The opinion of the court was delivered by: Shira A. Scheindlin, United States District Judge.
On August 6, 2002, this Court issued an opinion and order confirming
two interim arbitral orders requiring Petitioner to post prejudgment
security. See Banco de Seguros Del Estado v. Mutual Marine Offices,
Inc., No. 02 Civ. 467, 2002 WL 1808201 (S.D.N.Y. Aug. 6, 2002) ("Banco
I"). Familiarity with that opinion is assumed. On August 22, 2002, Banco
de Seguros del Estado ("Banco") moved for reconsideration. The motion to
reconsider is granted, but the result remains unchanged.
A motion for reconsideration is governed by Local Rule 6.3 and is
appropriate where a court overlooks "controlling decisions or factual
matters that were put before it on the underlying motion . . . and
which, had they been considered, might have reasonably altered the result
before the court." Range Road Music, Inc. v. Music Sales Corp.,
90 F. Supp.2d 390, 392 (S.D.N.Y. 2000) (quotation marks and citation
omitted); see also Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d
Cir. 1995) ("The standard for granting . . . a motion [for
reconsideration] is strict, and reconsideration will generally be denied
unless the moving party can point to controlling decisions or data that
the court overlooked — matters, in other words, that might
reasonably be expected to alter the conclusion reached by the court.").
Alternatively, a motion for reconsideration may be granted to "correct a
clear error or prevent manifest injustice." Griffin Indus., Inc. v.
Petrojam, Ltd., 72 F. Supp.2d 365, 368 (S.D.N.Y. 1999). Local Rule 6.3
should be "narrowly construed and strictly applied so as to avoid
repetitive arguments on issues that have been considered fully by the
Court." Dellefave v. Access Temps., Inc., No. 99 Civ. 6098, 2001 WL
286771, at *1 (S.D.N.Y. Mar. 22, 2001); see also In re Houbigant, Inc.,
914 F. Supp. 997, 1001 (S.D.N.Y. 1996) (a Local Rule 6.3 motion "is not a
motion to reargue those issues already considered when a party does not
like the way the original motion was resolved"); Carolco Pictures, Inc.
V. Sirota, 700 F. Supp. 169, 170 (S.D.N.Y. 1988) (purpose of Local Rule
6.3 is to "ensure the finality of decisions and to prevent the practice
of a losing party examining a decision and then plugging the gaps of a
lost motion with additional matters").
Banco raises four challenges to the August 6 Order: (1) the Court
should have employed a de novo standard in reviewing the arbitral orders
for manifest error of law; (2) contrary to the Court's August 6 Opinion,
Banco did assert that the arbitration Panel's award was against public
policy; (3) the Court erred in finding that the Panel did not act in
manifest disregard of law; and (4) the Panel erroneously relied on. the
terms of the reinsurance agreement in finding that Banco was required to
post prejudgment security. I will briefly address each of these
A. The Standard of Review
"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."
Willemijn Houdstermaatschappij, BV v. Standard Microsystems Corp.,
103 F.3d 9, 12 (2d Cir. 1997) (quotation marks omitted). "Review for
manifest error is `severely limited'." Greenberg v. Bear, Stearns &
Co., 220 F.3d 22, 28 (2d Cir. 2000) (quoting DiRussa v. Dean Witter
Reynolds Inc., 121 F.3d 818, 821 (2d Cir. 1997)). The Second Circuit has
cautioned that "manifest disregard clearly means more than error or
misunderstanding with respect to the law." Halligan v. Piper Jaffray,
Inc., 148 F.3d 197, 202 (2d Cir. 1998) (quotation marks omitted).
Specifically, a court may not vacate an arbitration award unless it finds
that: "(1) the arbitrators knew of a governing legal principle yet
refused to apply it or ignored it altogether, and (2) the law ignored by
the arbitrators was well defined, explicit, and clearly applicable to the
case." Greenberg, 220 F.3d at 28 (citing DiRussa, 121 F.3d at 821).
The party seeking vacatur of an arbitration award bears the burden of
proving manifest disregard of law. See Greenberg, 220 F.3d at 2-8 (citing
Willemijn Houdstermaatschappij, 103 F.3d at 12). But, even if that party
proves that the arbitrators' decision is based on a manifest error of
law, a court must nevertheless confirm the award if grounds for the
decision can be inferred from the facts of the case. See Willemijn
Houdstermaatschappij, 103 F.3d at 13; Green v. Progressive Mgmt., Inc.,
No. 00 Civ. 2539, 2000 WL 1229755, at *2 (S.D.N.Y. Aug. 29, 2000).
In response to this authority, which was summarized in a condensed
format in the August 6 Opinion, Banco notes that in Greenberg, the Second
Circuit held that "a district court's application of the manifest
disregard standard is a legal determination that we review de novo." See
Banco's Memorandum of Law in Support of Petitioner's Motion for
Reconsideration ("Banco Mem.") at 5 (quoting Greenberg, 20 F.3d at 28).
This argument is frivolous. While the Second Circuit must review the
district court's determination de novo, this in no way abrogates the
extensive authority cited above regarding this Court's "severely limited"
review of the arbitral award. This ground for reconsideration is rejected
as the Court applied the appropriate standard of review.
B. The Public Policy Argument
In the August 6 opinion, the Court listed the seven grounds set forth
in the Inter-American Convention that would permit a court to refuse to
recognize or enforce an arbitral award. The Court then noted that "Banco
does not claim that any of these provisions apply." Banco I, 1998 WL
1808201, at *6. Banco correctly points out that it did, in fact, claim
one of those grounds — namely that "the recognition or execution of
the decision would be contrary to the public policy ("order public") of
th[e] State [of the tribunal]."
9 U.S.C. § 207. At page 3 of its
Memorandum of Law in Reply on Plaintiff's Motion and in Opposition to
Defendant's' Cross-Motion ("Reply Brief"), Banco did, in fact, make the
following argument: "[T]he interim award may be refused enforcement
pursuant to Article 5 of the Inter-American Convention because they are
contrary to the public policy of the United States, specifically the
foreign policy interests embodied and reflected in the FSIA [Foreign
Sovereign Immunities Act]".*fn1 Because the Court overlooked an argument
raised on the initial motion, it must now consider the argument it failed
to consider earlier. It is for this reason that the motion for
reconsideration is granted.
A district court can only vacate an arbitration award on the basis of
public policy if there is (1) a violation of "`some explicit public
policy'," and (2) "the award explicitly conflicts with `law and legal
precedents', as opposed to `general considerations of supposed public
interests'." Alberti v. Morgan Stanley Dean Witter Reynolds Inc., No. 97
Civ. 9385, 1998 WL 438667, at *6 (S.D.N.Y. July 31, 1998), aff'd,
205 F.3d 1321 (2d Cir. 2000) (quoting United Paper Workers Int'l Union
v. Misco, Inc., 484 U.S. 29, 43 (1987)). Banco has correctly identified
an "explicit public policy". Section 1609 of the FSIA explicitly states
that "a foreign state shall be immune from attachment arrest and
execution . . ." 28 U.s.c. § 1609. The Second Circuit has held that
this section requires that a foreign state or its instrumentality is
generally immune from prejudgment attachment of its assets in the United