Last fall, I blogged about the challenges of overturning an arbitrator’s award (check out that post here). That case illustrated the difficulties of vacating an award based on a purported erroneous ruling of law. But what if a party seeks to vacate an arbitrator’s award on procedural grounds—specifically, the alleged concealment of evidence?

The recent decision in Shell NA LNG LLC v Venture Global Calcasieu Pass, LLC addresses precisely this issue.

Background

Shell NA LNG LLC (“Shell”) and Venture Global Calcasieu Pass, LLC (“VGCP”) entered into a purchase and sale agreement under which Shell agreed to purchase natural gas from VGCP upon the satisfaction of certain conditions. A dispute arose, and the parties commenced an arbitration.

The arbitration was extensive. Overseen by a panel of three commercial arbitrators (“the Tribunal”), it “involved extensive pre-hearing document production totaling many thousands of pages, an interim measures application, two rounds of merits briefing, a two-week evidentiary hearing featuring 26 witnesses (15 presented by Shell), two rounds of post-hearing briefing, and closing arguments all undertaken at considerable expense to the parties.”

Critically, during the evidentiary hearing, Shell cross-examined an independent engineer retained by VGCP. The engineer admitted to communicating with VGCP but could not recall any specific details of those communications.

Based on this testimony, Shell filed a mid-hearing discovery application “seeking allegedly undisclosed communications between VGCP and the Independent Engineer.” At an in-person hearing on the application, VGCP acknowledged that communications may exist but asserted they were privileged. The Tribunal denied the application.

Shell renewed its request, but VGCP again offered only a vague, carefully worded statement regarding the possible existence of responsive documents. The Tribunal denied the application a second time and ultimately issued an award in favor of VGCP.

Shell then sought redress from the Court to vacate the award under CPLR 7511 on the grounds of fraud or misconduct—alleging that VGCP had misled the Tribunal about the existence of communications with the independent engineer. Shell simultaneously sought leave to conduct post-arbitration discovery under CPLR 408.

The Court’s Ruling

The Court first addressed Shell’s application for post-arbitration discovery. Under CPLR 408, discovery in a special proceeding is permitted only in “rare circumstances” given the strong deference courts afford to arbitral proceedings. The standard is a fact-specific inquiry, and the movant bears a heavy burden.

In denying Shell’s application, the Court reasoned that Shell was effectively seeking a “third bite of an apple”—having already raised the same discovery requests twice before the Tribunal. The Court acknowledged the inherent tension “between respecting the Tribunal’s discovery decisions and the otherwise reasonable instinct to give a petitioner latitude to develop the evidentiary basis of its contentions.” Nonetheless, it concluded that granting discovery here would amount to “exactly the type of judicial second-guessing that is not permitted in a proceeding under CPLR 7511”—as Shell was afforded ample opportunity to convince the Tribunal otherwise.

Turning to the merits of the vacatur motion, the Court reiterated that CPLR 7511 imposes an exacting standard: an award may be vacated for misconduct only upon clear and convincing evidence. The Court found no such evidence here. The record did not establish that there was additional discoverable material or that VGCP made misrepresentations about such alleged undisclosed discovery to the Tribunal. Nor was there any showing that the requested discovery, even if allowed, would have altered the Tribunal’s decision in any way. The Court accordingly confirmed the award, demonstrating extreme deference to the Tribunal.

Takeaway

Shell v Venture Global serves as a powerful reminder that even procedural challenges—such as allegations of evidence concealment—face an extraordinarily high bar when seeking to vacate an arbitration award. Even in the face of a potentially colorable argument that evidence was concealed, courts remain reluctant to disturb the broad deference afforded to arbitral tribunals.

So, once again, I leave readers of this post with the same warning: If you find yourself in arbitration, particularly by contract, be prepared to accept the arbitrator’s award.