Aspic Engineering and Construction Co. v. ECC Centcom Constructors LLC, No. 17-16510 (9th Cir. 2019)
Annotate this CaseThe Ninth Circuit affirmed the district court's decision vacating an arbitration award to Aspic, in an action seeking to resolve how much money ECC owed Aspic after ECC terminated for convenience two subcontracts it had awarded to Aspic. The panel held that the arbitrator exceeded his authority and failed to draw the essence of the award from the subcontracts. In this case, the arbitrator did not base his conclusion upon Aspic and ECC's actual past procedures, but upon his rationalization that to enforce the Federal Acquisition Regulation (FAR) clauses on Aspic would be unjust. The panel held that the award disregarded specific provisions of the plain text in an effort to prevent what the arbitrator deemed an unfair result, and therefore such an award was irrational.
Court Description: Arbitration The panel affirmed the district court’s order vacating under the Federal Arbitration Act an arbitration award concerning the termination for convenience of two subcontracts for the construction of buildings and facilities in Afghanistan. The subcontracts were in support of defendants’ prime contracts with the U.S. Army Corps of Engineers. The subcontracts incorporated by reference Federal Acquisition Regulation (“FAR”) clauses governing termination for convenience, and they contained a clause mandating that plaintiff, a local company, owed to defendants the same obligations that defendants owed to the U.S. government. Voiding parts of the subcontracts, the arbitrator awarded plaintiff some of its claimed costs despite plaintiff’s failure to comply with FAR requirements. The panel held that, in finding that plaintiff need not comply with the FAR provisions, the arbitrator exceeded his powers and failed to draw the essence of the award from the subcontracts. The arbitrator’s award was “irrational” because he improperly based his conclusion not on past practices, but on his rationalization that to enforce the FAR clauses on plaintiff would be unjust.
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