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August 18, 2021 Practice Points

Interim Award Deemed Sufficiently Final and Confirmed

This decision is an important reminder of the kind of relief that may be available from such an emergency arbitrator and that such relief can be confirmed in court.

By Jazmine Phillips-Acie

In Vital Pharmaceuticals d/b/a VPX Sports v. PepsiCo, Inc, Case No. 20-CIV-62415-RAR (S.D. Fla. Dec. 21, 2020), the U.S. District Court for the Southern District of Florida confirmed an interim order issued by an emergency arbitrator to maintain the status quo pending arbitration of the parties' dispute. This decision was significant for the parties because the order required the respondent VPX Sports to abide by the terms of its distribution agreement with claimant PepsiCo. and to cease efforts to sell to customers for whom Pepsi had the exclusive distribution rights.

In finding that confirmation of an interim arbitral order granting injunctive relief is appropriate under the Federal Arbitration Act (FAA), the court joined the U.S. Courts of Appeal for the Second, Sixth, Seventh, and Ninth Circuits. The Eleventh Circuit has not yet opined on the issue.

Despite the fact that the emergency arbitrator's order was interim in nature, the court found that the grant of equitable relief to Pepsi was sufficiently final to be confirmed under the FAA. The interim order resolved the discrete issue of whether VPX and Pepsi needed to uphold their distribution agreement pending arbitration. Confirmation of the injunction was necessary to make meaningful any final award of relief. This holding is consistent with the Sixth Circuit's decision in Island Creek Coal Sales Co. v. City of Gainesville, Fla., 729 F.2d 1046 (6th Cir. 1984), which found that an interim award that resolves a severable issue is sufficiently final to be confirmed under the FAA, and the Ninth Circuit's decision in Pac. Reinsurance Mgmt. Corp. v. Ohio Reinsurance Corp., 935 F.2d 1019 (9th Cir. 1991), which held that "temporary equitable orders calculated to preserve assets or performance needed to make a potential final award meaningful . . . are final orders that can be reviewed for confirmation and enforcement by district courts under the FAA."

The court also rejected VPX's arguments that the emergency arbitrator's order was not final. In response to VPX's claim that the order could not be confirmed because VPX purportedly had appealed it, the court found that the American Arbitration Association's (AAA) Optional Appellate Arbitration Rules [PDF] requiring parties stay any proceedings until the conclusion of the appeal process were only applicable when incorporated into an agreement by the parties. While the parties' distribution agreement expressly permitted appeal of the award of the arbitration panel, it did not permit the appeal of interim relief by an emergency arbitrator. Even if it did contain such a right, under the applicable rules (AAA's Commercial Arbitration Rules), the arbitration panel would handle any request by VPX to modify an interim award of emergency relief.

Given that the rules of every major arbitral institution contain provisions for an emergency arbitrator, including the AAA, the International Chamber of Commerce, the International Centre for Dispute Resolution, and the London Court of International Arbitration, this decision is an important reminder of the kind of relief that may be available from such an arbitrator and that such relief can be confirmed in court.

Jazmine Phillips-Acie is a summer associate and 1L Scholar at Skadden, Arps, Slate, Meagher & Flom LLP in New York, New York.

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