06-1893-cv, 06-5617-cv Zeiler v. Deitsch
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2006
Heard: May 14, 2007 Decided: August 23, 2007
Docket Nos. 06-1893-cv, 06-5617-cv
- - - - - - - - - - - - - - - - - - - - - - - - MAYER ZEILER, FLOCKTEX INDUSTRIES LTD., DE-LUX INDUSTRIES and ACHIM DEITSCH TEXTILE INDUSTRIES, Plaintiffs-Counter-Defendants- Appellees,
v.
JOSEPH DEITSCH, MORDECAI DEITSCH, JACOB PINSON, RACHEL SANDMAN, DEITSCH PLASTIC COMPANY, DEITSCH PLASTIC PARTNERS, DEITSCH INTERNATIONAL SALES CORP., SHALVAH PARTNERSHIP, OLDE POINTE ASSOCIATED LIMITED PARTNERSHIP, ATC PARTNER- SHIP, ESDEE REALTY, ORANGE INVESTMENT COMPANY, WILLOWBROOK VENTURE COMPANY, ANNASH, INC. and GREENDEER, Defendants-Counterclaimants-Appellants. - - - - - - - - - - - - - - - - - - - - - - - -
Before: NEWMAN, MINER and KATZMANN, Circuit Judges.
Appeals from the March 22, 2006, judgment and November 9, 2006,
order of the United States District Court for the Eastern District of
New York (Sandra L. Townes, District Judge), vacating, in No. 06-1893,
arbitral awards made by a panel of Jewish rabbis because a panel member resigned, and confirming the full panel’s previous accounting
awards, and enforcing, in No. 06-5617, the judgment that had confirmed
the accounting awards.
No. 06-1893 reversed in part, affirmed in part, and remanded;
No. 06-5617 affirmed.
Nathan Lewin, Wash., D.C. (Alyza D. Lewin, Lewin & Lewin, LLP, Wash., D.C.; Thomas A. Kissane, Schlam Stone & Dolan, LLP, New York, N.Y., on the brief), for Defendants- Counterclaimants-Appellants.
Leslie A. Lupert, New York, N.Y. (Sarah P. Karwan, Orans, Elsen & Lupert LLP, New York, N.Y., on the brief), for Plaintiffs- Counter-Defendants-Appellees.
JON O. NEWMAN, Circuit Judge.
The primary issue on the first of these two appeals, which were
heard in tandem, is the narrow question of whether, in the
circumstances of this case, an arbitration panel composed of three
rabbis can proceed to make an award after one member has resigned from
the panel. The second appeal concerns the validity of a court order
enforcing a judgment that confirmed the three-member panel’s earlier
awards requiring accountings. These matters arise on an appeal in No.
06-1893 from a judgment of the United States District Court for the
Eastern District of New York (Sandra L. Townes, District Judge)
-2- vacating the two-member panel’s arbitration awards and confirming
eight accounting awards previously made by the full three-member panel
and an appeal in No. 06-5617, from an order enforcing the District
Court’s judgment with respect to the accounting awards. We conclude
that the arbitration panel was entitled to continue after one member’s
resignation, that the accounting awards were properly confirmed, and
that the enforcement order was properly entered. In No. 06-1893, we
reverse the District Court’s judgment in part, affirm in part, and
remand, and in No. 06-5617, we affirm.
Background
Facts. A somewhat detailed account of the facts is required.
Plaintiff-Appellee Mayer Zeiler (“Zeiler”) and Defendants-Appellants
Joseph Deitsch, Mordecai Deitsch, Jacob Pinson, and Rachel Sandman
(collectively “Deitsch”) all belong to the Jewish-Orthodox Deitsch
family. Zeiler resides in Israel, and Deitsch resides in the United
States. They have jointly owned various assets in both the United
States and Israel. Plaintiffs-Appellees Flocktex Industries Ltd., De-
Lux Industries, and Achim Deitsch Textile Industries are three Israeli
corporations that were jointly owned by Zeiler and Deitsch (“Israeli
companies”). Defendants-Appellants Deitsch Plastic Co., Deitsch
Plastic Partners, Deitsch International Sales Corp., and Annash, Inc.
-3- are U.S. corporations that were also owned jointly by Zeiler and
Deitsch (“U.S. companies”). Defendants Shalvah Partnership, Olde
Pointe Associated Limited Partnership, ATC Partnership, Esdee Realty,
Orange Investment Co., Willowbrook Venture Co., Annash, Inc., and
Greendeer are real estate entities located in various states in the
United States, which are owned jointly by Zeiler and Deitsch (“U.S.
real estate”).
In the late 1990s, Zeiler and Deitsch decided to sever much of
their business relations by dividing the jointly owned assets between
them. Due to the complexity of the issues and the various disputes
involved in making the division, the parties decided to submit their
dispute to arbitration. They agreed that arbitration would occur
before a “Beth Din,” which is a Jewish religious tribunal comprising
three rabbis.
The parties agreed to appoint the members of the Beth Din
according to the method known in Jewish law as “Zabla,” in which each
party elects one arbitrator, and the two appointed arbitrators then
pick a third neutral arbitrator as the presiding member of the panel.1
1 “Zabla” is the pronunciation of an acronym for the Hebrew words
“Ze Borer Lo Echad” (substituting capital “E” for the letter “aleph”
with its diacritical mark, signifying the sound of an “e”); the phrase
-4- Zeiler appointed Rabbi Moshe Tendler, Deitsch appointed Rabbi Moshe
Bogomilsky, and Rabbis Tendler and Bogomilsky selected Rabbi Shmuel
Gurwitz as the presiding arbitrator.
After the appointment of the panel, the parties signed, on August
22, 1999, a formal arbitration agreement--a concise, standard-form
contract in traditional Hebrew entitled “Arbitration Deed” (“1999
Arbitration Agreement”).2 The 1999 Arbitration Agreement stated, in
pertinent part, the willingness of the parties to seek resolution of
all their disputes by a Beth Din consisting of Rabbis Tendler,
Bogomilsky, and Gurwitz, who were to arbitrate the case according to
Jewish law. The arbitrators were authorized to enter interim and
final awards and to reach decisions by vote of a majority of the
roughly translates as “each picks his one.” 2 The District Court encountered an insignificant confusion
regarding the exact date of the signing: the Agreement stated only the
Hebrew calendar date, 10 Ellul 5759, which was in fact August 22,
1999. The translation supplied to the District Court, however,
mentioned the incorrect date September 22, 1999, and subsequent
documents filed by the parties apparently echoed that mistake. The
District Court therefore referred to the Agreement as the “September
1999 agreement.”
-5- members of the panel.
In September 1999, following several arbitration sessions, the
panel entered a framework decision in which it adopted the parties’
agreement to sever their commercial connections by granting Zeiler
full ownership of the Israeli companies and Deitsch full ownership of
the U.S. companies, while retaining joint ownership of the U.S. real
estate (“1999 Decision”). The decision then set out a general plan
according to which the dissolution of the partnership and the division
of the assets would take place. The 1999 Decision also required the
parties to jointly shoulder, in relative shares, the tax obligations
incurred by the U.S. and Israeli companies until the end of 1997;3 and
that Zeiler should receive “a full and accurate listing” of the
jointly owned real estate and additional information regarding his
pension and insurance rights in the U.S. companies. Finally, the Beth
Din ordered that a detailed contract be prepared based on the
principles set out in the decision.
From 1999 to 2003 the parties engaged in extensive negotiations
3 Since Zeiler owned 1/6 of the joint assets, his relative tax
liability was 1/6 of the full amount paid by the partners. The
arrangement regarding the tax liability was reiterated in a ruling of
the Beth Din in June 2001.
-6- in order to implement the 1999 Decision. As various disputes arose
along the way, the parties returned to the arbitration panel which in
turn entered various detailed decisions. Six such decisions, handed
down between July 2000 and April 2003, required, among other things,
that Deitsch provide Zeiler with an accounting regarding the U.S. real
estate entities, which are jointly owned by the parties but
effectively controlled by Deitsch.4 The parties disagree as to whether
all these orders, along with a similar provision in the 1999 Decision
4 More specifically, a decision of July 3, 2000, provided that
“Zeiler is entitled to an accounting and payment of all income due
him“ from the U.S. real estate; a decision of July 6, 2000, ordered
Deitsch “to provide Zeiler with a complete accounting of his real
estate investments, with documentation for the past five years”; a
decision of June 24, 2001, provided that “Zeiler should immediately be
given all the real estate information as indicated in the previous
[orders]”; a decision of May 14, 2002, stated that “Mr. Zeiler, or his
representative, has the right to review the books of the American real
estate partnerships”; a decision of March 4, 2003, required the
parties to follow the directives of an appointed accountant regarding
Zeiler’s request for information; and a decision of April 28, 2003,
literally reiterated the previous order.
-7- and a subsequent order in February 2004, regarding Zeiler’s life
insurance policies (collectively, the “accounting orders”), were fully
complied with (as Deitsch contends) or not (as Zeiler contends).
In June 2003, a comprehensive agreement entitled “Shares Sales
Agreement” was finally signed by the parties (“2003 Agreement”). The
2003 Agreement implemented the general guidelines of the 1999 Decision
and the subsequent orders of the arbitration panel. It specified the
details of both parties’ obligations, which would lead to splitting
the ownership of the Israeli and U.S. companies--mostly, reciprocal
transfers of funds, shares, and documents. Among its many provisions,
the 2003 Agreement reiterated Zeiler’s obligation to pay his relative
share (1/6) of tax obligations. The 2003 Agreement also required
Deitsch to provide Zeiler with documents regarding the U.S. real
estate and Zeiler’s pension and insurance rights in the U.S.
companies. Lastly, the 2003 Agreement stated:
[T]his Agreement shall be governed and construed pursuant to the Torah law,[5] and the Beth Din
5 “Torah law” and “Halachic law” are the formal terms for the body
of law sometimes referred to in English as “Jewish law.” See
http://en.wikipedia.org/wiki/Jewish_law (“Halakha”) (last visited
August 1, 2007). Jewish law is not to be confused with “Israeli law,”
-8- shall have exclusive jurisdiction in connection herewith.
“Beth Din” is defined in the 2003 Agreement as:
a judicial tribunal governed by Halachic law, the members of which are the honorable Rabbi Moshe D. Tendler, Rabbi Shmuel C. Gurwitz and Rabbi Moshe Bogomilski, or any other tribunal governed by Halachic law upon which the Parties mutually agree[.]
As the 2003 Agreement was being implemented, another dispute
arose between the parties, this time regarding the amount of Zeiler’s
share of the taxes paid by Deitsch to the I.R.S. In December 2003
Deitsch filed with Zeiler a reimbursement demand for 1/6 of the taxes
allegedly paid by Deitsch, an amount of nearly $800,000. In April
2004, Zeiler sent a letter to the three arbitrators in which he
contested Deitsch’s demand on the basis of lack of credible
documentation. Five days later, and before the Beth Din considered
this dispute, Rabbi Tendler, the arbitrator appointed by Zeiler,
resigned from the Beth Din. In two letters sent to Rabbi Gurwitz,
Rabbi Tendler accused Rabbi Gurwitz of failing to compel Deitsch to
abide by the accounting orders, and claimed that Rabbi Bogomilsky (the
arbitrator appointed by Deitsch) was biased.
Following Rabbi Tendler’s resignation, the two remaining
the body of law governing in Israel.
-9- arbitrators, Rabbis Gurwitz and Bogomilsky, entered a decision on May
7, 2004, stating that under Jewish law and in accordance with the 1999
Arbitration Agreement they retained authority over the arbitration.
In a letter sent to an Israeli rabbi, Rabbis Gurwitz and Bogomilsky
detailed the authorities in Jewish law on which they had based their
decision to retain jurisdiction. Their reasoning was based primarily
on the fact that the substantive issue--Zeiler’s 1/6 share in the
joint tax liability--had already been decided by the three arbitrators
in 2001, so the remaining dispute concerned only the amount of money
to be paid under that liability. In addition, the arbitrators
mentioned the 1999 Arbitration Agreement’s authorization to decide
issues by a majority vote. Rabbis Gurwitz and Bogomilsky then issued
a letter to the parties scheduling a session of the arbitration panel
to hear argument on the tax dispute.
In response, Zeiler declared that because the panel had lost one
of its members, “the Beth Din, as previously constituted, no longer
exists and it is for the parties to decide henceforth with regards to
a newly constituted Beth Din.” Zeiler added that he would not appear
before the two-member panel.
Rabbis Gurwitz and Bogomilsky denied Zeiler’s objections and
conducted the session, at which only Deitsch appeared, presenting
-10- evidence regarding the amount of money he had paid in U.S. taxes and
seeking reimbursement of Zeiler’s share. On June 16, 2004, Rabbis
Gurwitz and Bogomilsky entered a decision ordering Zeiler to pay
Deitsch $794,145.16--his share of the taxes that Deitsch proved he had
paid to the I.R.S. for earnings prior to the end of 1997. The June
16, 2004, decision briefly considered the claims included in Zeiler’s
letter contesting the tax liability, but denied them.
The litigation. In August 2004, Zeiler and the Israeli companies
filed a petition in New York Supreme Court, which Deitsch removed to
the District Court. Zeiler asked the Court to vacate the two-member
panel’s decisions of May 7, 2004 (retaining jurisdiction), and June
16, 2004 (imposing the nearly $800,000 liability). Zeiler also asked
the Court to confirm the eight accounting orders previously entered by
the three-member panel between 1999 and 2004. In an almost
symmetrical counter-petition, Deitsch and the U.S. companies sought
confirmation of the June 16, 2004, award and vacation of the eight
accounting orders.
On March 22, 2006, the District Court entered a judgment granting
all aspects of Zeiler’s petition--vacating the May 7, 2004, and June
16, 2004, decisions and confirming the eight accounting orders. Due
to the varying nationalities of the parties and the locations of the
-11- assets involved, the Court applied the standards for confirmation set
by Chapter 2 of the Federal Arbitration Act (“FAA”), which
incorporated the terms of the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards, 1958, 9 U.S.C. §§ 201-08, 21
U.S.T. 2517 (“Convention”). See Zeiler v. Deitsch, No. 04-3602
(E.D.N.Y. March 22, 2006). Deitsch appeals both aspects of the
District Court’s judgment in No. 06-1893.
After entry of the March 22, 2006, judgment, Zeiler filed a
motion with the District Court to enforce the judgment that had
confirmed the accounting orders. Zeiler’s enforcement motion
specifically asked the Court to order Deitsch to provide Zeiler with
“an accounting for the years 1995 to the present within ten (10) days
for the [U.S. real estate].” On October 27, 2006, Judge Townes
granted “in all respects” Zeiler’s motion to enforce the accounting
orders. An order to that effect was entered on November 9, 2006.
In December 2006, this Court granted Deitsch’s motion for a stay
of the District Court’s enforcement order. See Zeiler v. Deitsch, No.
06-1893 (2d Cir. Dec. 6, 2006). Deitsch then filed a second notice of
appeal, this time appealing the District Court’s enforcement order of
November 9, 2006. Deitsch claims that the enforcement decision has
broadened the scope of his accounting obligations, compared to the
-12- language of the eight accounting orders entered by the arbitration
panel and previously confirmed by the District Court. We consider
this second appeal, No. 06-5617, along with the appeal from the
Court’s March 22, 2006, judgment.
Discussion
I. Applicable Principles
“Where a district court denies confirmation of an arbitral award,
we review its findings of fact for clear error, and its conclusions of
law de novo.” Encyclopaedia Universalis S.A. v. Encyclopaedia
Britannica, Inc., 403 F.3d 85, 89 (2d Cir. 2005). Similarly, “[w]e
review a district court’s decision to confirm an arbitration award de
novo to the extent it turns on legal questions, and we review any
findings of fact for clear error.” Duferco International Steel Trading
v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003). In a
case governed by the Convention, “[t]he party opposing enforcement of
an arbitral award has the burden to prove that one of the seven
defenses under the New York Convention applies. Art. V(1). The burden
is a heavy one, as the showing required to avoid summary confirmance
is high.” Encyclopaedia, 403 F.3d at 90 (internal quotation marks and
citation omitted).
The facts of the case support the District Court’s assumption
-13- that, even though the arbitration took place in New York, it should be
considered a non-domestic arbitration for the purposes of the FAA, and
therefore covered by the Convention. Some of the assets that were the
subject of the arbitration are located in Israel, and some of the
parties reside there. The law chosen to govern the arbitration is
based on a foreign system. The commercial transactions decided in the
arbitration have a clear international character. See Convention, art.
I(1) (The Convention applies to “arbitral awards not considered as
domestic awards in the State where their recognition and enforcement
are sought.”); 9 U.S.C. § 202 (“An agreement or award arising out of
[a commercial] relationship which is entirely between citizens of the
United States shall be deemed not to fall under the Convention unless
that relationship involves property located abroad, envisages
performance or enforcement abroad, or has some other reasonable
relation with one or more foreign states.”); Bergesen v. Joseph Muller
Corp., 710 F.2d 928, 932-33 (2d Cir. 1983) (both the Convention and
section 202 authorize United States courts to enforce under the
Convention non-domestic awards entered in the United States); Yusuf
Ahmed Alghanim & Sons, W.L.L. v. Toys “R” Us, Inc., 126 F.3d 15, 19
(2d Cir. 1997) (awards become subject to the Convention “not because
made abroad, but because made within the legal framework of another
-14- country, e.g., pronounced in accordance with foreign law or involving
parties domiciled or having their principal place of business outside
the enforcing jurisdiction” (quoting Bergesen, 710 F.2d at 932)).
Judicial confirmation of the arbitration awards in the pending
case is therefore initially governed by the provisions of chapter 2 of
the FAA, 9 U.S.C. §§ 201-08, and by the Convention, 21 U.S.T. 2517, as
incorporated in the FAA. However, since the arbitration took place in
the United States, the awards entered by the Beth Din are at the same
time subject to the FAA provisions governing domestic arbitration
awards. See Convention, art. V(1)(e); Yusuf, 126 F.3d at 21-23; Sole
Resort, S.A. de C.V. v. Allure Resorts Management, LLC, 450 F.3d 100,
102 n.1 (2d Cir. 2006); Jacada, Ltd. v. International Marketing
Strategies, Inc., 401 F.3d 701, 709 (6th Cir. 2005). It appears that
the District Court did not consider the import of the FAA’s “domestic”
provisions, instead applying solely the Convention’s grounds of
review. However, as will be discussed in more detail below, we
conclude that such an additional analysis would have had no practical
effect on the matters before us.
The power of a district court to confirm a non-domestic
arbitration award under the Convention is stated in 9 U.S.C. § 207:
Within three years after an arbitral award falling under the Convention is made, any party
-15- to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award as against any other party to the arbitration. The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.
Article V of the Convention stipulates the bases for denying
confirmation of an arbitral award. It reads, in relevant part:
(1) Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:
. . . .
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
Applying these provisions, the District Court ordered the two
decisions entered by Rabbis Gurwitz and Bogomilsky vacated, and
confirmed the eight accounting orders entered by all three arbitrators
prior to Rabbi Tendler’s resignation. We consider each of these
decisions separately.
-16- II. Composition of the Arbitration Panel
The District Court ruled that the 2003 Agreement explicitly
required that the arbitration panel consist of the three named rabbis
and that the 2003 Agreement did not authorize any two of them to
continue the arbitration in the absence of the third. The Court
therefore granted Zeiler’s petition to vacate the two decisions
entered by only two members of the panel.6 The Court relied on
6 In vacating the two awards, rather than merely refusing to
confirm them, the District Court seems to have briefly recognized its
double role, both as a confirmation-and-enforcement tribunal of non-
domestic arbitration awards under the Convention, and as a “competent
authority of the country in which . . . that award was made,”
Convention, art. V(1)(e), authorized under Chapter 1 of the FAA to
vacate arbitration awards entered in the United States. See Yusuf, 126
F.3d at 21-23. While the distinction between vacation of an
arbitration award and refusal to confirm an arbitration award may be
of negligible significance within the United States, it can affect the
remaining force of an unconfirmed award outside this country, if a
party seeks to confirm and enforce the award under the Convention
abroad.
-17- Convention, art. V(1)(d), which authorizes a court to refuse
confirmation of an arbitration award if the award was entered by an
arbitral authority whose composition “was not in accordance with the
agreement of the parties.”
Deitsch presents two main arguments for the confirmation of the
June 16, 2004, award. First, he argues that the Convention grants a
However, as long as the Court had considered only Article V(1)(d)
of the Convention, it should not have vacated the arbitration awards,
as neither the Convention nor its enabling statute, 9 U.S.C. §§ 201-
08, grant such a power with regard to non-domestic awards. See Yusuf,
126 F.3d at 22; M & C Corp. v. Erwin Behr GMBH & Co., KG, 87 F.3d 844,
849 (6th Cir. 1996); Tesoro Petroleum Corp. v. Asamera (South
Sumatra), Ltd., 798 F. Supp. 400, 405 (W.D. Tex. 1992); Alan Scott
Rau, The New York Convention in American Courts, 7 Am. Rev. Int’l Arb.
213, 234-36 (1996). Rather, the Court should have only refused to
confirm the June 16, 2004, award, the confirmation of which was sought
in Deitsch’s cross-petition. Only if it had proceeded to analyze the
claims Zeiler presented under 9 U.S.C. § 10(a), could the District
Court have vacated the May 7, 2004, and the June 16, 2004, awards.
However, given our view of the merits of the appeal, as discussed
below, this broadening of the remedy is of no consequence.
-18- district court discretion whether to confirm non-domestic awards even
if they fall within the scope of Article V. Second, he argues that
contrary to the District Court’s view, the arbitration agreements
allow two arbitrators, when facing the unique circumstances that
existed in this case, to retain jurisdiction over the arbitration and
enter the June 16, 2004, award.7 We need not consider the first
argument because we agree with the second.
The authority of the two remaining arbitrators after the
resignation of the third one is essentially an issue of contract
interpretation, grounded in the language of the agreements between the
parties. See Volt Information Sciences, Inc. v. Board of Trustees of
Leland Stanford Junior University, 489 U.S. 468, 476 (1989) (“[T]he
federal policy [under the FAA] is simply to ensure the enforceability,
according to their terms, of private agreements to arbitrate.”).
Because the District Court relied for its interpretation of the 2003
Agreement on the contractual language itself, we review de novo its
inference that the 2003 Agreement could not be understood to foresee
the possibility of a two-member disposition in the unique
7 Deitsch also argues that this is the view of Jewish law, which
was explicitly chosen by the parties to govern both the substance of
the arbitration and the interpretation of the 2003 Agreement.
-19- circumstances of this case. See Bellefonte Reinsurance Co. v. Aetna
Casualty & Surety Co., 903 F.2d 910, 912 (2d Cir. 1990) (“The proper
standard for appellate review of a pure textual construction by the
district court, whatever the procedural posture of the case, is de
novo.”). On this issue of interpretation we disagree with the District
Court.
Article V(1)(d) of the Convention authorizes courts to deny
confirmation of arbitration awards entered by a panel whose
composition was not in accord with the parties’ agreement. Applying
this article, the District Court focused its inspection on the 2003
Agreement’s definition of “Beth Din.” Because that definition
specified the three named arbitrators, the Court ruled that a panel
composed of only two of those originally named was not the panel
agreed upon. Zeiler also argues that the only alternative under the
2003 Agreement to the three-member panel was “any other tribunal
governed by Halachic law upon which the parties mutually agree.”
Since the parties did not reach a new agreement as to the panel’s
composition following Rabbi Tendler’s resignation, Zeiler maintains
that the award entered by the two remaining members was not in
accordance with the parties’ agreement.
We conclude that the naming of the three rabbis in the 2003
-20- Agreement did not have the effect of precluding two members from
continuing in the absence of a resigned member. Since the 2003
Agreement was executed after the three panel members had been
identified, the more natural reading of the 2003 Agreement is that the
three members were named only to reflect the choices previously made
by the parties and their designated members, not to state a limitation
on the authority of the panel to continue in the unexpected event that
one of the members might resign. Cf. Doe v. Pataki, 481 F.3d 69, 76-77
(2d Cir. 2007) (recitation of terms of then-existing statutory
provisions in agreement between state and private parties did not
prohibit state from amending its statutes).
This conclusion is also consistent with the “Zabla” method that
the parties had employed in appointing the three arbitrators.
Although the parties did not explicitly mention “Zabla” in either the
1999 Arbitration Agreement or the 2003 Agreement, neither party
disputes that this method was the basis for the appointment of the
three named arbitrators. A natural implementation of the Zabla method
when a member designated by a party resigns would be that party’s
appointment of a substitute. Cf. Trade & Transport, Inc. v. Natural
Petroleum Charterers, Inc., 931 F.2d 191, 195-96 (2d Cir. 1991) (in
domestic arbitration, absent express agreement to that effect, full
-21- panel should not be removed due to the death of party-appointed
member; replacement arbitrator should be designated).
Reading the parties’ agreement to permit continuation of the
panel in the event of a member’s resignation, with the opportunity of
the relevant party to appoint a successor, is especially appropriate
in the circumstances of this case. The panel had already decided the
substantive issues between the two sides. All that remained was
determination of the amount of tax liabilities in light of the prior
determination of the allocation of those liabilities. To read the
agreement to require the proceeding to be halted upon the resignation
of one member at that late stage of the proceedings would enable bad
faith manipulation of the arbitration process: in an ongoing and
complex arbitration, a party receiving unfavorable interim rulings
would have an incentive to invite the member he designated to resign
to forestall an anticipated ultimate defeat, or even, as in the
pending case, after securing favorable rulings that are confirmable,
to precipitate an arbitrator’s resignation in the hope of avoiding
confirmation of a later unfavorable award. The agreement should not
be read to countenance the waste of resources required to redo a
protracted arbitration proceeding in the event that one member of a
-22- panel died or otherwise became unable to serve during the proceeding.8
A more sensible reading of the agreement makes continuation of the
remaining members of the panel (with an opportunity for appointment of
a replacement) the default position, subject to an explicit agreement
8 Zeiler’s claim that federal and state courts have often reached
such an unreasonable conclusion is unpersuasive, as none of the cases
he cites involved a unique arbitration structure such as the one
before us nor an attempt by one party to abort an ongoing arbitration
while certain issues were still pending. See, e.g., Encyclopaedia, 403
F.3d at 91 (refusal to confirm under the Convention a single,
conclusive award); Szuts v. Dean Witter Reynolds, Inc., 931 F.2d 830
(11th Cir. 1991) (vacation under the FAA of single, conclusive award
and remand for new arbitration proceedings); Gutfreund v. Weiner (In
re Salomon Inc. Shareholders Derivative Litigation), 68 F.3d 554 (2d
Cir. 1995) (arbitration thwarted from the start by agreed arbitrator’s
declining to arbitrate); New York Telephone Co. v. Pennsylvania
General Insurance Co., 87 A.D.2d 956, 451 N.Y.S.2d 219 (App. Div.
1982) (vacation of single, conclusive award entered after single
session); Golenbock v. Komoroff, 2 A.D.2d 742, 153 N.Y.S.2d 309 (App.
Div. 1956) (refusal to appoint replacement arbitrator for full
arbitration).
-23- of the parties that only a panel with the three originally designated
members still serving is authorized to render an award, albeit by a
majority vote.
We note the parties’ agreement that the arbitration is to be
governed by Jewish law, an intricate set of norms culled from written
and oral tradition and custom, as prescribed by widely accepted
rabbinic authorities, but absent a singular authoritative code or a
firm institutional structure. Not surprisingly, we have not been
referred to any authoritative precedent under that body of law, and,
in view of our interpretation of the parties’ agreement, we need not
rule definitively on what Jewish law would say if the parties’
agreement did not resolve the pending issue. We would be surprised,
however, should the issue arise, if Jewish law would permit the
opportunity for manipulation of the sort we have identified.
We also believe that Zeiler’s reliance on the latter part of the
definition of “Beth Din” in the 2003 Agreement lacks merit. The words
“other tribunal” signal that the parties did not intend this provision
to apply to an instance such as the one before us, in which the
original panel, although lacking one member, remains. Rather, the
parties’ power to mutually agree on some “other tribunal” contemplates
the possibility of creating a wholly distinct mechanism of dispute
-24- resolution, in case the parties choose to abandon the original “Beth
Din.”9
Because we believe the panel was entitled to continue after Rabbi
Tendler’s resignation, we conclude that the awards were confirmable
and therefore reverse.
III. Confirmation of the Accounting Orders
The District Court confirmed, as a group, eight orders entered by
the arbitration panel over the course of about four years, requiring
Deitsch to provide Zeiler with accounting of the joint U.S. real
estate, beginning in 1995, as well as documents regarding Zeiler’s
pension and insurance rights in the U.S. companies. Deitsch contends
that the eight orders could not be confirmed because they were not
final awards and because, even as “interim” awards, they were already
satisfied. We disagree with both contentions and therefore affirm the
9 We further note that while Zeiler stresses the centrality of the
“other tribunal” alternative to the original three-member panel, he
made no attempt to suggest the creation of some other tribunal in the
three years that have passed since Rabbi Tendler’s resignation, nor
even now.
-25- District Court’s confirmation of the accounting orders.10
(a) Finality of the orders. Deitsch views the eight accounting
orders as interim discovery rulings that were all intended to
facilitate a subsequent final resolution of the substantive commercial
disputes between the parties, and should therefore be regarded as non-
final and non-confirmable. Zeiler, on the other hand, stresses the
independent nature of Deitsch’s accounting obligations and the
10 9 U.S.C. § 207 sets a three-year statute of limitations for
seeking confirmation of an arbitration award under the Convention. See
Seetransport Wiking Trader Schiffarhtsgesellschaft MBH & Co.,
Kommanditgesellschaft v. Navimpex Centrala Navala, 989 F.2d 572, 580-
81 (2d Cir. 1993); cf. Kerr-McGee Refining Corp. v. M/T Triumph, 924
F.2d 467, 471 (2d Cir. 1991). While Zeiler’s petition was filed in
August 2004, the first four accounting orders he sought to confirm
were entered between September 1999 and June 2001--more than three
years earlier. Because Deitsch did not raise a statute of limitations
objection in the District Court, we consider it abandoned. See
generally National Market Share, Inc. v. Sterling National Bank, Inc.,
392 F.3d 520, 526 (2d Cir. 2004) (“If an affirmative defense is
neither pled nor tried with the parties’ consent, the defense is
usually waived.”).
-26- separate value he attributes to receiving information about assets
that are and will remain in joint ownership of both parties.
We agree with Zeiler that all of the accounting orders are final
orders requiring accounting and transfer of documents. The decisions
require specific action and do not serve as a preparation or a basis
for further decisions by the arbitrators. They have “finally and
conclusively disposed of a separate and independent claim” and
therefore “may be confirmed although [they] do[] not dispose of all
the claims that were submitted to arbitration.” Metallgesellschaft
A.G. v. M/V Capitan Constante, 790 F.2d 280, 283 (2d Cir. 1986); see
also Sperry International Trade, Inc. v. Government of Israel, 532 F.
Supp. 901, 909 (S.D.N.Y. 1982), aff’d, 689 F.2d 301 (2d Cir. 1982).11
The confirmable nature of the various accounting orders stems
11 Deitsch’s reliance on Michaels v. Mariforum Shipping, S.A., 624
F.2d 411 (2d Cir. 1980), is unavailing. In Michaels, we reversed a
district court’s willingness to review a partial arbitral award that
had decided only some of the liability claims, but had left other
liability issues as well as damages determinations to a subsequent
award. The accounting orders in the pending case are not segments of
a future conclusive award, nor are they determinations required for
furtherance of the arbitration.
-27- from the unique character of this arbitration, as agreed by the
parties. See Trade & Transport, 931 F.2d at 195 (“[I]f the parties
agree that the panel is to make a final decision as to part of the
dispute, the arbitrators have the authority and responsibility to do
so.”). This was not a “regular” arbitration, in which the arbitrators
would hear all the evidence and eventually reach a conclusive
resolution of the entire case. Rather, the arbitrators were asked to
preside over the continuing process of sorting out the details of a
commercial relationship, entering operative decisions along the way.
The various decisions entered since the 1999 Decision were practical
orders to the parties to take various actions, including conducting
accountings and providing documents. Each order was specific and
final and did not need to be followed by a concluding award.
(b) Confirmation of satisfied awards. Deitsch contends, in the
alternative, that the District Court could not have confirmed awards
that had already been complied with. Zeiler responds that the
accounting orders are yet to be satisfied, and that in any event prior
compliance is not a ground for refusal of confirmation. While
expressing no view as to the factual question of Deitsch’s compliance
with the accounting orders, we agree with Zeiler that Deitsch has
failed to show why prior compliance should serve as a ground for
-28- refusal to confirm an arbitration award. Confirmation under the
Convention is a summary proceeding in nature, which is not intended to
involve complex factual determinations, other than a determination of
the limited statutory conditions for confirmation or grounds for
refusal to confirm. See Encyclopaedia, 403 F.3d at 90. A district
court confirming an arbitration award does little more than give the
award the force of a court order. At the confirmation stage, the
court is not required to consider the subsequent question of
compliance. See, e.g., District Council No. 9 v. APC Painting, Inc.,
272 F. Supp. 2d 229, 239 (S.D.N.Y. 2003); Collins v. D.R. Horton,
Inc., 361 F. Supp. 2d 1085, 1093 (D. Ariz. 2005).
Because Deitsch did not provide a sufficient reason for refusing
to confirm the eight accounting orders, we affirm the District Court’s
confirmation of these awards.
III. Scope of Enforcement
Having affirmed the District Court’s confirmation of the eight
accounting orders, we next consider Deitsch’s second appeal, No. 06-
5617, which contests the scope of the Court’s order enforcing the
confirmed arbitration awards. Deitsch contends that the District
Court impermissibly went beyond the scope of the confirmed arbitration
awards. Specifically, Deitsch understands the confirmed arbitration
-29- awards to require accounting only until the date of entry of the last
of the eight awards, February 18, 2004, and argues that the Court
could not require an accounting for any period after that date.
Zeiler, on the other hand, contends that the Court’s order properly
requires an accounting for the period ending on the date of the
Court’s enforcement order, November 9, 2006.
“As a general rule, once a federal court has entered judgment, it
has ancillary jurisdiction over subsequent proceedings necessary to
vindicate its authority, and effectuate its decrees. This includes
proceedings to enforce the judgment.” Dulce v. Dulce, 233 F.3d 143,
146 (2d Cir. 2000) (quotation marks and internal citation omitted).
In the context of an arbitration, the judgment to be enforced
encompasses the terms of the confirmed arbitration awards and may not
enlarge upon those terms. However, enforcement is not confirmation.
Once confirmed, the awards become enforceable court orders, and, when
asked to enforce such orders, a court is entitled to require actions
to achieve compliance with them.
In the pending case, after judgment was entered on March 22,
2006, Zeiler moved for an order requiring Deitsch “to comply with the
. . . judgment and provide [Zeiler] with an accounting for the years
1995 to the present.” The District Court granted Zeiler’s motion “in
-30- all respects.” That order is fairly understood to require an
accounting “to the present,” meaning the date of the Court’s order,
November 9, 2006.12 It was entirely permissible for the Court to
enforce its judgment by requiring an accounting up to that date in
order to implement the judgment.
Conclusion
Accordingly, in No. 06-1893, we reverse that part of the District
Court’s judgment that vacated the arbitration awards of May 7, 2004,
and June 16, 2004; affirm that part of the judgment that confirmed the
eight accounting awards; and remand for entry of an amended judgment
confirming the arbitration award of June 16, 2004. The stay
previously entered is lifted. In No. 06-5617, we affirm the
enforcement order.
12 It is arguable that the motion’s use of the phrase “to the
present” should be understood to limit the accounting to the date of
the motion, April 5, 2006. However, Deitsch has not made this
argument, and we understand the “present” in the Court’s order
granting the motion on November 9, 2006, to mean the date of the
Court’s order. Counsel would have been well advised to avoid this
ambiguity by specifying either a date certain or an event as the end
point of the accounting it was then seeking.
-31-