NY Court of Appeals Rules on Federal Evident Partiality Standard and Confims Arbitration Award

The New York Court of Appeals affirmed an arbitration award arising out of a breach of contract dispute. See U.S. Electronics, Inc. v. Sirius Satellite Radio, Inc. 2011 NY Slip Op 8179 (N.Y. Nov. 15, 2011). In the present case, United States Electronics, Inc. (“USE”) sought to vacate an arbitration award in favor of Sirius Satellite Radio, Inc. (“Sirius”). USEclaimed that the chairman of the arbitration panel’s son, a member of Congress, had publicly advocated a merger between Sirius and XM Satellite Radio, Inc. and was a close political ally of Congressman Darrell Issa, the founder and director of a competitor of U.S. Electronics in radio receiver distribution.

The Court adopted the Second Circuit’s reasonable person standard and applied it to consider the federal evident partiality standard of the Federal Arbitration Act 9 USC § 10. The Court concluded that evident partiality is not shown “premised on attenuated matters and relationships” and stated that, “Chairman Sessions’ son publicly endorsed the Sirius-XM merger had no impact on the merits of the separate and distinct breach of contract matter. Moreover, the purported connection between Chairman Sessions and Congressman Issa through his son’s political relationship is too tenuous to impute partiality to the chairman…” The Court also noted that “This would be a far different case if USE could allude to a personal or business relationship between Chairman Sessions and Congressman Issa; or if his son had a prominent role at Sirius or DEI.”

Accordingly, the Court affirmed confirmation of the arbitral award, with costs.

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