Port Arthur Steam Energy LP v. Oxbow Calcining LLC
416 S.W.3d 708
Tex. App.2013Background
- Oxbow sued Port Arthur Steam Energy in arbitration for environmental compliance costs.
- AAA proposed David Peden as a three-member panel arbitrator; he disclosed past firm affiliations.
- After discovery and an eight-day hearing, Yetter Coleman learned of Anglo-Dutch appellate representation.
- Oxbow objected to Peden’s continued participation and moved to disqualify him for partiality.
- AAA denied the disqualification; panel issued a unanimous award largely in PASE’s favor.
- Trial court vacated the award for evident partiality; the court of appeals reverses and remands to confirm the award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Peden’s nondisclosure establish evident partiality? | Oxbow argues nondisclosure created partiality. | Pase contends no actual knowledge existed; disclosure warned of limitations. | No evident partiality; vacatur affirmed by trial court reversed. |
| Does ongoing tie to Greenberg Peden and Yetter Coleman create a disqualifying conflict? | Oxbow points to ongoing collection and shared counsel. | No direct dispute or party relation; no known adverse interest. | Not a disqualifying conflict; no vacatur based on this relationship. |
| Should the award be vacated given the arbitration panel’s prior ruling and AAA control? | Vacatur warranted under evident partiality standard. | AAA ruling on partiality should be respected as conclusive. | Vacatur reversed; court remands to confirm the award. |
Key Cases Cited
- Mariner Fin. Group v. Bossley, 79 S.W.3d 30 (Tex. 2002) (partiality inquiry is fact-intensive and limits judiciary's role)
- Amoco DT Co. v. Occidental Petroleum, 343 S.W.3d 837 (Tex. App.—Houston [14th Dist.] 2011) (burden of proof on party seeking vacatur; evidentiary standard)
- Positive Software Solutions, Inc. v. New Century Mortg. Corp., 476 F.3d 278 (5th Cir. 2007) (high threshold for vacatur for nondisclosure of slender connections)
- Burlington N. R.R. Co. v. TUCO Inc., 960 S.W.2d 629 (Tex. 1997) (arb. impartiality concerns; deference to arbitration process)
- City of San Antonio v. McKenzie Constr. Co., 150 S.W.2d 989 (Tex. 1941) (presumption favoring arbitration)