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Second Circuit denies vacatur of arbitral award but refuses to impose attorneys' fees on losing party
Practical Law Legal Update 7-622-6400 (Approx. 3 pages)
Second Circuit denies vacatur of arbitral award but refuses to impose attorneys' fees on losing party
by Practical Law Arbitration
| Published on 02 Feb 2016 • International, USA (National/Federal) |
The US Court of Appeals for the Second Circuit considered whether it should grant the successful party the attorneys' fees it incurred in seeking enforcement and in resisting vacatur of an international arbitral award.
On January 28, 2016, the US Court of Appeals for the Second Circuit affirmed the recognition of a New York-seated arbitration award but denied granting the successful party the attorneys' fees it incurred in seeking enforcement and in resisting vacatur. In denying to grant the attorneys' fees, the court noted that:
- A judicial challenge to the award was not a breach of the arbitration agreement.
- Even if the arbitration agreement could be construed to prohibit judicial challenges, parties may not divest the courts of their statutory role in reviewing awards under section 10(a) of the Federal Arbitration Act (9 U.S.C. § 10(a)).
- Even though the court found the arguments supporting vacatur to be "unconvincing," it nevertheless declined to impose attorneys' fees under 28 U.S.C. § 1927 because the arguments were not "so unconvincing as to require the conclusion that they are made for an improper purpose."
This decision by the Second Circuit stands in contrast to other cases that have held that parties can be sanctioned for frivolous attacks on arbitration awards. Although the decision does not really undermine that concept, it is likely that it will be cited by parties trying to avoid sanctions.
For more information on sanctions and attorneys' fees in relating to arbitration in US courts, see Practice Note, Sanctions in Arbitration-related Litigation.