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United States District Court, S.D. New York

May 3, 2004.


The opinion of the court was delivered by: P. KEVIN CASTEL, District Judge


Petitioners bring this action seeking confirmation of an interim arbitration award unanimously issued by a three-member arbitration panel. The Court has jurisdiction by reason of diversity of citizenship and pursuant to provisions of the Federal Arbitration Act, 9 U.S.C. § 9. Because there is no valid basis to vacate, modify, or correct the award, the petitioners' motion to confirm is granted.

The petitioners authored and/or have rights to a play, Harmony, and entered into an agreement with the respondent dated October 10, 2002 granting it certain rights to act as producer of the play. (Approved Production Contract for Musical Plays ("Contract") ¶ 1.01, attached at Verified Petition to Confirm Arbitration Award ("Petition") Ex. 3; Supplementary Agreement, attached at Petition Ex. 4) The Contract contained provided that the respondent's rights would expire if it did not produce Harmony in a prescribed period of time. (Contract §§ 1.03, 2.01, 19.02-03) The Contract required that all disputes be submitted to a specified mechanism for arbitration. (Contract §§ 20.01-20.10) It expressly permitted the arbitrators "to render a partial award before making a final award and grant such relief, injunctive or otherwise, in such partial award as they deem just and equitable." (Contract § 20.09)

  Petitioners invoked the arbitration procedures and alleged, inter alia, that respondent failed to exercise in a timely manner an option for the extension of rights under the Contract, and that the respondent's rights under the Contract had expired. (Demand for Arbitration, attached at Petition Ex. 1) A three-person arbitration panel was convened and hearings were held on January 29 and 30, 2004, spanning 700 pages of transcripts. Post-hearing memoranda were submitted by the parties. The arbitrators issued an interim award declaring that respondent's rights as Harmony producers had terminated under the Contract, and directing respondent to cease acting as producer for Harmony. (Petition Ex. 7) It is the interim award, transmitted to the parties on March 20, 2004, which is at issue.

  Under 9 U.S.C. § 9, "any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title." "Arbitration awards are subject to very limited review in order to avoid undermining the twin goals or arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation." Folkways Music Publishers, Inc. v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993). The Court's role in confirming or vacating an arbitration award is "severely limited." See Ganguly v. Charles Schwab & Co., Inc., 2004 WL 213016 at *3 (S.D.N.Y. Feb. 4, 2004). Courts have viewed an interim arbitration award of equitable relief as sufficiently final for a court to grant affirmation. See, e.g., Southern Seas Navigation Ltd. of Monrovia v. Patroleos Mexicanos of Mexico City, 606 F. Supp. 692 (S.D.N.Y. 1985) (Weinfeld, J.).

  Respondent does not dispute the application of any of these principles, including the Court's power to confirm this interim award. Nor does it invoke the language of sections 10 or 11 of title 9. Rather, it relies on the judicial doctrine of "manifest disregard" arguing that a court may set aside an award if it finds "both 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 v. Bear, Stearns & Co., 220 F.3d 22, 28 (2d Cir. 2000), cert. denied 531 U.S. 1075, 121 S.Ct. 770 (2001), quoting DiRussa v. Dean Witter Reynolds Inc., 121 F.3d 818, 821 (2d Cir. 1997). Application of the "manifest disregard" doctrine requires its proponent to meet a "very stringent burden." Greenberg, 220 F.3d at 28. Respondent argues that the arbitration panel's failure to specifically address its affirmative defense of promissory estoppel amounts to "manifest disregard" of the law and prevents the confirmation of the award. (Respondent's Opposition ¶¶ 15-22) Notably, respondents do not contend that there was any "manifest disregard" of the facts by the arbitrators. (Respondent's Reply at p. 4)

  The panel expressly requested additional briefs on the issues of waiver and estoppel. (Id. at p. 745) The act of requesting such specific submissions is inconsistent with the claim that the panel ignored the very doctrines on which their request was based. I note that the panel's interim award states in part that: "[c]laimants' actions after October 9, 2003 do not constitute a waiver of their rights under the APC Agreement." (Attached at Petition Ex. 7) It is reasonable to conclude that this language reflects the panel's rejection of respondent's estoppel contentions, which were briefed in tandem with the waiver issue. True, waiver and estoppel are distinct doctrines, but the very case which respondents cite to explain the distinction between the two, elects, after discussing the distinction, to treat the two defenses in tandem. See England v. Nettesheim, 222 A.D.2d 825, 827 (3d Dep't 1995) (cited Respondent's Reply at p. 5). Cf. New York Jurisprudence 2d, Estoppel § 75 (updated to March 2004) ("[a]lthough waiver and estoppel are sometimes used interchangeably, they are rooted in different conceptions.")

  At bottom, respondents endeavor to ascribe too much meaning to the panel's failure to invoke the term estoppel in its six lines of discussion in its one-page unanimous interim award. "[A] lack of accompanying justification for the award will not render the award ambiguous or in manifest disregard of the law. Arbitrators need not give reasons for their determination." Folkways Music, 989 F.2d at 112, citing Wilko v. Swan, 346 U.S. 427, 436, 74 S.Ct. 182, 187 (1953). Moreover, the arbitrators expressly noted that they had given "full consideration of the alternate theories presented by the Parties. . . ." (Petition Exhibit 7) Because the respondents have not satisfied their "very stringent burden," Greenberg, 220 F.3d at 28, needed to show "manifest disregard" of the law, petitioners' motion is GRANTED, respondents' motion to vacate is DENIED and the interim arbitration award is CONFIRMED.



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