A Texas federal district court has held that the Federal Arbitration Act’s (FAA) one-year limitation on award confirmation is a "mandatory" time limit, thus barring motions to confirm awards after one year has passed.

In FIA Card Services, N.A. v. Gachiengu, Civ. A. No. H-07-2382, 2008 WL 3826110 (S.D. Tex. Aug. 14, 2008), Gachiengu opened a credit card account with FIA. The account was issued subject to a broadly-worded arbitration agreement and a Delaware choice-of-law provision. A dispute arose, and an award was issued in favor of FIA in June of 2005. In November of 2005, FIA moved to confirm the award. Unable to find Gachiengu, FIA obtained an order permitting substituted service in July of 2006.

In April of 2007, FIA filed another suit against Gachiengu to confirm the award. Gachiengu moved to vacate the award, arguing the confirmation was untimely. He also filed a counterclaim for violation of the Texas Debt Collection Act (TDCA), maintaining that FIA’s attempt to confirm a time-barred award violated Texas law.

The Court acknowledged a circuit split among courts considering whether the one-year time limitation on confirmation in 9 U.S.C. § 9 is permissive or mandatory. Compare Val-U Const. Co. of S.D. v. Rosebud Sioux Tribe, 146 F.3d 573, 581 (8th Cir. 1998) (§ 9 limit is permissive); Sverdrup Corp. v. WHC Constructors, Inc., 989 F.2d 148, 156 (4th Cir. 1993) (same), with Photopaint Technologies, LLC v. Smartlens Corp., 335 F.3d 152, 157-58 (2d Cir. 2003) (deciding § 9 limit is mandatory).

The Court interpreted the use of the word "may" in Section 9 to "reflect the party’s discretion as to whether to apply to the court for an order confirming the award," not discretion to bring the motion to confirm at a point in time beyond the stated limitation. As support for its interpretation, the Court noted the Fifth Circuit Court of Appeals’ adoption of this interpretation. Bernstein Seawell & Kove v. Bosarge, 813 F.2d 726, 731 (5th Cir. 1987) (holding a motion to confirm timely, while acknowledging that "[t]he complaint to enforce the arbitration award was filed within one year as required by 9 U.S.C. § 9").

FIA also argued that, in the alternative, common law confirmation of the award was still available. However, the Court pointed to the Delaware choice of law provision in the parties’ agreement and held that the one-year time limitation in Delaware statute had abrogated the old common law confirmation rule in that jurisdiction. See Del. Code tit. 10, § 5713.

Finally, the Court rejected Gachiengu’s TDCA claim, finding FIA’s attempt to confirm the award was made in "good faith" in light of the conflict of authority on Section 9 time limitations. Even if Texas law applied, FIA could not be liable under the TDCA as a matter of law.