## Facts

- Chinmax Medical Systems Inc. (a Chinese corporation) served as Alere San Diego, Inc.’s exclusive distributor in China for certain medical devices.
- The parties entered a distribution agreement effective April 1, 2007, with renewals extending the relationship through March 31, 2010, and an automatic renewal provision absent timely nonrenewal notice.
- A dispute arose when Chinmax claimed it had the contractual right to register new products in China, but Alere allegedly required that Alere register products directly and then sold newly registered products in China.
- Chinmax treated the alleged conduct as causing damages and withheld roughly $2.7–$2.8 million that it otherwise owed Alere for delivered products.
- The agreement required arbitration under AAA-ICDR rules and also allowed either party to seek interim or provisional relief in court.
- Under the ICDR procedures, Alere sought emergency relief; an emergency arbitrator issued an interim order granting limited relief (including measures related to documentation, communications, and product-registration continuity) while denying, among other things, a request to require Chinmax to escrow the withheld funds.
- Chinmax filed a verified petition and motion in federal district court under the Federal Arbitration Act (FAA) to vacate the emergency interim award and sought a stay pending review.

## Issues

1. Whether an emergency interim arbitration award is reviewable and subject to vacatur under the FAA where it does not finally resolve the parties’ merits dispute.
2. Whether Chinmax established any FAA § 10 ground for vacatur, including that the emergency arbitrator exceeded his powers or engaged in misconduct depriving Chinmax of a fair hearing.
3. Whether the contract clause allowing judicial interim relief limited or displaced the arbitrator’s authority to order interim measures under the incorporated ICDR rules.

## Decision

- The court denied Chinmax’s verified petition to vacate and motion to vacate the emergency interim award.
- The court concluded the interim award did not warrant vacatur because Chinmax failed to show any statutory basis under FAA § 10.
- The court rejected the argument that the judicial interim-relief clause stripped the emergency arbitrator of authority to issue interim measures.
- The court directed the clerk to close the case, leaving the merits dispute to proceed in arbitration before the full panel.

## Legal Principles

- Judicial review of arbitration decisions under the FAA is highly deferential; vacatur is limited to the grounds specified in FAA § 10.
- An arbitrator exceeds his powers under FAA § 10(a)(4) only when acting outside the scope of the parties’ agreement; legal or factual error is not enough if the decision is at least arguably based on the contract and incorporated rules.
- Incorporation of institutional arbitration rules can confer authority for emergency interim measures, including procedures for an emergency arbitrator prior to formation of the full tribunal.
- A contractual carve-out permitting parties to seek interim or provisional relief in court is generally permissive and does not, without clearer limiting language, negate the arbitrator’s power to grant interim relief under the arbitration clause and incorporated rules.
- Summary emergency procedures do not constitute “misconduct” under FAA § 10(a)(3) absent a showing of serious procedural unfairness or denial of a meaningful opportunity to be heard.

## Conclusion

The court refused to vacate an emergency interim arbitral award because the arbitrator acted within the authority granted by the parties’ arbitration clause and incorporated ICDR rules, and Chinmax did not establish any FAA § 10 basis for vacatur based on excess of power, unfair process, or the contract’s judicial provisional-relief clause.


Chinmax Med. Sys. Inc. v. Alere San Diego, Inc., No. 10-CV-2467-WQH (BGS), 2011 WL 2135350 (S.D. Cal. May 27, 2011)