February 9, 2021
We are pleased to announce that today the United States Court of Appeals for the Second Circuit issued a decision in favor of our clients, affirming the Southern District of New York’s decision granting our clients’ motion to dismiss a petition that sought to vacate an arbitration award in our clients’ favor. In its petition to vacate the arbitration award, Milberg LLP alleged that it had previously represented our clients for several years in connection with litigation concerning defaulted Argentinean bonds. The clients terminated Milberg in the underlying bond litigation, and subsequently hired our firm and secured a $162.3 million settlement. Milberg then commenced arbitration against the clients, claiming that the clients owed it $11.9 million in legal fees. The arbitration panel denied Milberg’s claim, after which Milberg filed a petition in the District Court under the Federal Arbitration Act, 9 U.S.C. § 12, to vacate the arbitration award. The District Court granted our litigation team’s motion to dismiss Milberg’s petition to vacate, finding that Milberg did not sufficiently plead the Court’s subject matter jurisdiction by properly alleging that complete diversity existed between the parties, and that Milberg failed to serve notice of its petition within the three-month deadline established by the Federal Arbitration Act. Milberg appealed the District Court’s holding to the Second Circuit. After briefing and an oral argument held on February 1, 2021, the Second Circuit today handed down its ruling affirming the District Court’s denial of Milberg’s petition to vacate. The Second Circuit decision holds, in relevant part, that (1) although “the question is close . . . Milberg adequately pled diversity” but that (2) “the facts advanced by Milberg would not support even the equitable exception that it hypothesizes,” and therefore the Court “need not reach the question of whether there are any exceptions to the rule of strict compliance with the FAA’s three-month deadline[.]” Our litigation team in the District Court proceedings and on the Second Circuit appeal was led by Jay Auslander, Julie Cilia and Scott Watnik. The appeal is captioned, Milberg LLP v. Drawrah Ltd. et al., case number 20-2500. A copy of the Second Circuit’s decision can be found here.