforcing the parties’ agreement on the procedure to be employed in arbitration.
See Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013); Am. Express. Co. v. Italian Colors Rest., 133 S. Ct. 2304 (2013).
See Harout J. Samra, Two to Tango: Domestic Grounds for Vacatur Under the New York Convention, 20 Am. Rev. Int’l Arb. 367 (2009); Bangor Gas Co., LLC v H.Q. Energy Services (U.S.) Inc., 695 F.3d 181, 187 n.3 (1st Cir. 2012) (collecting decisions addressing manifest disregard of the law as grounds for vacatur in the wake of Hall Street Associates, L.L.C. v. Mattel, Inc., 522 U.S. 576 (2008)).
Id. at 2070. The relevant part of the arbitration clause read: “No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration. . .” Id.
The old refrain, “See you in court!” is so last century. The latest trend in resolving contractual disputes is the less expensive, out-of-court process of arbitration. Even the Kardashians include an arbitration clause in their contracts, and you can’t get any trendier than that.
Though arbitration is intended to be cheaper and speedier than a legal trial, for South Florida law firms it also has become an important and growing revenue stream.
On Sunday, March 2, 2013, the Willem C. Vis Commercial Arbitration Pre-Moot Competition was held at the JAMS Miami facilities. The Pre-Moot was sponsored by the Florida Bar International Law Section and hosted by JAMS at their Miami office. Teams from five Florida law schools participated: Stetson University, Nova Southeastern University, Florida International University, University of Florida and University of Miami. There were joined by teams from Loyola University New Orleans and Comenius University in Bratislava, Slovakia, the latter hosted by Richard DeWitt.
Each team participated in four rounds and were judged by volunteer arbitrators drawn from our local community. The first place team, Stetson, received a monetary award from the Chartered Institute of Arbitrators, presented by Luis O’Naghten. Second place winner, Loyola and third place winner, FIU were each awarded a copy of Prof. Peter Rutledge’s, “Arbitration and the Constitution”.
The MIAS $500 prize for the best oralist was presented by MIAS Board Member Judith Freedberg. The prize went to Stetson team member Meagan Foley. Meagan is to be congratulated for her achievement in winning this prize two years in a row. A copy of Prof. Rutledge’s book was also presented to the runner-up best oralist Dane Ullian of Univerity of Florida.
Many thanks to the International Law Section and the Pre-Moot chair, Clarissa Rodriquez, JAMS, the many MIAS members and all the other volunteers who offered their services and made this Pre-Moot a great success.
Professor Doug Jones recently gave a presentation to MIAS titled “The Australian Arbitration Option – Asia Pacific Region.” The full presentation can be downloaded here: The Australian Arbitration Option – MIAS (Powerpoint Format).
MIAS member Joe Matthews is co-chairing a winter forum by The Institute for Transnational Arbitration at the Biltmore in January. Please click here for a call for papers to be submitted for the forum. (Word document)
The American Bar Association Section of International Law (“ABA International”), invites you to our 2012 Fall Meeting in Miami Beach, Florida.
We expect more than 1,000 international practitioners from not only the United States but more than 60 countries to attend the 2012 Fall Meeting. Our attendees range from practitioners with the large global law firms, regional and national firms outside the US, US-based small-firm and solo practitioners with significant international practices; corporate and in-house counsel, lawyers serving in government or with non-governmental organizations and inter-governmental organizations, and academics.
For more information, please click here. (PDF Format)