## Facts

- Hasbro and Catalyst entered a 1993 software licensing agreement requiring arbitration under the Federal Arbitration Act (FAA) and American Arbitration Association (AAA) rules.
- Hasbro demanded arbitration on October 8, 1999, alleging dissatisfaction with Catalyst’s software performance.
- An AAA commercial arbitration panel held hearings in Milwaukee from October 2000 through March 2001 and set post-hearing briefing and argument deadlines into June 2001.
- After oral argument, the panel ordered additional briefing through July 10, 2001; the parties also agreed to modify their arbitration agreement to allow an award of attorneys’ fees to the prevailing party.
- The panel did not formally declare the hearing closed, and Hasbro maintained the record remained open at least as to fee-related matters.
- No award issued soon after July 2001. In October 2001, Catalyst questioned an AAA bill and raised timeliness concerns, citing an AAA rule calling for an award within 30 days after the hearing closes.
- Catalyst formally objected in November 2001 that any award would be untimely; the panel then issued an award for Hasbro about a month later.

## Issues

1. Whether an arbitration panel “exceeds its powers” under the FAA by issuing an award outside AAA timing rules for post-hearing issuance.
2. Whether an objection to a late award is waived when not raised promptly during the arbitration.
3. Whether delay in issuing an award, without a showing of prejudice, warrants vacatur under the FAA.

## Decision

- The Seventh Circuit reversed the district court’s order vacating the award and remanded with instructions to enforce the arbitration award for Hasbro.
- The court held that any deadline-related defect was waived by the parties’ failure to object at a time when the arbitral process could address it.
- The court also held that any procedural timing error was harmless absent a showing of prejudice affecting fairness or the merits.

## Legal Principles

- Judicial review of arbitration awards under the FAA is narrow; vacatur for arbitrators “exceeding their powers” is not available for routine procedural disputes absent a basis recognized by the statute.
- Timing rules for issuing an award under AAA procedures are generally treated as procedural requirements rather than jurisdictional limits on arbitral authority.
- Parties must raise procedural objections in arbitration promptly; waiting until late in the process, or until after an adverse result appears likely, supports waiver.
- Delay alone does not justify vacatur without demonstrated prejudice tied to the conduct or fairness of the arbitration.

## Conclusion

The court required enforcement of a delayed AAA arbitration award because the timing objection was not timely raised within the arbitration and, in any event, the delay did not establish prejudice sufficient to support vacatur under the FAA.


Hasbro, Inc. v. Catalyst USA, Inc., 367 F.3d 689 (7th Cir. 2004)