USA Trends and Developments Contributed by: John Desmond, Alexis Taitel and Alice Samberg, Dickinson Wright PLLC
U.S.C. § 11, a court may modify an award only upon a showing that: • there was an evident mistake in the arbitrator’s cal- culation of a particular figure or in the description of a person, thing, or property; • the arbitrator ruled upon and awarded a matter not submitted to them by the parties; or • the award is imperfect in a way that does not affect the merits of the judgment but nevertheless must be modified to effect the intent of the award or to promote justice. By contrast, per 9 U.S.C. § 10, a court cannot vacate an arbitration award in the absence of more extreme and unjust circumstances, such as: • fraud, corruption, or evident partiality in the arbitra- tor; • arbitrator misconduct by way of refusing to post- pone a hearing or to hear pertinent and material evidence; or • the arbitrator having exceeded his or her authority. By and large, courts do not hold another trial or force the parties to relitigate issues that were already deter- mined by the arbitrator. Indeed, parties that seek to set aside the arbitration award wholesale in favour of a “do over” must satisfy a high burden of proof, essen- tially requiring a showing of extrinsic fraud. Although the overturning of an arbitration award is more com- monly seen in state courts than federal courts, it is exceedingly rare regardless of jurisdiction. Depending on the jurisdiction in which the prevailing party seeks confirmation, the applicable law may set forth varying grounds upon which a court may modify or vacate an award. The law also differs by jurisdiction as to whether a court may consider grounds for modi- fication or vacatur sua sponte (meaning, of its own accord) or only upon the losing party’s opposition to the confirmation of the award. Moreover, under narrow circumstances, some states’ judicial precedent allows parties to expand judicial review of arbitral awards, while the FAA prohibits it. For example, New Jersey may allow parties to a contract to expand the grounds on which a court may modify or vacate an arbitra- tion award if the parties to the contract were to arbi-
trate. By contrast, states like Florida, Massachusetts, Georgia, and Tennessee align with the FAA, prohibiting parties from contracting for expanded judicial review or enumerating additional grounds for modification or vacatur of an arbitration award. In addition to the enforceability nuance, an arbitration award is further distinct from a judgment because it is not directly appealable. Under the functus officio doctrine, once an arbitrator makes and issues a final award, the arbitrator has exhausted his or her author- ity and loses the contractual power to make binding determinations on the merits of the case. Conse- quently, final arbitration awards are not appealable to the arbitrator – other than in a handful of practical, administrative exceptions, such as the clarification of clerical errors. This is why courts typically wield the sole authority to modify or vacate an arbitration award. Once a district judge reaches a final decision about the confirmation of an arbitration award, that decision may be appealed through the court system but only on narrow grounds. Thus, arbitration awards hold a degree of finality that judgments do not, limiting the right and ability of the losing party to seek recon- sideration of the arbitrator’s findings and conclusions. Once a court confirms an arbitration award and enters a judgment, the prevailing party obtains all of the same rights as a typical judgment holder. Should the non- prevailing party refuse to comply with the judgment, the judgment holder may move for post-judgment relief to enforce the terms of the judgment. Conclusion Depending on a client’s goals and resources, ADR methods such as arbitration and mediation can be efficient, cost-effective ways to resolve disputes. Mediation allows parties to get creative with their remedies, as they can craft them in such a way that courts may not have the authority to do. Parties can choose to mediate, or they can be ordered to do so by a judge. If the parties fail to reach an agreement during mediation, they revert right back to the normal course of litigation. Alternatively, arbitration is often mandated by contracts and can lead to swifter resolu- tions than full-blown litigation. In arbitration, it is more likely that documents and testimony will be deemed admissible than in litigation, as the rules of evidence
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