Court Tosses Challenge to Sirius Arbitration Award

(CN) - U.S. Electronics failed to prove that Sirius Satellite Radio benefited from a biased arbitration award, a New York appellate division ruled. The company argued that the arbitration panel's chairman should have disclosed that his son, a congressman, publicly supported the $5 billion merger of Sirius and XM radio networks.

The First Appellate Division in Manhattan noted that the challenger of an arbitration decision has a high burden of proof, which U.S. Electronics did not meet.

"The chairman should have made full disclosure," the justices wrote. "But despite such nondisclosure, petitioner failed to meet his burden of proving by clear and convincing evidence that any impropriety or misconduct on the part of the arbitrator prejudiced its rights or the integrity of the arbitration process or award, since no proof was offered of actual bias or even the appearance of bias on the part of the chairman."

U.S. Electronics distributed hardware for Sirius before the merger, but later began making radios for XM. Sirius stopped using U.S. Electronics, saying the move violated their exclusive arrangement. U.S. Electronics sued, and the arbitration panel sided with Sirius.

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