The opinion of the court was delivered by: Sweet, District Judge.
Once again petitioner LLT International Inc., F/K/A Lee, Liu &
Tong Advertising, Inc. ("LLT") has moved to vacate an arbitration
award (the "Award" or the "Second Award"), rendered this time on
March 29, 1999, in the continued arbitration between it and
respondent MCI Telecommunications Corporation, S/H/A MCI
Telecommunications, Inc. ("MCI"). MCI has cross-moved to confirm
the Award. For the reasons set forth below, LLT's motion is
denied, the cross motion of MCI is granted, and the Award
An arbitration between the parties was conducted pursuant to
their agreement of July 6, 1994 (the "Agreement"), under which
LLT was retained by MCI as an advertising and marketing
consultant to assist MCI in its efforts to market its services to
the Asian-American community. MCI terminated the Agreement,
claiming defective and fraudulent performance by LLT. LLT
claimed, inter alia, wrongful termination, and sought payment
of unpaid invoices and damages for termination.
The dispute between the parties was arbitrated in Washington,
D.C., with fourteen days of hearings, thirteen fact witnesses,
thousands of pages of documentary evidence, two expert witnesses,
seven fully-briefed motions, two post-hearing memoranda from the
parties, and a day of closing arguments. An award was issued on
November 19, 1997 (the "First Award") leaving the parties,
financially, where they were. The Award was vacated in an opinion
of this Court, dated September 24, 1998, familiarity with which
is assumed. See LLT Int'l v. MCI Telecommunications,
18 F. Supp.2d 349 (S.D.N.Y. 1998) ("LLT I"). On remand, no
additional evidence was presented, and the arbitration panel (the
"Panel") conducted a hearing on January 22, 1999.
On March 29, 1999, the Panel rendered the Second Award, stating
that MCI and LLT each bore the burden of proving all the elements
of their respective claims and counterclaims, and that neither
party had sustained that burden.*fn1 As a result, the Panel
determined, once again, to "leave the parties where they found
More specifically, the Panel found that: [M]CI did
sustain its burden of proving (a) that LLT materially
breached the Agreement by failing to perform its
contractual obligations and to submit proper invoices
in accordance with the terms of the Agreement, (b)
that LLT's improper practices in breach of the
Agreement were pervasive and resulted in substantial
overcharges to MCI, (c) that LLT's improper practices
were concealed from MCI and were not discovered by
MCI until the summer of 1996, (d) that MCI had good
cause for terminating the Agreement, and (e) that
MCI's termination notice to LLT dated July 26, 1996
[M]CI did not sustain its burden of proving (a)
that LLT's improper performance, billing practices,
or overcharges constitute fraud, and (b) that MCI is
entitled to recover any amount from LLT in excess of
the amount that MCI owed to LLT.
[L]LT did not sustain its burden of proof with
respect to all elements of any of its counterclaims.
The Second Award also concluded that "the law of account stated
does not relieve LLT of the burden of proving its counterclaims,"
and that the doctrine of functus officio did not preclude the
Panel from reaching its conclusions concerning the parties'
satisfaction of their respective burdens. The Second Award's
denial of LLT's counterclaims indicated that LLT had not
sustained its burden of proving, among other things, "[t]hat LLT
fully and properly performed its obligations under the Agreement"
or "[t]hat LLT properly billed for its services in accordance
with the terms of the Agreement."
LLT moved to vacate the Second Award, MCI moved to confirm it,
and both motions were marked fully submitted on June 30, 1999.
I. The Standard for Vacatur of an Arbitral Award
As set forth in LLT I, "[t]he grounds for vacating awards are
[C]ourts have consistently held that "`arbitration
awards are subject to very limited review in order to
avoid undermining the twin goals of arbitration,
namely, settling disputes efficiently and avoiding
long and expensive litigation.'" . . . Moreover, the
burden is on the party seeking to vacate the award to
establish one of the statutory grounds for that
relief. Thus, the Second Circuit "adhere[s] firmly to
the proposition  . . . that an arbitration award
should be enforced, despite a court's disagreement
with it on the merits, if there is a `barely
colorable justification for the outcome reached.'"
18 F. Supp.2d at 352 (citations omitted). Accordingly, a party
seeking to vacate an arbitration award bears a heavy burden of
proof. See Warnes, S.A. v. Harvic Int'l., Ltd., No. 92 Civ.
5515(RWS), 1995 WL 261522, at *3 (S.D.N.Y. May 4, 1995) ("Any