Second Circuit Un-Vacates Arbitration Award, Finding No Manifest Disregard
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The Second Circuit reversed a district court’s vacatur of an arbitration award this week, finding that the arbitration panel did not manifestly disregard the law when it refused the respondent’s reading of a state statute. Sotheby’s Int’l Realty, Inc. v. Relocation Group, LLC, 2015 WL 64265 (2d Cir. Jan. 6, 2015). In doing so, the Second Circuit suggests that 2014’s theme (arbitrator authority) is continuing into the new year.
The dispute in Sotheby’s was between two realty firms over their commissions from the sale of a $16M property in Greenwich, Connecticut. (See Sotheby’s Int’l Realty, Inc. v. Relocation Group, LLC, 987 F. Supp. 2d 157 (D. Conn. 2013).) A three-member arbitration panel awarded the Relocation Group the commission it sought. In accordance with the applicable arbitration rules, the panel offered no rationale for its decision.
The federal district court vacated the arbitration award, finding that the arbitration panel had manifestly disregarded the law. It ruled that the Relocation Group’s commission was precluded by a Connecticut statute requiring brokers to fulfill certain conditions before recovering commissions. Because the district court concluded the law was clear, and the arbitration panel knew of it but improperly applied it, it vacated the award.
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