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BANCO DE SEGUROS DEL ESTADO v. MUT. MARINE OFFICES

September 5, 2002

BANCO DE SEGUROS DEL ESTADO, PETITIONER,
V.
MUTUAL MARINE OFFICES, INC., RESPONDENT.



The opinion of the court was delivered by: Shira A. Scheindlin, United States District Judge.

OPINION AND ORDER

I. INTRODUCTION

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.

II. LEGAL STANDARD

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").

III. DISCUSSION

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 arguments.

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. ยง 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 States, ...


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