FINRA Awards Need Not Detail Subsidiary Issues Absent Joint Request for a Reasoned Decision
Commentary on UBS Financial Services, Inc. of Puerto Rico v. David Efron, 23-13879 (11th Cir. July 3 2025)

1. Introduction

The Eleventh Circuit’s unpublished but precedentially influential opinion in UBS Financial Services, Inc. of Puerto Rico v. Efron addresses the circumstances under which a FINRA arbitration award may be vacated or confirmed under the Federal Arbitration Act (FAA). David Efron, a Puerto Rican attorney, sought to overturn a third FINRA panel’s $6.48 million award in favour of UBS following a tumultuous, multi-panel arbitration saga rooted in a 2001 divorce, a negligence action brought by Efron’s ex-wife against UBS, and UBS’s subsequent contractual indemnification claim against Efron under a Master Account Agreement (“MAA”).

The central appellate dispute focused on whether the arbitral tribunal violated FINRA Rule 12904(e) by omitting an express discussion of (i) choice-of-law, (ii) interpretation and enforceability of the indemnity clause, and (iii) UBS’s equitable claims. Efron argued that these omissions, coupled with allegedly prejudicial evidence, justified vacatur under all four statutory grounds in § 10(a) of the FAA. Rejecting every contention, the Eleventh Circuit affirmed confirmation of the award, crystallising several important principles for arbitration jurisprudence within the Circuit.

2. Summary of the Judgment

• Rule 12904(e) compliance. An award that lists the parties’ claims (“contractual indemnification, unjust enrichment, equitable contribution”) satisfies the “summary of the issues” requirement. Arbitrators need not enumerate subsidiary issues (e.g., choice-of-law) unless both parties request an explained or reasoned award under Rule 12904(g).
• FAA § 10(a) limits. Alleged non-compliance with FINRA procedural rules, absent more, does not constitute “misconduct” (§ 10(a)(3)) or “exceeding powers” (§ 10(a)(4)); at most it may warrant modification under § 11(c).
• “Arguably interpreting” standard reaffirmed. Where contractual language is susceptible to the interpretation adopted by the arbitrators, courts must defer, even if the interpretation appears erroneous.
• No evident partiality or undue means shown. The introduction of negative evidence about a party’s prior litigation conduct, without proof of corruption or bias, falls short of the high bar for vacatur under §§ 10(a)(1)–(2).
• Attorney-fee component sustained. Efron’s perfunctory challenge—based solely on counsel invoices addressed to an affiliate—was deemed waived for inadequate briefing.

3. Analysis

3.1 Precedents Cited and Their Influence

• Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013)
  Reiterated that the only judicial question under § 10(a)(4) is whether the arbitrator “even arguably” interpreted the contract. The panel relied heavily on this framing to dismiss Efron’s substantive attack on the merits.
• Cat Charter, LLC v. Schurtenberger, 646 F.3d 836 (11th Cir. 2011) & Raiford v. Merrill Lynch (11th Cir. 1990)
  Confirmed that arbitrators are not required to explain awards unless the parties stipulate otherwise; expeditious resolution is paramount.
• Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panamá, 78 F.4th 1252 (11th Cir. 2023)
  Provided the standard for “evident partiality,” reinforcing that speculation is insufficient.
• Natco Ltd. P’ship v. Moran Towing, 267 F.3d 1190 (11th Cir. 2001)
  Cited for its broad reading of “arising out of” language in indemnity clauses, supporting the arbitrators’ finding of liability under the MAA.

3.2 Court’s Legal Reasoning

The opinion proceeds methodically through each statutory ground for vacatur:

1. Rule 12904(e) Allegation (FAA §§ 10(a)(3) and (4)).
   • The award’s “case summary” named each cause of action, satisfying the rule’s demand for a “summary of the issues.”
   • Subsidiary matters (interpretative sub-issues, choice-of-law) need not appear in a non-reasoned award.
   • Even a technical violation would implicate § 11(c) (modification of “form”), not vacatur.
2. Contract Interpretation Challenge (FAA § 10(a)(4)).
   • The indemnity clause was “broad enough” (“any claims … in any way relating to”) to encompass UBS’s settlement payment.
   • Because at least one plausible reading supports UBS, the tribunal “arguably interpreted” the contract; judicial second-guessing is foreclosed.
3. Misconduct / Undue Means (FAA §§ 10(a)(1)–(3)).
   • Introduction of Efron’s prior litigation conduct was relevant to attorneys’ fees; no evidence of fabricated documents or suppression of material evidence.
   • Efron’s counsel conceded on record that the panel acted fairly, undermining claims of bias.

3.3 Potential Impact of the Decision

• Clarifies FINRA Award Drafting Obligations. Panels in the Eleventh Circuit may rely on this decision to provide concise “standard” awards unless both parties demand a reasoned award. Counsel cannot later complain that choice-of-law or other sub-issues were missing.
• Limits Post-Award Litigation. By emphasising § 11(c) modification over vacatur for purely formal defects, the Court discourages tactical challenges aimed at derailing enforcement because of minor rule deviations.
• Broad Indemnity Clauses Reinforced. The Court’s adoption of a wide reading of “arising out of” language, even when indemnifying a party for its own negligence, may influence contract drafting and risk-allocation strategies in brokerage and lending agreements.
• Attorney-Fee Challenges Must Be Substantiated. Perfuctory or unsupported objections to fee awards risk being deemed waived.

4. Complex Concepts Simplified

• FINRA Rule 12904(e) vs. (g). Rule 12904(e) requires minimal components (party names, relief, “summary of issues”) in every award. Rule 12904(g) allows for an “explained decision”—essentially a short written rationale—but only if both parties ask and pay a fee.
• “Reasoned Award” vs. “Standard Award”. A standard award states who wins and the relief; a reasoned award adds a brief explanation. Parties must jointly opt in.
• Vacatur vs. Modification. Vacatur wipes out the award; modification tweaks clerical or formal errors while keeping the substantive result intact (§ 11 of the FAA).
• “Arguably Interpreting” Test. Courts examine only whether the arbitrator looked at the contract and reached some interpretation—even if wrong. They do not evaluate correctness.
• Evident Partiality. Requires proof of actual or undisclosed conflicts so serious that a reasonable person would question neutrality; mere adverse rulings or vigorous advocacy are insufficient.

5. Conclusion

UBS v. Efron reiterates the FAA’s extremely narrow scope of judicial review, especially in the FINRA context. The Eleventh Circuit underscores that:

1. Absent a joint request for a reasoned award, arbitrators satisfy Rule 12904(e) by listing the pleaded claims; they are not required to catalogue each legal sub-issue or analysis.
2. Perceived legal or factual errors—no matter how grave—do not justify vacatur if the arbitrators were “arguably interpreting” the contract.
3. Allegations of bias or misconduct must be concrete, supported by evidence, and rise to the level of corruption, fraud, or manifest disregard—not merely aggressive litigation tactics by the prevailing party.
4. Technical or clerical defects should ordinarily be addressed under FAA § 11(c) (modification), not § 10 (vacatur), preserving arbitration’s speed and finality.

Practitioners should heed the take-home lesson: If comprehensive reasoning or explicit choice-of-law findings are important, insist—jointly—on a reasoned award before the arbitration begins. Otherwise, post-award challenges premised on absent explanations are highly unlikely to succeed within the Eleventh Circuit after UBS v. Efron.