THE LAW AND CIVIL ENGINEERING – MAY 2021 NEWSLETTER
What if You Don’t Like Your Arbitration Award
by Eugene Bass
Arbitration is one means of resolving disputes. In arbitration, an arbitrator acts as the trier of fact, he considers the evidence and renders a decision. The decision by the arbitrator can then be confirmed through a court proceeding whereby it will be given the force and effect of a judgment.
One of the advantages with arbitration is in the finality of the decision. The parties can be relatively assured that once an arbitration award is rendered it will be final and that there will be no further appeals or court proceedings that keep the dispute alive. That is not to say that there is no basis to have an arbitration award set aside. The grounds for such action are limited, however, and are specifically set forth in the statutes. With a trial, there may be numerous grounds for appeal that involve questions of law and procedure during the conduct of the trial. In arbitration, the arbitrator does not have to follow the law and the requirements applicable to the conduct of trials do not apply and hence do not serve as the basis for appeal.
Following are essentially the statutory basis for vacating an arbitration award. An award may be vacated where the arbitration it was procured by corruption, fraud or other undue means or if there was corruption in any of the arbitrators. An award can be vacated if the rights of a party were substantially prejudiced by misconduct of a neutral arbitrator.
The agreement where the arbitration clause is contained serves as a guide in determining the scope of authority of the arbitrator and in defining the limits of the dispute that is to be arbitrated. The arbitrators can exceed their powers by acting upon issues that are outside their authority. An award can be vacated where the arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.
During or before the conduct of an arbitration one party or the other may find it necessary or desirable to postpone the hearing. It is a ground for vacation of an award where the rights of a party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown.
In arbitration, the hearings generally follow the format of court proceedings as regards the questioning of witnesses and presentation of evidence. Arbitrations are often more informal than trials and the presentation of evidence less restrictive. Some arbitrators tend to treat arbitrations as mini trials, however, and apply the rules of evidence more rigidly. This presents a risk in that the refusal of the arbitrators to hear evidence material to the controversy can also serve as a basis for vacation of an arbitration award.
There are other grounds for vacation of awards involving failure of an arbitrator to disqualify himself where potential conflicts of interest have been shown.
While there is more finality in arbitration, there are still grounds for vacation of an award. They are limited, however.
This article is intended only to provide general information regarding legal issues. It is not to be relied upon for legal advice. Contact your attorney for advise and guidance on general and specific legal issues.