A district court may not pierce the corporate veil to bind a non-signatory parent corporation during a proceeding to confirm an arbitration award.
In a contract of affreightment, the respondent’s obligations were guaranteed by its parent corporation. An arbitrator awarded damages against the respondent and held the parent liable on the guarantee, despite the parent not being a formal party to the arbitration clause. The district court confirmed the award against the respondent but vacated it as to the parent. The question presented is whether a district court may pierce the corporate veil during an action to confirm an arbitration award to bind a non-signatory parent corporation. The court applies the rule that confirmation proceedings are narrowly circumscribed to determine if the award falls within the submitted dispute and are not the proper time to adjudicate alter ego theories. The court affirms the judgment, holding that the arbitrator exceeded its powers by binding the parent, and that the plaintiff must pursue separate actions to enforce the guarantee or alter ego liability.
At page 301 Determining arbitrator authority versus court review of nonparty liability19 citing cases“we hold that an action for confirmation is not the proper time for a district court to 'pierce the corporate veil.”
- Optima Healthcare, Inc. v. Ascion, LLC, No. 2:25-cv-13494 (E.D. Mich. July 23, 2026). ([A] decision whether parties other than those formally signatories to an arbitration clause may have their rights and obligations determined by an arbitrator when that issue has not been submitted to him is not within…)
- CBF Indústria de Gusa v. AMCI Holdings, Inc., 14 F. Supp. 3d 463 (S.D.N.Y. 2014).published ([W]e hold that an action for confirmation is not the proper time for a District Court to ‘pierce the corporate veil.’)
- Gov't of the Lao People's Democratic Repub. v. Baldwin, No. 25-2562 (9th Cir. Sept. 17, 2026).published Id. at 301.
- Pacer Constr. Holdings Corp. v. Pelletier, No. 3:19-cv-01263 (S.D. Cal. Feb. 6, 2020).The court held that “an action for confirmation is 4 not the proper time for a District Court to ‘pierce the corporate veil.’” Id. at 301.
- Dish Network v. Ghosh, No. 18-1131 (10th Cir. Oct. 11, 2018).unpublished(declining to extend confirmation of award to nonparty because whether nonparty was alter ego of party to arbitration or had consented to arbitration was too complex to hear in a confirmation action)
- CBF Indústria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58 (2d Cir. 2017).published States Petroleum Corp., 312 F.2d 299, 301 (2d Cir.), cert. denied, 373 U.S. 949 , 83 S.Ct. 1679 , 10 L.Ed.2d 705 (1963), appellants could not pursue enforcement of an arbitral award under the Convention for the Enforcement and Recognition…
- CBF Industria DeGusa S/A. v. AMCI Holdings, Inc., No. 15-1133-cv (L) (2d Cir. Mar. 2, 2017).published States Petroleum Corp., 312 F.2d 299, 301 (2d Cir.), cert. denied, 11 373 U.S. 949 (1963), appellants could not pursue enforcement of an arbitral award 12 under the Convention for the Enforcement and Recognition of Foreign Arbitral 13 Awar…
- CBF Industria De Gusa S/A v. AMCI Holdings, Inc., No. 15-1133-cv (L) (2d Cir. Jan. 18, 2017).publishedStates Petroleum Corp., 312 F.2d 299, 301 (2d Cir.), cert. denied, 2 373 U.S. 949 (1963), appellants could not pursue enforcement of an arbitral award 3 under the Convention for the Enforcement and Recognition of Foreign Arbitral 4 Awards…
- Sheet Metal Employers Indus. Promotion Fund v. Absolut Balancing Co., 884 F. Supp. 2d 617 (E.D. Mich. 2012).publishedCo., 330 F.3d 843, 846 (6th Cir.2003). “ ‘[A] decision whether parties other than those formally signatories to an arbitration clause may have their rights and obligations determined by an arbitrator ... is not within the province of the a…
- Dist. Council No. 9 v. APC Painting, Inc., 272 F. Supp. 2d 229 (S.D.N.Y. 2003).published Co., 502 F.2d 674, 677 (2d Cir.1974) (“Arbitrators do not have the power to bind a [party] which [was] not ... a voluntary participant in the arbitration proceeding.”) (citing Orion Shipping, 312 F.2d at 299); Kelley v. Workmen’s Circle Ho…
Show 9 more citing cases
- Nationwide Mutl Ins v. Home Ins Co, No. 01-4200 (6th Cir. June 3, 2003).publishedCo., 793 F.2d 214, 216 (8th Cir. 1986); Orion Shipping conflict between Nationwide J and the arbitration award could & Trading Co. v. Eastern States Petroleum Corp. of Panama, be avoided by interpreting the arbitration award as creating no…
- Grad v. Wetherholt Galleries, 660 A.2d 903 (D.C. 1995).publishedIn Orion, the court stated, "A decision whether parties other than those formally signatories to an arbitration clause may have their rights and obligations determined by an arbitrator when that issue has not been submitted to him is not w…
- Transp. Cybernetics, Inc. v. Forest Transit Comm'n, 950 F.2d 350 (7th Cir. 1992).publishedIt would unduly complicate and protract the proceeding were the court to be confronted with a potentially voluminous record setting out details of the corporate relationship between a party bound by an arbitration award and its purported “…
- In re Arbitration Between Dist. 15, Int'l Ass'n of MacHinists & Aerospace Workers & Numberall Stamp & Tool Co., 658 F. Supp. 648 (S.D.N.Y. 1987).publishedOrion, 312 F.2d at 301.
- Builders Fed.(Hong Kong) Ltd. v. Turner Const., 655 F. Supp. 1400 (S.D.N.Y. 1987).publishedOrion Shipping & Trading Co., Inc. v. Eastern States Petroleum Corporation of Panama, S.A., 312 F.2d 299, 301 (2d Cir.1963).
- In re the Arbitration Between Hidrocarburos Y Derivados, C.A. & Lemos, 453 F. Supp. 160 (S.D.N.Y. 1978).publishedBut an action to confirm the arbitrator’s award cannot be employed as a substitute for either of these two quite distinct causes of action.” 312 F.2d at 301.
- Saxis S.S. Co. v. Multifacs Int'l Traders, Inc., 375 F.2d 577 (2d Cir. 1967).publishedFlanzbaum v. M & M Transport Co., 286 F.2d 500, 503 (2 Cir. 1961); Orion Shipping & Trading Co. v. Eastern States Petroleum Corp., supra, 312 F.2d at 301.
- Saxis S.S. Co., Owners of the Ss Warm Springs v. Multifacs Int'l Traders, Inc. v. Am. Renaissance Lines, Inc., Petitioner-Intervenor-Appellant, 375 F.2d 577 (2d Cir. 1967).publishedFlanzbaum v. M & M Transport Co., 286 F.2d 500, 503 (2 Cir. 1961); Orion Shipping & Trading Co. v. Eastern States Petroleum Corp., supra, 312 F.2d at 301. 18 Renaissance should not have been barred by the district court from bringing an ac…
- NCR Corp. v. Sac-Co., 43 F.3d 1076 (6th Cir. 1995).published
At page 300 Vacatur of arbitration award for improper party rights determination14 citing cases[T]he law is clear that an arbitration award based upon a misinterpretation of law or an insufficiency of supporting facts will not be overturned.
- Forall USA, Inc., No. 1:21-cv-02721 (S.D.N.Y. Aug. 12, 2021).([T]he law is clear that an arbitration award based upon a misinterpretation of law or an insufficiency of supporting facts will not be overturned.)
- CBF Indústria de Gusa v. AMCI Holdings, Inc., 14 F. Supp. 3d 463 (S.D.N.Y. 2014).published See Orion, 312 F.2d at 301 (“[W]e hold that an action for confirmation is not the proper time for a District Court to ‘pierce the corporate veil.’ ”).
- Gov't of the Lao People's Democratic Repub. v. Baldwin, No. 25-2562 (9th Cir. Sept. 17, 2026).published Id. at 301.
- Lakah v. UBS AG, No. 1:07-cv-02799 (S.D.N.Y. Oct. 22, 2024).Under this narrow reading, courts have found vacatur under § 10(a)(4) necessary in cases in which rights were determined for a corporation not party to the arbitration agreement, see Orion Shipping & Trading Co., 312 F.2d at 300-01, or whe…
- Petitions of Laitasalo, 196 B.R. 913 (Bankr. S.D.N.Y. 1996).publishedOrion Shipping and Trading Co., v. Eastern States Petroleum Corp. of Panama, 312 F.2d 299, 300 (2d Cir.), cert. denied, 373 U.S. 949 , 83 S.Ct. 1679 , 10 L.Ed.2d 705 (1963).
- Tanoma Mining Co. v. Local Union No. 1269, 717 F. Supp. 357 (W.D. Pa. 1989).publishedIn Orion Shipping and Trading Company v. Eastern States Petroleum Corporation of Panama, 312 F.2d 299, 300-01 (2d Cir.1963) the Court of Appeals for the Second Circuit noted as follows: Judge Dawson denied Orion’s motion under Section 9 of…
- Swift Indep. Packing Co. v. Dist. Union Local One, 575 F. Supp. 912 (N.D.N.Y. 1983).published“the law is clear that an arbitration award based upon a misinterpretation of law or an insufficiency of supporting facts will not be overturned”
- Sidarma Societa Italiana Di Armamento Spa v. Holt Marine Indus., Inc., 515 F. Supp. 1302 (S.D.N.Y. 1981).publishedOrion Shipping & Trading Co. v. Eastern States Petroleum Corp. of Panama, S.A., 312 F.2d 299, 300 (2d Cir.), cert. denied, 373 U.S. 949 , 83 S.Ct. 1679 , 10 L.Ed.2d 705 (1963).
- Eddie S.S. Co. v. Czarnikow-Rionda Co., 480 F. Supp. 731 (S.D.N.Y. 1979).publishedOrion Shipping & Trading Co. v. Eastern States Petroleum Corp. of Panama, S. A., 312 F.2d 299, 300 (2d Cir.), cert. denied, 373 U.S. 949 , 83 S.Ct. 1679 , 10 L.Ed.2d 705 (1963).
- Refino v. Feuer Transp., Inc., 480 F. Supp. 562 (S.D.N.Y. 1979).published“[T]he law is clear that an arbitration award based upon a misinterpretation of law or an insufficiency of supporting facts will not be overturned”
Show 4 more citing cases
- Metal Prods. Workers Union, Local 1645 v. Torrington Co., 242 F. Supp. 813 (D. Conn. 1965).publishedAmicizia Societa Navegazione v. Chilean Nitrate & Iodine Sales Corp., supra note 10, at 808; Orion Shipping & Trading Co. v. Eastern States Petroleum Corp. of Panama, S.A., 312 F.2d 299, 300 (2 Cir. 1963), cert. denied, 373 U.S. 949 , 83 S…
- Asset Acceptance, LLC v. Tyler, 2012 IL App (1st) 93559.published(district court correctly vacated arbitration award under sections 10 and 11 of the FAA where arbitrator improperly determined the rights of a party that was not a signatory to the arbitration clause)
- Asset Acceptance, LLC v. Tyler, 2012 IL App (1st) 093559, 966 N.E.2d 1039.published(district court correctly vacated arbitration award under sections 10 and 11 of the FAA where arbitrator improperly determined the rights of a party that was not a signatory to the arbitration clause)
- Lucas v. Philco-Ford Corp., 399 F. Supp. 1184 (E.D. Pa. 1975).published See, e. g., Orion Shipping and Trading Co. v. Eastern States Petroleum Corp., 312 F.2d 299 , 300 (2d Cir.), cert. denied, 373 U.S. 949 , 83 S.Ct. 1679 , 10 L.Ed.2d 705 (1963); Saxis Steamship Co. v. Multifacs International Traders, Inc., 3…
At page 299 Arbitrator's authority to bind non-participant guarantors1 citing case“the law is clear that an arbitration award based upon a misinterpretation of law or an insufficiency of supporting facts will not be overturned.”
- Dist. Council No. 9 v. APC Painting, Inc., 272 F. Supp. 2d 229 (S.D.N.Y. 2003).published Co., 502 F.2d 674, 677 (2d Cir.1974) (“Arbitrators do not have the power to bind a [party] which [was] not ... a voluntary participant in the arbitration proceeding.”) (citing Orion Shipping, 312 F.2d at 299); Kelley v. Workmen’s Circle Ho…
Other citing cases
- Kurt Orban Co. v. Angeles Metal Sys. & Newman Iron & Metal Co., 573 F.2d 739 (2d Cir. 1978).published
- Parrella v. Orange Rabbit, Inc., No. 1:20-cv-09923, 2021 WL 4462809 (S.D.N.Y. Sept. 29, 2021).
- Contemporary Elec., Inc. v. Int'l Bhd. of Elec. Workers, 638 F. Supp. 923 (D. Minn. 1986).published
- Oriental Com. & Shipping Co. v. Rosseel, N.V., 609 F. Supp. 75 (S.D.N.Y. 1985).published
- Am. Renaissance Lines, Inc. v. Saxis S.S. Co., 502 F.2d 674 (2d Cir. 1974).published
- In re the Arbitration Between Philippine Bulk Shipping, Inc. & Int'l Minerals & Chem. Corp., 376 F. Supp. 654 (S.D.N.Y. 1973).published
- Soleimani v. Andonian, No. 1:21-cv-01018 (S.D.N.Y. Mar. 10, 2022).
- Bros. Bldg. Co. of Nantucket v. Yankow, 779 N.E.2d 991 (Mass. App. Ct. 2002).published
- Carte Blanche (Singapore) PTE., Ltd. v. Diners Club Int'l, Inc., 758 F. Supp. 908 (S.D.N.Y. 1991).published
- Dundas Shipping & Trading Co. v. Stravelakis Bros., 508 F. Supp. 1000 (S.D.N.Y. 1981).published
Show 3 more citing cases
- Arbitration Between Laminoirs-Trefileries-Cableries De Lens, S. A. v. Southwire Co., 484 F. Supp. 1063 (N.D. Ga. 1980).published
- Aerojet-Gen. Corp. v. Am. Arbitration Ass'n, 478 F.2d 248 (9th Cir. 1973).published
- In the Matter of the Arbitration Between South East Atl. Shipping Ltd., & Garnac Grain Co., Inc., 356 F.2d 189 (2d Cir. 1966).published
v.
EASTERN STATES PETROLEUM CORPORATION OF PANAMA, S.A., and Eastern States Petroleum and Chemical Corporation and Signal Oil & Gas Company
Libellant Orion Shipping & Trading Co., Inc., entered into a contract of af-freightment with one of the respondents, Eastern States Petroleum Corporation of Panama, S.A. (Eastern Panama), whereby Orion was to transport oil furnished by Eastern Panama from the Persian Gulf to Houston, Texas. Eastern Panama’s obligations under the contract were guaranteed by its parent corporation, Eastern States Petroleum and Chemical Corporation, referred to here as Eastern American, and by Eastern American’s successor corporation, Signal Oil & Gas Company. When Eastern Panama notified Orion of its decision to terminate the contract because of a presidential promulgation limiting the importation of crude oil into the United States, Orion secured an order, affirmed by this Court, 2 Cir., 284 F.2d 419 (1960), compelling Eastern Panama to submit to arbitration[1] the question of breach of contract and damages to Orion. Although it was clear that the liability of Eastern Panama only was to be determined by the arbitrator — such was the decision of this Court and the stipulation of the parties — and although Eastern American’s (Signal’s) guarantee was not submitted into evidence, the arbitrator determined not only that Eastern Panama was responsible for breach of contract to the extent of $988,-081.98 plus interest, but also that Signal was liable on its guarantee if Eastern Panama were to default.
Eastern Panama’s motion to vacate the award of damages on the ground that it was improperly calculated was correctly denied by Judge Dawson in the court below, for the reasons there stated. Not only has this Court already determined, on the first appeal, that the manner of computing damages was for the arbitrator and not for the courts, 284 F.2d at 421, but the law is clear that an arbitration award based upon a misinterpretation of law or an insufficiency of supporting facts will not be overturned.[2] See Wilko v. Swan, 346 U.S. 427, 436-437, 74 S.Ct. 182, 98 L.Ed. 168 (1953); Amicizia Societa Navegazione v. Chilean Nitrate & Iodine Sales Corp., 274 F.2d 805, 808 (2d Cir.), cert. denied, 363 U.S. 843, 80 S.Ct. 612, 4 L.Ed.2d 1727 (1960); Commercial Solvents Corp. v. Louisiana Liquid Fertilizer Co., 20 F.R.D. 359, 362 (S.D.N.Y.1957).
Judge Dawson denied Orion’s motion under section 9 of the United States Arbitration Act, 9 U.S.C. § 9, to confirm that portion of the arbitration award holding Signal liable as guarantor of Orion’s contractual obligations. He held, properly we think, that the arbitrator exceeded his powers in determining the obligations of a corporation which was clearly not a party to the arbitration proceeding, and that Signal’s motion to vacate the award against it should be granted. See 9 U.S.C. §§ 10(d), 11.[*301] A decision whether parties other than those formally signatories to an arbitration clause may have their rights and obligations determined by an arbitrator when that issue has not been submitted to him is not within the province of the arbitrator himself but only of the court. See A/S Ganger Rolf v. Zeeland Transportation Ltd., 191 F.Supp. 359, 363 (S.D.N.Y.1961); Brescia Construction Co. v. Walart Construction Co., 238 App.Div. 45, 263 N.Y.S. 13 (1st Dep’t 1933), aff’d, 264 N.Y. 260, 190 N.E. 484, 93 A.L.R. 1148 (1934); cf. Fisser v. International Bank, 282 F.2d 231 (2d Cir., 1960).
Orion agrees that the arbitrator exceeded his powers in determining Signal’s liability as guarantor. It also agrees that the question whether Signal should be bound by the arbitration award, although not formally a party to the arbitration clause, is to be determined by the courts and not by the arbitrator. It argues that the District Court, in an action to confirm the award against Eastern Panama, may adjudge Signal liable thereon since Eastern Panama is merely a “shell,” while Signal, its “alter ego,” is truly responsible for Eastern Panama’s obligations. We are cited to Fisser v. International Bank, supra, where this Court held that a parent corporation, if so thoroughly in control of its subsidiary as to be deemed an “alter ego,” could be ordered to submit to arbitration pursuant to a clause in its subsidiary’s contract. See Chilean Nitrate Sales Corp. v. The Nortuna, 128 F.Supp. 938 (S.D.N.Y.1955).
It may well be, as Judge Dawson indicated below, that Eastern Panama is thoroughly dominated by Signal, and that Signal is properly accountable on an “alter ego” theory. But we hold that an action for confirmation is not the proper time for a District Court to “pierce the corporate veil.” The usual office of the confirmation action under 9 U.S.C. § 9 is simply to determine whether the arbitrator’s award falls within the four corners of the dispute as submitted to him. This action is one where the judge’s powers are narrowly circumscribed and best exercised with expedition. It would unduly complicate and protract the proceeding were the court to be confronted with a potentially voluminous record setting out details of the corporate relationship between a party bound by an arbitration award and its purported “alter ego”. Our conclusion does not in any way impugn the soundness of the reasoning in the Fis-ser case, which arose in the quite distinguishable context of an action to compel arbitration under 9 U.S.C. § 4, rather than to confirm.
As Judge Dawson concluded, our holding does not preclude Orion from prosecuting its action, still pending, against Signal as guarantor of Eastern Panama’s obligations. Nor does it preclude Orion from bringing a separate action against Signal to enforce the award against Eastern Panama, invoking the “alter ego” theory. But an action to confirm the arbitrator’s award cannot be employed as a substitute for either of these two quite distinct causes of action.
Orion also argues that Signal’s conduct during the arbitration proceeding constituted a consent to arbitration which in turn gave the arbitrator power to render an award binding against it. It is asserted that Signal was in effect conducting the arbitration and interposing defenses personal to it alone, and that all witnesses, testimony, and documents emanated from Signal rather than Eastern Panama. Since much of the evidence which would have to be adduced to prove that Signal “consented” to a binding arbitration award would be congruent with the evidence adduced to prove that Signal is Eastern Panama’s “alter ego,” we hold for the same reasons that it is inappropriate for the District Court to dispose of this argument in an action to confirm.
We therefore affirm the judgment below confirming the arbitrator’s award as it applied to Eastern Panama and vacating the award as it applied to Signal.
Special clause 14 of the contract of af-freightment provided for arbitration, according to a prescribed procedure, of “any dispute arising during the execution of this Contract of Affreightment. * Sji sjc »>
9 U.S.C. § 10 sets down the circumstances in which an arbitration award may properly be vacated:
“(a) Where the award was procured by corruption, fraud, or undue means.
“(b) Where there was evident partiality or corruption in the arbitrators, or either of them.
“(e) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
“(d) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual final and definite award upon the subject matter submitted was not made."