Arbitration Panel’s Award Upheld Despite Refusal to Grant Continuance

An arbitration panel’s refusal to grant a continuance does not constitute misconduct on part of the panel sufficient to overturn an arbitration award, the United States Court of Appeals for the Fifth Circuit held.

In Laws v. Morgan Stanley Dean Witter, No. 05-20626, 2006 WL 1579542 (5th Cir. June 9, 2006), Laws sought vacatur of an arbitration award. When Laws first requested documents from Morgan Stanley, the arbitration had been pending for more than three years. Laws received some documents from Morgan Stanley only two days before the arbitration hearing, but the panel refused to grant his request for a continuance.

Noting that the Federal Arbitration Act, 9 U.S.C. § 10(a)(3), allows vacatur “where the arbitrators were guilty of misconduct in refusing to postpone their hearing, upon sufficient cause shown,” the Court held that Laws failed to show sufficient misconduct on the part of the arbitrators.

Laws did not argue that he was denied a fair trial as a result of the panel denying his request for a continuance. He neither indicated that he was prejudiced by not receiving the postponement nor that the documents he received two days before the hearing were material to his case.

Additionally, the Court noted several factors that may have led the panel to deny Laws’ request for a continuance. Laws made no showing that the documents were “complex, voluminous, or important.” Allowing further delays in an arbitration proceeding that had been pending for three years would undermine the efficiency of the arbitration process. Finally, allowing Laws’ continuance may have been inequitable to Morgan Stanley, considering Laws was the party who waited three years before beginning discovery.

Since Laws was not denied a fair trial and the panel had reasonable bases for denying Laws’ request for a continuance, the Court refused to vacate the panel’s award.