Opinion ID: 783608
Heading Depth: 3
Heading Rank: 1

Heading: Exceeding Authority

Text: 36 The Federal Arbitration Act (FAA) permits vacatur of an arbitral award where the arbitrators exceeded their powers. 9 U.S.C. § 10(a)(4). We have consistently accorded the narrowest of readings to the FAA's authorization to vacate awards pursuant to § 10(a)(4). Westerbeke Corp. v. Daihatsu Motor Co., Ltd., 304 F.3d 200, 220 (2d Cir.2002) (citation omitted). Our inquiry focuses on whether the arbitrators had the power based on the parties' submissions or the arbitration agreement, to reach a certain issue, not whether the arbitrators correctly decided that issue. Id. at 220 (quoting DiRussa v. Dean Witter Reynolds Inc., 121 F.3d 818, 824 (2d Cir.1997)). We must determine whether the arbitrator[s] acted within the scope of [their] authority, or whether the arbitral award is merely the arbitrator[s'] own brand of justice. Local 1199 v. Brooks Drug Co., 956 F.2d 22, 25 (2d Cir.1992). 37 Where an arbitration clause is broad, as here, arbitrators have the discretion to order remedies they determine appropriate, so long as they do not exceed the power granted to them by the contract itself. See AT & T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 651, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (citation omitted) (stating that arbitrators must not be allowed to impose obligations outside the contract); Sperry Int'l Trade, Inc. v. Gov't of Israel, 689 F.2d 301, 306 (2d Cir.1982) (stating that, under New York Law, arbitrators are not constrained by the strict rules of the courts and may order relief that a court would not, or could not, grant); McDonnell Douglas Fin. Corp. v. Pennsylvania Power & Light Co., 858 F.2d 825, 832 (2d Cir.1988) (stating that if arbitrators have jurisdiction over a matter, any subsequent construction of the contract and of the parties' rights and obligations under it is for the arbitrators to decide (citation omitted)). 38 It is not the role of the courts to undermine the comprehensive grant of authority to arbitrators by prohibiting an arbitral security award that ensures a meaningful final award. See Yasuda, 37 F.3d at 348 (allowing arbitrators to order pre-hearing security in the form of a letter of credit); Pac. Reins. Mgmt. Corp., 935 F.2d at 1025 (allowing arbitrators to order pre-hearing security in the form of an escrow account); Island Creek Coal Sales Co. v. City of Gainesville, Florida, 729 F.2d 1046, 1049 (6th Cir.1984) (finding that where the contract did not preclude equitable relief, [t]he arbitrator may grant any remedy or relief which the arbitrator deems just and equitable and within the scope of the agreement of the parties) (citing AAA Commercial Arbitration Rule 43). 39 There is little doubt that the parties expected the Panel to rule on the issue of pre-hearing security. It was listed as an agenda item for the Organizational Meeting with the Panel; it was fully briefed and was orally debated by both parties. 40 It is not without significance that the arbitrators were relieved of all judicial formalities and may abstain from following the strict rules of law, and that the Umbrella Agreements do not preclude the posting of security, and, indeed, contain a clause requiring Banco to post a Letter of Credit. We can hardly conclude that the posting of pre-hearing security represented the Panels' own brand of justice. Brooks Drug Co., 956 F.2d at 25.