|
In S & B Engineers and Constructors, Ltd. v. Alstom Power, Inc., No. 3:04-CV-0150-L, 2006 WL 2820085 (N.D. Tex. Oct. 2, 2006), the United States District Court for the Northern District of Texas held that the arbitrators in a construction dispute were not guilty of evident partiality or misconduct for refusing to hear certain evidence.
S & B was a subcontractor on a project supervised by Alstom. When a contract dispute arose between the parties, S & B initiated arbitration and received a partial award in its favor. S & B moved to vacate the award, however, since it represented only a fraction of their alleged total losses. Since the arbitration panel had “refused” to admit critical evidence, according to S & B, the award should be vacated.
The Court disagreed, rejecting S & B’s claims of arbitrator misconduct and evident partiality. With regard to the disputed evidence, known as “Exhibit C261,” S & B was offered the option to present this additional evidence, in exchange for allowing Alstom an additional two weeks to prepare its cross-examination and rebuttal. The exhibit consisted of largely the same materials as Exhibit C137, which was admitted into evidence, except that Exhibit C261 contained numerous annotations meant to explain S & B’s complaints and generate continuity in its allegations.
Noting that “the arbitrators were in a better position than this court to address these matters,” the Court found that the arbitrators did not “refuse to hear evidence” by offering S & B the options that it did. Either the two exhibits were identical and admitting C261 served no functional purpose, or they were different and the arbitrator was authorized to limit the admissibility of handwritten notes and potential hearsay.
The Court also rejected S & B’s contention that one of the arbitrators had a personal financial stake in his decisions, due to a “cancellation fee policy.” This policy provided that if an arbitration hearing was cancelled less than 30 days prior to the date the hearing was scheduled to commence, the arbitrator would receive one-half of his daily fee for each hearing day that was cancelled. However, the cancellation fee applied equally to all parties in the arbitration, and S & B never objected to it during the proceedings. Thus, the Court found no “evident partiality” by the arbitrator, and any objections to the policy were waived by S & B’s failure to address them during the arbitration. See Gateway Techs. v. MCI Telecomms. Corp., 64 F.3d 993, 998 (5th Cir. 1995) (quoting Nat’l Wrecking Co. v. Int’l Bhd. of Teamsters, Local 731, 990 F.2d 957, 960 (7th Cir. 1993)).
Subscribe to a free weekly update on ADR case law and
legislation
|