New York Federal Court Finds Arbitration Award Is Subject to Confirmation Even Though It Doesn’t Dispose of All Claims Submitted to Arbitration

In a recent decision, a New York federal district court considered whether two arbitration awards issued by a tribunal in an ongoing arbitration were “mutual, final, and definite” and thus subject to confirmation proceedings in the district court.

The underlying arbitration involved a long-running dispute between Gerling, a German insurance company, and Tosco Corp., a petroleum refining company, in which Tosco (through successor-in-interest Phillips 66 Co.) sought indemnity and defense costs arising out of its manufacture and sale of petroleum products containing methyl tertiary-butyl ether. On July 13, 2021, Gerling reimbursed Phillips 66 $725,412.94 pursuant to the Gerling policy’s “loss payable” provision in connection with defense costs incurred in certain ongoing lawsuits against Phillips 66. However, on November 26, 2021, the tribunal decided Gerling was not obligated to reimburse Phillips 66 under the “loss payable” provision until the underlying cases had been finally resolved. When Phillips 66 refused to repay the $725,412.94 amount to Gerling, the tribunal issued another order on December 21, 2021, directing Phillips 66 to repay that amount and reaffirming the tribunal’s prior interpretation of the “loss payable” provision. Gerling then sought to have the tribunal’s December 2021 award confirmed by the district court.

In confirming the portion of the tribunal’s December 2021 award directing repayment by Phillips 66, the court noted that that award “required specific action and did not serve as a preparation or basis for further decisions.” Rather, the court characterized it as a “separate and independent claim” that “can be confirmed even though it does not, in and of itself, dispose of all claims.” The court further noted that even though Phillips 66 had repaid the required amount six days before Gerling’s motion to confirm, “the fact that the arbitration award has been complied with is not a ground for refusing to confirm it.”

The district court declined to confirm the portion of the tribunal’s December 2021 award addressing the “loss payable” provision on the grounds that that portion of the award “merely decides issues that bear on future determinations as to claims that still must be made … in order to establish liability.” As a result, the district court granted in part and denied in part Gerling’s motion to confirm the December 2021 arbitration award.

HDI Global SE v. Phillips 66 Co., No. 1:22-cv-00807 (S.D.N.Y. Aug. 26, 2022).