![arbitration[1].jpg](http://www.constructionlawtoday.com/uploads/image/arbitration%5B1%5D-thumb-220x186-861.jpg)
In
Vacating Arbitration Awards: Reasons In The Federal Arbitration Act Are The Only Way For Now - Part 1, we talked about the background facts and the judges' decision in
Saipem America v. Wellington Underwriting Agencies Limited. That was the case about claims for damage to an oil drilling platform while in transit from Texas to Israel. Today we're going to talk about some of the lessons from the
Saipem decision and how they could affect you.
- If you're going to have an arbitration clause in your contract, you need to think about what you want it to cover and ensure its language expresses your intentions. If you have a dispute with your counterparty, the verbal perimeter you establish in your arbitration clause will decide which disputes get arbitrated, which disputes don't, and which ones you spend time and money on disputing whether they get arbitrated.
- Do you want to narrowly circumscribe the claims that get arbitrated? For instance, arbitrate only claims for beach of your contract. But keep in mind that if you pick this option, you may wind up with a dispute where some of the claims (breach of contract) get arbitrated, but others (negligence) don't. If that happens you might have to can pay for two parallel proceedings - one in arbitration and one in court. And those proceeding may even yield contradictory decisions.
- Or do you want a broader sweep on which claims go to arbitration? For instance, all of claims the could arise from your relationship with your counterparty, regardless of classification (e.g., fraud, violation of statutes, interference with other contracts you have with third-parties).
- Be careful when your amend you contract and prepare documents once arbitration starts. I suspect the subcontractor in the Saipem case didn't think at the time that the Terms of Reference
would expand disputes that could be arbitrated to include claims for
negligent misrepresentation. Now they probably wish they'd focused
more thought there.
Until the Supreme Court
settles this issue, success in vacating an arbitration award may depend
as much on (1) the geography of the court where you ask a judge to
vacate an award, as it does on (2) how manifestly an arbitrator
disregarded the law. Consequently, the place you select in your
contract as the seat for arbitration could be critical. Consider it
carefully.
- The good news for the insurers in the Saipem
decision was that they won $1,110,657 in damages at arbitration. The
bad news was they had to pay (1) more than $399,000 in attorneys fees
and expenses and (2) $105,000 for costs of the arbitration. Luckily
for them, they had an attorneys fee and cost provision
in the contracts they were suing under so they could make the losing
subcontractor pay their legal expenses. Otherwise, the insurers would
have paid almost half of what they won to their lawyers and arbitration
administrator. Pyrrhic victory
that would have been. So when you're taking the time to consider
whether to have an arbitration provision in your contract, and how
narrow or broad it should be, take a little extra time to consider an
attorneys fee and cost provision too.
![arbitration[1].jpg](http://www.constructionlawtoday.com/uploads/image/arbitration%5B1%5D.jpg)
In Vacating Arbitration Awards: Reasons In The Federal Arbitration Act Are The Only Way For Now - Part 1, we talked about the background facts and the judges' decision in
Saipem America v. Wellington Underwriting Agencies Limited. That was the case about claims for damage to an oil drilling platform while in transit from Texas to Israel. Today we're going to talk about some of the lessons from the Saipem decision and how they could affect you. 
After the U.S Supreme Court's decision in Hall Street Associates L.L.C. v Mattel, Inc., there's some doubt about whether, under the Federal Arbitration Act,
you can vacate an arbitration award from an arbitrator who manifestly
disregarded the law . As 5th Circuit Court of Appeals explained in Citigroup Global Markets, Inc. v. Bacon,
various federal circuit courts of appeal have decided different ways.
And it's going to take another decision by the U.S. Supreme Court to
remove that doubt. 
Construction Law Today is a legal blog about construction contracts, disputes, finance, and the people whose job it is to deal with them.
