## Facts

- An Israeli individual and an Israeli manufacturer entered a business arrangement with U.S. individuals and companies to import and market a computer security device through a New York corporation.
- The parties executed a shareholders agreement for the U.S. marketing entity and a separate exclusive distribution agreement with minimum purchase obligations; both agreements included arbitration clauses and New York choice-of-law provisions.
- After an initial shipment, the U.S. distributor made a partial payment but did not pay the balance and later stated it would not perform the remaining contract terms.
- The manufacturer commenced a New York-seated American Arbitration Association arbitration before a three-member panel asserting claims against the U.S. parties and entities.
- The arbitrators issued an award for the U.S. parties and assessed attorneys’ fees against the manufacturer and its principal.
- The manufacturer and its principal sought vacatur or modification, alleging “evident partiality” and “misconduct” by one arbitrator based on (i) comments about sanctions, (ii) alleged witness coaching, (iii) an allegedly anti-Israeli remark, and (iv) a brief ex parte conversation with an opposing party about a computer problem.

## Issues

1. Whether petitioners met their burden under the Federal Arbitration Act to vacate or modify the award based on “evident partiality” by an arbitrator.
2. Whether the alleged ex parte contact and other complained-of conduct constituted prejudicial arbitrator “misconduct” warranting vacatur.
3. Whether the award should be confirmed in full notwithstanding the challenge, and whether additional attorneys’ fees should be awarded for the confirmation proceeding.

## Decision

- The court denied the petition to vacate or modify the arbitral award.
- The court granted respondents’ cross-petition to confirm the award in its entirety.
- The court denied respondents’ request for additional attorneys’ fees incurred in the federal confirmation proceeding.

## Legal Principles

- Judicial review of arbitral awards under the FAA is highly limited, and arbitral awards carry a strong presumption of validity.
- The party seeking vacatur bears the burden of proving a statutory ground for vacatur.
- “Evident partiality” requires more than speculation; the challenger must present concrete facts that would lead a reasonable person to conclude the arbitrator was biased.
- Vacatur for arbitrator “misconduct” requires improper conduct that prejudiced the complaining party’s rights (including denial of a fair hearing); minor irregularities or non-merits contacts, without prejudice, are insufficient.
- Courts do not reweigh evidence or revisit the merits absent a recognized statutory defect (e.g., excess of powers or refusal to hear material evidence).

## Conclusion

The court confirmed the commercial arbitration award because petitioners failed to prove evident partiality or prejudicial misconduct by the challenged arbitrator, and it declined to award additional attorneys’ fees for the confirmation proceeding.


Spector v. Torenberg, 852 F. Supp. 201 (S.D.N.Y. 1994)