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A District of Columbia federal court confirmed an arbitration award over allegations of manifest disregard of the law and evident partiality because the petitioner offered no evidence to support these arguments.
In Williams Fund Private Equity Group, Inc. v. Engel, No. CIV.A.06-02266(HHK), 2007 WL 3277297 (D. D.C. Nov. 07, 2007), Williams Fund entered into a stock purchase agreement with David Engel and later defaulted on the agreement. Engel moved to foreclose on the assets of Williams Fund and its stock, which had been used as collateral for the purchase.
Williams Fund filed for arbitration, claiming that Engel breached the agreement. Engel filed a fraudulent inducement counterclaim. The arbitrator found in favor of Engel and awarded damages only to Engel. Williams Fund moved to vacate the award on grounds of manifest disregard of the law and evident partiality.
This Court rejected Williams Fund’s arguments. First, Williams Fund did not prove that the arbitrator manifestly disregarded the law. It offered no specific evidence that the arbitrator ignored a principle of law of which he was aware. At most, the arbitrator may have incorrectly applied the law, and this would not be reviewable by the Court.
Although the arbitrator did not award restoration to Williams Funds, there was evidence that the arbitrator considered this aspect of Virginia’s rescission law and applied it correctly. It is possible that the arbitrator was persuaded by Engel’s argument that Williams Fund was not entitled to restoration because it acted fraudulently.
Second, Williams Fund’s argument that the arbitrator was biased in favor of Engel was found to lack merit. Williams Fund did not offer an explanation for how Engel’s attorney’s remarks during closing argument “constituted a ‘threat’ as opposed to a persuasive argument.” Further, Williams Fund failed to “‘connect the dots’ between the statement and its assertion that the arbitrator was partial.”
Finally, the arbitrator’s exposure to a document unrelated to this proceeding which alleged fraud against Williams Fund did not prove bias. The Court noted that “[i]t is simply not the case ‘that arbitrators are so impressionable that exposure to prejudicial documents inexorably leads to partiality.’” (internal citations omitted).
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