HET-JV, HUNG-YI CONSTRUCTION CO., LTD., EVERGREEN INTERNATIONAL ENGINEERING CORP., and TA CHEN CONSTRUCTION & ENGINEERING CORP., Movants,
WESTON SOLUTIONS, INC., Respondent.
JAN E. DuBOIS, District Judge.
This is a breach of contract case. Movants HET-JV, Hung-Yi Construction, Evergreen International Engineering Corp., and TA Chen Construction & Engineering Corp. (collectively "HET") were engaged as subcontractors by respondent Weston Solutions, Inc. ("Weston") in a construction project for the United States government in Taipei, Taiwan, at the American Institute in Taiwan. Due to numerous problems that affected construction, Weston first declared HET in default and later formally terminated the contract with HET for default. The parties participated in arbitration before the International Center for Disputes Resolution ("ICDR"), in which the proceedings were bifurcated into liability and damages phases. In deciding issues of liability, the tribunal ruled, inter alia, that Weston was entitled to damages incurred as a result of HET's default. HET now moves to vacate the arbitration award on the grounds that the arbitrators imperfectly executed their powers and manifestly disregarded the law. Weston has filed a Counter-Motion for Confirmation of the Arbitration Award. For the reasons that follow, the Court denies both HET's Motion and Weston's Counter-Motion.
The facts of this case are set forth in detail in the arbitration panel's Interim Decision. (See Counter-Mot. Ex. A.) In addition, because the Court declines to review the Interim Decision at this stage of the proceedings, the Court will only recite those facts necessary to explain its rulings on the instant motions.
The following facts are not materially in dispute. In 2009, Weston was awarded a prime contract to design and build a new office building project at the American Institute in Taiwan. Weston then subcontracted most of the required construction to HET. During the course of the project, "disagreements developed" between Weston and HET concerning HET's performance of the subcontract, and Weston declared HET in default on October 20, 2010. (Counter-Mot. at 3); (Mot. at 7.) Weston later formally terminated the contract with HET by reason of the default on March 8, 2011.
The subcontract required the parties to submit any disputes to binding arbitration before the ICDR, and in September of 2011 Weston filed a Notice of Arbitration, seeking damages in excess of $39, 500, 000. HET filed a Statement of Defense and Counterclaim, seeking damages between $8 million and $11 million. The parties and the tribunal agreed that the proceedings should be bifurcated, with Phase One proceedings addressing liability and Phase Two addressing damages. In the Phase One proceedings, the parties submitted lengthy witness statements and engaged in seventeen days of evidentiary hearings. The tribunal issued its Interim Decision as to liability on January 9, 2013, ruling, inter alia, that "Weston is entitled to seek recovery of any damages it may have incurred resulting from HET's default and the termination of HET's performance, and HET is entitled to seek a set-off for the Subcontract Work actually performed...." (Counter-Mot. Ex. A at 42.)
HET then moved pursuant to Rule 30 of the ICDR Arbitration Rules for an interpretation of the Interim Decision. HET sought a more "explicit ruling on whether Weston's March 8, 2011 default termination of HET was valid...." (Mot. at 20.) The tribunal dismissed HET's motion. HET then filed the instant Motion to vacate the liability award in this Court, and Weston filed its Counter-Motion to Confirm the Arbitration Award.
III. LEGAL STANDARD
The party moving to vacate an arbitration award bears the burden of proof. Grosso v. Salomon Smith Barney, Inc., 2003 U.S. Dist. Lexis 20208 (E.D. Pa. Oct. 24, 2003). Where a party has agreed to arbitrate a dispute, the court will set the arbitration decision aside "only in very unusual circumstances." First Options v. Kaplan , 514 U.S. 938, 942 (1995).
The parties agree that the Federal Arbitration Act ("FAA") applies to this case. Under the FAA, a district court may vacate an arbitration award only:
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, ...