Huizhou Kailangde Technology Co. v. Amazon.com Services

Background

Huizhou Kailangde Technology Co., Ltd. was a third-party seller on Amazon’s online marketplace. In March 2018, it entered a Business Solution Service Agreement with Amazon that required arbitration of disputes. The agreement allowed Amazon to withhold funds and suspend or terminate a seller account in specified circumstances.

In June 2021, Amazon deactivated the petitioner’s seller accounts without prior notice. Amazon alleged that the petitioner had engaged in review abuse by inducing positive product reviews. Amazon withheld funds and made deductions for matters including commissions, storage, delivery, returns, refunds, and other account-related charges. The petitioner alleged that Amazon initially withheld $476,255.30.

The petitioner then brought an arbitration claim seeking recovery of the withheld funds, consequential damages, and declaratory relief. On July 18, 2025, the arbitrator ruled that the agreement’s Section 2 was an unenforceable penalty clause and that Amazon could not retain the remaining funds as liquidated damages. The arbitrator calculated the principal amount owed at $88,208.80, awarded prejudgment interest, required each side to bear its own attorney’s fees, and allocated the arbitration fees between the parties as incurred.

The arbitrator later corrected the principal amount to $120,540.27 based on a different calculation. The arbitrator reaffirmed the other rulings and denied the petitioner’s later request for another modification. The petitioner then asked the federal court to partly confirm and partly modify or vacate the award. Amazon opposed the request and characterized it as a request to vacate the award.

Requests to Modify or Vacate the Award

The petitioner asked the court to increase the award from $120,540.27 to the full $476,255.30, recalculate prejudgment interest, award $314,820 in damages for Amazon’s account blocking, require Amazon to pay all fees and expenses, and declare Sections 3 and 8 of the agreement unenforceable. The petitioner relied on the Federal Arbitration Act provisions allowing limited modification or vacatur of an arbitration award and argued that the arbitrator had made a material calculation error and disregarded the law.

The court denied the request to modify the calculation under Section 11(a) of the Federal Arbitration Act. That provision permits correction of an evident material miscalculation, meaning an obvious mistake apparent from the award itself. The court held that the petitioner was challenging the figures and reasoning used by the arbitrator, rather than identifying an obvious arithmetic error. Recalculating the award using different figures would improperly require the court to reconsider the substance of the arbitration.

The court also denied the request to remand the award to the arbitrator for clarification. It held that the arbitrator provided a reasonable, legally consistent basis for calculating the $120,540.27 award and for allowing deductions for commissions, storage, delivery, and other account-related charges. The award was not ambiguous.

The court rejected the petitioner’s argument that the arbitrator had manifestly disregarded the law. Manifest disregard is a narrow basis for changing an arbitration award that requires proof that the arbitrator knowingly ignored a clearly applicable legal rule. The court found that the arbitrator considered Washington law, awarded prejudgment interest at the maximum statutory rate of twelve percent per year, and reasonably selected October 1, 2021, as the interest start date. The court also held that the arbitrator did not ignore governing law by refusing to require Amazon alone to pay the fees and costs.

The court further rejected the argument that the arbitrator had failed to issue a final and definite award. The award stated that it was a full and final determination of all substantive claims and counterclaims and that claims not specifically addressed were denied. The court held that the arbitrator was not required to grant the requested declaratory relief concerning Sections 3 and 8 or the requested consequential damages, or to explain the reasons for refusing those requests.

Request to Partly Confirm the Award

The petitioner also sought confirmation of favorable portions of the award, including the determination that Section 2 was unenforceable and that Amazon owed withheld funds. Amazon argued that the petitioner lacked standing because the award had been paid in full.

The court held that the petitioner had standing to seek review because a contract right can be a legally protected interest even without a continuing direct financial loss. However, the court dismissed the request to partly confirm the award as moot. Mootness means that a dispute no longer presents a live controversy requiring judicial relief. Because the award amount had been paid in full, and because the petitioner did not allege that Amazon was violating or would certainly violate the requested declaratory relief, the court found no continuing injury requiring confirmation.

The court explained that even if the confirmation request had not been moot, that would not have lowered the high standard for modifying or vacating the arbitration award. The court therefore declined to alter the award.

Disposition

The court denied the petitioner’s requests to partially modify or vacate the arbitration award and dismissed the request to partially confirm the award as moot. The conclusion states that the petitioner’s motion to partially confirm and partially modify the arbitration award was denied.