RAIN CII CARBON, LLC v. ConocoPhillips Co.
2012 U.S. App. LEXIS 5006
| 5th Cir. | 2012Background
- Rain CII Carbon and ConocoPhillips entered a long-term supply agreement for green anode coke with a market-price formula and a baseball arbitration mechanism to resolve disputes over the formula.
- In 2008, Conoco reopened price negotiations and, failing to reach agreement, submitted the matter to arbitration.
- The arbitrator conducted an evidentiary hearing in 2010, received proposals from both sides, and issued an eight-page award on March 7, 2011 signaling Rain's formula would prevail for the term.
- The arbitrator incorporated two paragraphs from Conoco's draft award into the final award and later identified them as clerical errors and removed them on Rain's motion.
- Conoco moved to vacate the award in district court; Rain moved to confirm. The district court denied vacatur and granted confirmation.
- Conoco appeals to the Fifth Circuit, challenging (i) whether the arbitrator exceeded authority by not selecting a single proposed mechanism and (ii) whether the award was a reasoned award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did the arbitrator exceed powers by not selecting one proposal? | Rain: selection of one proposal per contract; clerical corrections valid. | Conoco: mixing two proposals shows excess of powers. | No, the corrections were clerical; authority not exceeded. |
| Was the award a valid reasoned award? | Rain: award is more than a standard result and sufficiently reasoned. | Conoco: lacking explicit reasoning renders it unreasoned. | Yes, the eight-page award constitutes a valid reasoned award. |
Key Cases Cited
- Brook v. Peak Int'l, Ltd., 294 F.3d 668 (5th Cir. 2002) (judicial review of arbitration is narrowly confined; deference to arbitral decisions)
- Apache Bohai Corp. v. Texaco China BV, 480 F.3d 397 (5th Cir. 2007) (arbitrator's powers and contract-based limits; deference to arbitration)
- Delta Queen Steamboat Co. v. AFL-CIO, 889 F.2d 599 (5th Cir. 1989) (limitations on arbitrator's authority must be plain and unambiguous)
- Sarofim v. Trust Co. of the W., 440 F.3d 213 (5th Cir. 2006) (definition and scope of a reasoned award)
- Green v. Ameritech Corp., 200 F.3d 967 (6th Cir. 2000) (reasoned award not strictly required; adequacy depends on contract terms)
- Cat Charter, LLC v. Schurtenberger, 646 F.3d 836 (11th Cir. 2011) (reasoned-award spectrum; vacatur should not undermine arbitration unless necessary)
- W. Employers Ins. Co. v. Jefferies & Co., 958 F.2d 258 (9th Cir. 1992) (distinction when findings of fact and conclusions of law are contracted for)