## Facts

- InterChem Asia 2000 PTE. Ltd., a Singapore petrochemicals trader, contracted to sell Oceana Petrochemicals AG, a Swiss trader, 5,000 metric tons of paraxylene.
- Oceana sought an expedited partial delivery of 4,000 metric tons for its customer, Polysindo, to be delivered in Korea.
- Oceana refused to accept a shipment; the arbitrator found the refusal was not justified by any breach by InterChem and stemmed from Polysindo’s cancellation.
- The contract required arbitration and incorporated American Arbitration Association (AAA) rules.
- In the arbitration, InterChem claimed Oceana failed to timely produce documents concerning the Polysindo transaction and related communications.
- The arbitrator ruled for InterChem on liability and awarded relief against Oceana.
- Although the arbitration agreement and AAA rules did not expressly authorize sanctions against attorneys, the arbitrator ordered Oceana and Oceana’s counsel, Richard A. DiDonna (a nonparty), to pay InterChem’s attorneys’ fees incurred in the document-production dispute.
- InterChem petitioned to confirm the award under the Federal Arbitration Act (FAA); Oceana opposed and sought partial vacatur based on the sanctions ruling and alleged evident partiality, misconduct, and manifest disregard of law.

## Issues

1. Whether the arbitrator exceeded his powers under the FAA by imposing a monetary attorneys’ fee sanction on a nonparty attorney absent contractual, rule-based, or consensual authorization.
2. Whether the award should be vacated for “evident partiality” under 9 U.S.C. § 10(a)(2) based on the arbitrator’s critical comments toward Oceana and its counsel.
3. Whether the arbitrator committed “misconduct” under 9 U.S.C. § 10(a)(3) by refusing to consider certain evidence or arguments.
4. Whether the award reflected “manifest disregard of the law” warranting vacatur.

## Decision

- The court granted InterChem’s petition to confirm the award except as to the portion imposing fees on Oceana’s counsel personally.
- The court vacated the award to the extent it required attorney Richard A. DiDonna to pay InterChem’s attorneys’ fees, holding the arbitrator exceeded his powers.
- The court confirmed the award against Oceana, including fee shifting assessed against Oceana.
- The court rejected vacatur based on evident partiality, misconduct, and manifest disregard of law.

## Legal Principles

- Under the FAA, an arbitration award must be confirmed unless a statutory ground for vacatur is shown; judicial review is narrowly limited.
- An arbitrator’s authority is defined by the parties’ agreement and the matters submitted; relief imposed on a nonparty outside that grant of authority constitutes an excess of powers under 9 U.S.C. § 10(a)(4).
- “Evident partiality” requires a showing that a reasonable person would have to conclude the arbitrator was partial; adverse rulings or critical remarks during proceedings do not, without more, establish bias.
- Under 9 U.S.C. § 10(a)(3), arbitrators have broad procedural discretion; vacatur requires a showing that the arbitrator refused to hear pertinent, material evidence in a way that denied a fair hearing.
- “Manifest disregard of the law” demands an exceptionally high showing; an award stands if it has a plausible legal basis and does not reflect conscious disregard of controlling law.

## Conclusion

The court confirmed the arbitral award in favor of InterChem against Oceana but vacated the discovery-related fee sanction imposed directly on Oceana’s nonparty counsel, holding that the arbitrator lacked authority to impose monetary sanctions on an attorney absent express authorization or consent.


InterChem Asia 2000 PTE. Ltd. v. Oceana Petrochemicals AG, 373 F. Supp. 2d 340 (S.D.N.Y. 2005)