Overseas Private Investment Corp. v. Anaconda Co.

418 F. Supp. 107, 1976 U.S. Dist. LEXIS 14020
District Court, District of Columbia·Decided July 20, 1976·No. Misc. 75-192·Published·Cited by 17 cases

Opinion

MEMORANDUM

FLANNERY, District Judge.

This action challenges the validity of an arbitration decision. Petitioner, Overseas Private Investment Corporation (OPIC), insures business investments in foreign countries. Respondents, Anaconda Copper Company and Chile Copper Company (collectively Anaconda), conducted substantial operations in Chile and contracted with OPIC for protection of their assets. When the Allende government expropriated the property, respondents filed a claim for compensation in the amount of approximately $154,-000. 000. Pursuant to the insurance contract, a panel of three arbitrators considered the claim and unanimously found OPIC liable. OPIC, having subsequently learned that one member of the panel was negotiating an affiliation with a law firm which performed limited services related to the arbitration for respondents’ counsel, petitions the court to set aside the panel’s decision under 9 U.S.C. § 10 (1970). Respondents oppose the petition and cross-petition for an affirmance of the decision. Following extensive discovery, the matter now comes before the court on cross-motions for summary judgment. The court, finding no genuine issue to exist as to any material fact and respondents to be entitled to judgment as a matter of law, will grant respondents’ motion.

Anaconda instituted the arbitration proceedings attacked in this action on November 30, 1972. By September 7, 1974, Mr. Davidson Sommers had been selected as an arbitrator by the parties and consented to serve on the panel. The selection of Mr. Sommers, as well as the two remaining arbitrators, 1 followed extensive screening by both parties, each of whom had to approve the entire panel. During the pre-se-lection screening period, Mr. Sommers disclosed that he had discussed the possibility of becoming affiliated with several law firms, including Anaconda’s counsel, Wilmer, Cutler & Pickering, and OPIC’s counsel, Leva, Hawes, Symington, Martin & Oppenheimer. Beginning in late September, 1974, Mr. Sommers entered into serious discussions with the firm of Curtis, Mallet-Prevost, Colt & Mosle. The negotiations went into a lull from December 1974 to mid-April, 1975, then steadily increased in frequency until early September 1975, when Mr. Sommers announced that he was to become “of counsel” to the Curtis firm. During this same period, the arbitration panel, which had bifurcated the case, proceeded towards resolution of the liability question, issuing its 'opinion on July 17, 1975. 2

The storm clouds began to gather on September 30, 1975, when Mr. Sommers wrote a letter to the American Arbitration Association stating that he should not serve on the arbitration panel when it reconvened to determine damages. Mr. Sommers arrived at this conclusion after learning that Curtis, Mallet-Prevost had given limited assistance *109 to Wilmer, Cutler & Pickering in preparing Anaconda’s case for arbitration and had represented Anaconda in the past on two separate matters. According to Mr. Som-mers, he had just learned of the Curtis firm’s relationship with Anaconda and the arbitration, and did not know of it at the time the panel arrived at its decision on the liability issue.

Curtis, Mallet-Prevost’s involvement in the arbitration began on December 19,1974, when Louis Oberdorfer, lead arbitration counsel for Anaconda, contacted the firm for the purpose of obtaining a- back-up translation of a document previously translated by Anaconda house counsel and obtaining an affidavit by a member of the Chilean bar on a narrow issue of Chilean law. The Curtis firm, upon learning the identity of the arbitrators, revealed to Mr. Oberdorfer that it had discussed affiliation with Mr. Sommers in the past, and could not immediately accept the assignments. After the persons conducting negotiations with Mr. Sommers were consulted, both Curtis, Mallet-Prevost and Mr. Oberdorfer concluded that the negotiations were not at a stage where a conflict of interest could arise, although the record leaves some doubt as to whether Mr. Oberdofer was told that the talks were dead or merely dormant. In any event, Curtis, Mallet-Prevost provided the new translation requested and directed Anaconda to a member of the Chilean bar who, with initial aid from the Curtis firm, provided the required affidavit. 3 The Curtis firm’s services were completed in large part by early January, 1975, and in their entirety by February 3, 1975. The firm’s bill was paid in May, 1975.

None of the foregoing activities revealed to Mr. Sommers that Curtis, Mallet-Prevost was involved in the arbitration. The firm’s name appeared in the arbitration record only once, and then in connection with an opinion it had provided Anaconda in 1966 concerning provisions of the insurance contracts construed by the panel. This reference to Curtis, Mallet-Prevost is contained in a two-page handwritten memorandum introduced by OPIC as an exhibit. Mr. Sommers claims to have never seen this memorandum, which was submitted with several other exhibits.

Section ten of Title nine of the United States Code specifies the conditions under which an arbitration decision rendered pursuant to a contract involving interstate commerce must be vacated. Of special relevance to the instant case are subsection (a), which provides for vacation of awards “procured by corruption, fraud, or undue means” and subsection (b), which provides for vacation of awards where the record reveals “evident partiality or corruption in the arbitrators.” 4 OPIC contends that the series of “ex parte contacts” between Curtis, Mallet-Prevost and Mr. Sommers and Anaconda’s failure to disclose the relationship between Curtis, Mallet-Prevost and Mr. Sommers each raise substantial questions about both the means by which the decision was procured and the impartiality of the panel.

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Overseas Private Investment Corp. v. Anaconda Co., 418 F. Supp. 107, 1976 U.S. Dist. LEXIS 14020 (D.D.C. 1976).

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