First Department Rejects Effort to Vacate Arbitration Award Based Upon Alleged Fraud on Tribunal For Procedural and Substantive Reasons

In the recent decision in Republic of Kazakhstan v Chapman, 2023 NY Slip Op 03211 (1^st Dep’t Decided June 13, 2023), the First Department affirmed the dismissal of claims seeking to vacate an arbitration award based upon allegations of fraud. The decision is a good source of accepted principles, including relating to claims of aiding and abetting fraud, conspiracy to commit fraud and the element of reasonable reliance.

Arbitration Awards

As often recognized, is it extremely difficult to vacate an arbitration award. The grounds are quite limited. One accepted ground, embodied in the Federal Arbitration Act (FAA), is where the award was “procured by fraud.” A party seeking to challenge an arbitration award based upon evidence of fraud submitted to the arbitrator(s) must prove a number of elements.

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