Arbitrator’s Award in Amazon’s Favor Was ‘Completely Irrational,’ Says ex-Seller
An arbitrator’s award in Amazon’s favor against former third-party Amazon seller Cowin Technology “must be vacated on the grounds that the decision is completely irrational” and that it “manifestly disregards the law,” said Cowin’s reply memorandum of law Tuesday (docket…
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
1:23-cv-03054) in U.S. District Court for Southern New York in further support of its petition to vacate the arbitration award and in opposition to Amazon’s motion to confirm that award. Cowin is seeking to recover $1.09 million in sales proceeds that Amazon seized -- and the arbitrator let Amazon keep -- when Amazon deactivated Cowin’s account and accused the seller of violating its business solutions agreement (BSA) by manipulating product reviews (see 2305100001). The award also violates “strong public policy” by errantly ruling that Section 2 of the BSA “is a valid liquidated damage clause” and that it’s “enforceable,” said the reply memorandum. Liquidated damages clauses “often explicitly disclaim that the amount payable is a penalty or forfeiture,” it said. It’s “noteworthy” that what Amazon trumpets as a liquidated damages clause “fails to include those words,” it said. Nor does the clause “in any way take pains to distinguish the amount to be paid thereunder from a penalty or forfeiture,” it said. It also doesn’t allude “to the test for the validity of a liquidated damages clause, or explain how the parties’ relationship satisfies that test,” it said: “Indeed, the language does not even suggest, much less express, that the amount withheld and appropriated thereunder serves as compensation to Amazon.” Those “drafting deficiencies” raise the question of whether Amazon intended Section 2 of the BSA to serve as a liquidated damages clause, “or whether it now retrospectively and expediently characterizes the clause as such,” it said.