In 2009, Tully Construction Co. filed a demand for arbitration against Canam Steel Corp., concerning a dispute over a contract to supply steel. Tully sought over $20 million in damages for breach of contract and intentional and negligent misrepresentation. Canam counterclaimed for approximately $5 million. Tully Constr. Co. v. Canam Steel Corp., No. 13 Civ. 3037, 2015 U.S. Dist. LEXIS 25690 (S.D.N.Y. Mar. 2, 2015).

After a full hearing, the selected arbitrator, John Krol, issued an award granting Tully almost $7 million in damages on its claim, and granting Canam over $350,000 on its counterclaim. The arbitrator listed out categories of alleged damages and the amount awarded for each.

The Dispute

After Krol issued the award, Canam requested that he withdraw the award and instead issue a “reasoned award.” Canam’s argument for a reasoned award was premised on the parties’ arbitration agreement itself and a scheduling order issued by the arbitrator. Specifically, the arbitration agreement governing the dispute provided that the arbitration would be covered by the AAA Arbitration Rules for Complex Construction Cases. Such rules provide that, unless the parties agree otherwise, the arbitrator shall issue a “reasoned award.” Krol had also issued a scheduling order stating that the “arbitrator’s decision shall be reasoned.”

Krol denied Canam’s request to withdraw the award, responding that his final award was a reasoned award because it “sufficiently and specifically incorporates all credible evidence adduced during the hearings, detailing the liability for each item of claim and counterclaim.”

When Tully sought confirmation of the arbitrator’s award in the United States District Court for the Southern District of New York, Canam opposed the petition arguing, among other things, that the arbitrator had exceeded his authority by failing to issue a reasoned award.

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