Here is the scenario, Transpac Corp. and Alliance, Inc., agree to a contract that includes a binding arbitration clause. After a dispute arises between the parties, the case goes to arbitration. The arbitrator finds in Transpac's favor. Alliance files a lawsuit, alleging that the award should not be enforced because the arbitrator made a minor error in her findings of fact. The court will likely:
a. review the merits of the dispute.
b. set aside the arbitrator's award.
c. review the sufficiency of the award.
d. none of the above.Please explain, the reason. Thank You.
One would have to know the "minor" fact error, but NY courts rarely overturn an arbitration award. The State Standard and the Federal Standard are different, but both strongly favor enforcement of an arbitration award. If their only basis is "minor error in her findings of fact" neither State nor Federal law wold support overturning the award. Both a State and Federal Court will review the merits of he award, and then likely deny the challenge, BUT without knowing more, it is impossible to predict what the court will do, although challenges to arbitration awards are not favored and are rarely successful.
You do not indicate what state's law applies, which could affect the answer. In New York, the answer would be (d).
The grounds for vacating an arbitration award in NY are limited, and are set forth in Section 7511 of the CPLR. As stated in 7511(b), an award may be vacated in NY only where a court finds that the rights of a party to the arbitration were prejudiced by (a) corruption, fraud or misconduct in procuring the award, (b) bias on the part of an arbitrator who was appointed as a neutral; (c) an arbitrator exceeding his/her authority, or so imperfectly executing it that a final and definite award was not made, or (d) failure to follow the procedures set forth in Article 75 of the CPLR, unless the party complaining about it knew of such failure and continued with the arbitration without objection.
This answer does not establish an attorney-client relationship. It is for informational purposes only. It is not intended as specific legal advice regarding your case, and the answer could be different if all of the facts were known.
A minor error in the findings of fact are very unlikely to provide grounds to vacate the arbitrator's award. The Federal Arbitration Act sets out very narrow grounds for vacatur in section 10:
Where the award was procured by corruption, fraud, or undue means.
Where there was evident partiality or corruption in the arbitrators, or either of them.
Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
Where an award is vacated and the time within which the agreement required the award to be made has not expired the court may, in its discretion, direct a rehearing by the arbitrators.
Assuming the contract affected interstate commerce, the Federal act would apply. Under some rules, such as the American Arbitration Association, the arbitrator can make very limited corrections to an award once the award has been issued. They may correct typographical errors or mathematical errors, but that is about it.
Two US Supreme Court cases, "Prima Paint, et. al" and "Buckeye Check Cashing, et. al." make it pretty clear that small errors by arbitrators are not grounds to vacate an award.
This AVVO entry is for educational purposes only and does not constitute legal advice nor does it create an attorney-client relationship.
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