Court Orders Clarification of Arbitration

Parties to an arbitration recently learned what happens if their selected arbitrator fails to issue a “reasoned award.” On a motion to vacate such an award under the Federal Arbitration Act, a federal district court found that the arbitrator exceeded his authority. But instead of vacating the award, the court remanded the case to the arbitrator for clarification.

A Dispute Is Generated

In Smarter Tools, Inc. v. Chongqing SENCI Import & Export Trade Co., the parties quarreled over sales by a Chinese company to a Virginia corporation of thousands of units of a gas-powered inverter generator. There was no dispute that the buyer failed to pay for some of the delivered generators. But the buyer claimed that it required the generators to be compliant with both EPA and California air standards and that they were not. It also argued that the seller unilaterally cancelled several transactions. As a result, the buyer complained that it had to cease sales of the generators in the United States and that it was fined $507,000 for selling non-compliant generators in California.