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Facing a party's attempt to employ the Federal Rules of Civil Procedure in a way that would have effectively allowed the loser of a $1.36 million dollar arbitration award to pay nothing, a Federal District Court in Texas struck down a Rule 41 "Voluntary Dismissal" motion as being "improvidently filed," and proceeded to confirm the award.
In Alstom Power, Inc. v. S & B Engineers & Constructors, Ltd., Civil Action No. 3:04-CV-2370-L, 2007 WL 1284968 (N.D. Tex. Apr. 30, 2007), Alstom Power, Inc. (Alstom) lost in arbitration to its subcontractor S & B Engineers & Constructors, Ltd. (S & B). However, because the award was smaller than either party had anticipated, S & B moved to vacate, while Alstom sought immediate confirmation.
Because of technical matters, the award remained unconfirmed nearly three years after it was issued. In a final attempt to thwart S & B's efforts to increase the award, Alstom filed a Rule 41 motion for "Voluntary Dismissal" of its motion to confirm, and claimed further that S & B could not move to confirm since the statute of limitations on confirmation had expired.
The Court rejected Alstom's motion. First, it noted that the federal rule allows voluntary dismissal of an "action" under certain conditions. However, matters heard by the Court relating to arbitrations involve "motions," not actions, and the rule therefore does not apply to arbitration proceedings.
Second, the Court found that even if the rule did apply, it would be unjust to apply it in this case, as it would deeply prejudice S & B, and effectively make an end run around a final legal decision in a dispute.
Third, and perhaps most importantly, the Court noted that in making this motion, Alstom "overlooks the whole purpose of arbitration." That is, if all the rules of civil procedure from court proceedings applied to arbitrations, "the purpose of avoiding protracted litigation…and costs… would be thoroughly frustrated."
Labeling Alstom's motion an attempt at "legal legerdemain," the court ruled that it was "improvidently filed" and therefore rendered "null and void." This left no bar to consideration of the original motion to confirm, which the Court proceeded to grant.
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