By R. David Gallo
Section 9 of the Federal Arbitration Act (9 U.S.C. § 1 et seq.) provides that, “at any time within one year after the award is made any party to the arbitration may apply … for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of [the FAA].”
Per Section 12, a “[n]otice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered.”
Each of these two rules is relatively straightforward when read in isolation. When read together, however, a few areas of confusion often arise.
In its September 17, 2021 decision in McLaurin v. Terminix, the U.S. Court of Appeals for the Eleventh Circuit offered helpful guidance on the intersection of sections 9 and 12.* The winning party in arbitration, McLaurin, moved to confirm an arbitration award two days after receiving the award. The losing party, Terminix, filed an answer that indicated its intention to file a motion to vacate within the three-month statutory period. The Court set a briefing schedule requiring Terminix to respond to the motion to confirm within a few weeks. Terminix timely submitted its opposition to the motion to confirm, but that opposition did not include any grounds to vacate the award. Instead, Terminix opposed the motion to confirm as “premature” in light of section 12’s three-month period to file a motion to vacate. While Terminix later filed a motion to vacate, the Court rejected it as untimely under the Court’s briefing schedule. The Court confirmed the award and Terminix appealed.
In affirming the district court’s decision to reject the motion to vacate and confirm the award, the Eleventh Circuit weighed in on whether a court or winning party must wait three months to confirm an arbitration award, as Terminix insisted. “Nothing in the statute prevents a party from moving for confirmation of an award within three months of that award or mandates that a district court wait to rule on such a motion because another party may file a motion to vacate.” Terminix, at *5. “As a practical matter, a motion to confirm puts the other party to his objections….” Id. at *5. In other words, section 12’s three-month period can be shortened by the filing of a motion to confirm.**
Still, the Eleventh Circuit appeared to sympathize with Terminix, which apparently believed that its court-ordered deadline to “oppose” the motion to confirm was separate from its statutory deadline to move to vacate. The Eleventh Circuit explained that “[w]hen a motion to confirm is filed before the time to challenge an arbitration award has lapsed, we believe that the best practice is for a district court to issue an order that sets simultaneous deadlines for a losing party to file an opposition to the motion to confirm” and to file any “motion to vacate, modify, or correct” the award. Terminix, at *3. This will “ensure that all issues are fully and fairly litigated.” Id.
In passing, the Court also discussed another issue that has caused litigants some confusion—whether a party must submit two separate filings when opposing a motion to confirm and also requesting the court vacate the award (or vice versa). Thankfully, the Court endorsed a unified filing: “a party may raise the grounds [for vacating, modifying, or correcting an award] as defenses to a motion to confirm an arbitration award so long as those defenses are timely.” Terminix, at *5. Not every court has taken such a practical approach. See, e.g., Carpenters 46 N. California Ctys. Conf. Bd. v. Meddles, 535 F. Supp. 775, 778 (N.D. Cal. 1981) (“challenges to an arbitration award are to be brought via a timely motion to vacate, not by way of defenses … raised in response to a motion to confirm.”).
Conclusion. If you wish to move to vacate an arbitration award under the FAA, be mindful not only of the statutory deadlines, but also of any court-imposed deadlines issued as a result your opponent filing a motion to confirm the award. Your best bet is to assume that the court will confirm an award unless presented with reasons to vacate; the court has no obligation to wait until section 12’s three-month period has expired. Whenever possible, seek clarification as to precisely what the court expects from the parties.
* McLaurin v. Terminix Int’l Co., LP, 2021 WL 4236673 (11th Cir. Sept. 17, 2021).
** But note that section 12’s three-month period cannot be extended by the filing of a motion to confirm. See Florasynth Inc. v. Pickholz, 750 F.2d 171 (2d Cir. 1984) (“a party may not raise a motion to vacate, modify or correct an arbitration award after the three-month period has run, even when raised as a defense to a motion to confirm.”).
About the author:
David Gallo specializes in business litigation and arbitration. Prior to moving to Atlanta, David studied under leading arbitration practitioners and scholars at Columbia Law School, practiced litigation and arbitration at two AmLaw 100 firms in New York, and taught arbitration at Fordham Law School.
About the Arbitration Blog
This blog is a user-friendly resource for businesses and individuals who find themselves faced with issues involving arbitration. Perhaps you want to include an arbitration clause in your contract, or you are being asked to sign a contract with an arbitration clause. Maybe a dispute has arisen and you want to begin arbitration proceedings but you are not sure whether your arbitration clause covers the dispute (hint: it usually does). Perhaps you received a subpoena for documents in connection with an arbitration in which you are not otherwise involved. This blog provides you with answers to simple questions and will help you ask the right questions when confronted with more complex issues.
Among other topics, we cover how to draft an arbitration clause and what to expect in arbitration proceedings. We discuss the differences and similarities among arbitrations governed by Georgia law, federal law, and international law. We explore—in layman’s terms, whenever possible—the Georgia Arbitration Code, the Federal Arbitration Act, transnational law, and decisions from Georgia’s state courts, Georgia’s federal district courts, the U.S. Court of Appeals for the Eleventh Circuit, the U.S. Supreme Court, and foreign tribunals. We provide toolkits and checklists you can use to navigate everyday arbitration issues. We discuss the various contexts and industries in which we have handled arbitration issues for our clients, including:
- Breach of Contract
- Closely Held Company Shareholder Disputes
- Earn Out Disputes
- Executive Separation/Severance
- Franchise Disputes
- Mergers and Acquisitions
- Real Estate
- Trusts and Estates
- Vendor/Supplier Disputes
- Trusts and Estates
We are available and eager to discuss your arbitration issues with you.
Attorneys at Krevolin & Horst with extensive arbitration experience: