Heritage and OMG disputed their commissions related to the auction of high-end firearms (such as Colt’s Texas Paterson, right). They arbitrated and Heritage won. OMG successfully opposed confirmation in the district court, which concluded: “By finding that the [parties contracts] never came into existence, the arbitrator intruded on an issue that was reserved for an alternative decision-maker and thereby exceeded his authority.” OMG, LP v. Heritage Auctions, Inc., No. 14-10403 (May 8, 2015, unpublished).
The Fifth Circuit disagreed. It reminded: “By submitting issues for an arbitrator’s consideration, parties may expand an arbitrator’s authority beyond that provided by the original arbitration agreement such that we need not address whether the original agreement encompassed such authority.” Here, “the parties agreed to arbitrate the issue of contract formation by submitting, briefing, and generally disputing that issue throughout the arbitration proceedings, with the plaintiffs never contesting the arbitrator’s authority to decide contract formation until he issued an adverse award.”