arbitration award | GAR Journal 6/6

Time to Vacate an Arbitration Award Starts to Run when Award Is Issued Under the FAA

May 23, 2023

The Southern District of New York issued an opinion and order on May 22, 2023, dismissing a parties' Petition to Vacate an arbitral award as untimely.

Although the petitioner argued that the time to move to vacate had not started to run because he had “neither received a copy of the Award by mail nor been personally served with a copy of the Award," the Court pointed out that the argument is based on overruled precedent.

The Court explained:

While it is true that this Court previously held that, per Rule 39(f), Section 12 of the FAA’s three-month service period for a petition to vacate an AAA award was not triggered until the petitioner received the AAA’s award by personal service or mail, Salus Cap. Partners, LLC v. Moser, 289 F. Supp. 3d 468, 476 (S.D.N.Y. 2018), that decision (and the other decisions cited by [Petitioner]) preceded the Second Circuit’s recent opinion in Dalla-Longa, 33 F.4th at 696. Dalla-Longa similarly involved a petition to a vacate an AAA employment arbitration award, and there, the Second Circuit clearly stated that the three-month service period under Section 12 of the FAA began to run when the AAA award was issued. See id. (providing that, because “the arbitration award was issued on September 9, 2019,” the petitioner “thus had until December 9, 2019, to properly serve notice of any motion or petition to vacate the award”). In accordance with that ruling, courts in this Circuit, including this Court, have subsequently held that Section 12 of the FAA’s three-month service clock starts when an award is issued, not when it is legally served upon the parties to the arbitration. See e.g., Moster v. Credit Suisse Sec. (USA) LLC, No. 22 Civ. 999 (NRB), 2022 WL 4467626, at *7 (S.D.N.Y. Sept. 25, 2022) (“[I]t is undisputed that the ‘clock’ for the three-month period for service of the petition began ticking the day the award was issued.”); Gross v. HSBC Bank USA, N.A., No. 21 Civ. 8636 (PAC), 2022 WL 2967630, at *2 (S.D.N.Y. July 27, 2022) (“Under the FAA, a losing party has three months following the issuance of an award to move to vacate or modify the award.”); Kaplan v. Merrill Lynch Lynch, Pierce, Fenner & Smith Inc., No. 22 Civ. 1333 (ER), 2022 WL 2110391 at *3 (S.D.N.Y. June 10, 2022) (noting that three-month service period under Section 12 of the FAA began to run on the date the award was issued).

The opinion can be dowloaded below.

Iraq Seeks Confirmation of Award Against Turkey from Crude Oil Pipeline Agreement

Apr 10, 2023

On April 10, 2023, the Republic of Iraq, represented by Vinson & Elkis LLP, as well as the French office of Cleary Gottlieb as of counsel, filed a petition to confirm an arbitration award in the District Court of the District of Columbia.

Iraq is seeking to confirm, and then enforce, a 2023 arbitration award arising from breaches of the "Crude Oil Pipeline Agreement, signed by the Republic of Iraq and the Republic of Turkey in 1973, with protocols, addenda, and amendments dated 1976, 1985, and 2010" of almost $1.5 billion. According to the petition, the breach resulted from "Turkey caus[ing] Iraqi crude oil pumped by the Kurdistan Regional Government (the “KRG”) to be loaded according to the KRG’s instructions, without the authorization of the Ministry of Oil of the Republic of Iraq and in contravention of its explicit instructions."

The petition may be downloaded below. The case is The Republic of Iraq v. The Republic of Turkey, No. 1:23-cv-00978 in the District Court for the District of Columbia.

Stati Brothers Ask SDNY to Vacate Ex Parte Order and Quash Subpoena

Apr 6, 2023

The Moldovan Stati brothers, along with related entities (the "Intervenors"), intervened in a Section 1782 matter initiated by Kazakhstan to ask the Southern District of New York on April 6 to vacate an ex parte order and quash a subpoena seeking financial discovery of financial transactions from The Clearing House Payments Company L.L.C related to the Intervenors “during the last seven years” to use in ongoing foreign proceedings.

The Intervenors argued that the discovery sought by Kazakhstan was "not in aid of a foreign proceeding, as required under 28 U.S.C. § 1782[, but r]ather, ... an improper fishing expedition filed in advance of yet another round of contemplated litigation in the U.S." The Intervenors explain that although Kazakhstan claims to seek discovery in order to supports its allegations of fraud in relation to the Intervenors obtaining an arbitration award back in 2013, the financial information sought "goes back, at most, seven years, to 2016." The Intervenors further pointed out that Kazakhstan has recently filed a new action in the District of Columbia arguing that the Intervenors have obtained the 2013 award through fraud, thus proving that "the Petition in this case was in furtherance of a U.S. proceeding."

The Intervenors also ask the Court to reject Kazakhstan's claim that the information is needed “to locate the Statis’ assets to execute on cost orders” because "clear, binding caselaw from the Second Circuit Court of Appeals prohibit[s] § 1782 relief for exactly this kind of request." The Intervenors referred to Euromepa, S.A. v. R. Esmerian, Inc., 154 F.3d 24 (2d Cir.1998) and Jiangsu Steamship Co. v. Success Superior Ltd., No. 14 CIV. 9997 CM, 2015 WL 3439220, at *4 (S.D.N.Y. Feb. 5, 2015) to support their position that “[n]either pre-judgment attachment nor post-judgment proceedings are adjudicative in nature” and thus Section 1782 cannot be used to propound discovery in such cases.

The case is In re Application of the Republic of Kazakhstan for Order Directing Discovery from The Clearing House Payments Company L.L.C. Pursuant to 28 U.S.C. § 1782, No. 1:22-mc-00367-JPO. The Intervenors are represented by Berenice Le Diascorn and Thomas Vandenabeele of Kellner Herlihy Getty & Friedman, LLP.

The Motion to Vacate can be downloaded below.