Despite decades of federal and state jurisprudence favoring arbitration as an efficient, economical alternative to the courtroom, recent trends across the New York Supreme Court, Appellate Division suggest that arbitration may not be as "final" or "binding" as it is purported to be. Strict federal and state standards for judicial review of arbitration awards prohibit courts from considering the merits of an arbitration award, even when the award violates the court's sense of justice. These standards were specifically designed to preserve the efficiency and expediency of arbitration by assuring that parties treat arbitration awards as final decisions, not as first steps on the way to the court room. However, there is evidence that New York courts often choose not to leave these awards untouched. This is particularly true in the labor and employment context, despite the fact that under both federal and state law, the standards for vacating labor and employment awards are intended to be stricter than the review of awards generally.
This comment is designed to outline the strict federal and state standards for vacating arbitration awards, to explore the policy considerations underlying these standards, and to explain both how New York's appellate courts apply these standards, and why their applications might differ from the idealistic notion of "final and binding" arbitration. The comment will begin with a methodology, explaining a study that was conducted specifically to support this comment's thesis. It will identify the source of many of the
statistical figures used throughout this comment to support conclusions concerning Appellate Division rates of vacatur. Next, the national policy favoring arbitration of contractual disputes will be introduced and compared to New York's policy of judicial deference toward arbitration awards. The benefits of arbitration will also be explored. The comment will then lay out the statutory and common law standards used by federal and New York courts to determine when and under what circumstances arbitration awards may be vacated. These standards will then be compared and contrasted.
The next part will fully explain the results of the study detailed in the methodology section. It will list the percentage of arbitration awards vacated by the New York Appellate Division's four judicial departments, as identified by a sample study of nearly one hundred and fifty cases over the past ten years. It will specifically identify how many arbitration awards were vacated by each department in these cases. It will also compare vacatur rates in labor-employment cases with vacaturs in other types of cases. Next will be a full explanation of what these figures could actually mean in practice. This section will attempt to explain any potential disconnect between the national policy of deference toward arbitration awards and the actual number of awards being vacated. It will offer explanations for the data, and will postulate as to whether the case study portrays the current state of arbitration accurately.
Finally, the conclusion will offer different possibilities for the future of arbitration. Specifically, it will explore whether a reinvigorated concept of "final and binding" arbitration awards might restore faith in the arbitral system.
The purpose of this comment is to evaluate New York's treatment of arbitration awards. Although studies have been conducted on the number of arbitration awards vacated in federal courts nationwide, no such study existed for New York courts prior to this comment's publication. Therefore, a study was conducted specifically for the purposes of this comment in order to test some of the hypotheses that the comment was intended to explore.
The study began with a Westlaw search using the search terms "7511," (1) "vacate," and "arbitration" in different combinations. This
search was then narrowed to decisions from 1999 to the present, based upon the belief that this timeframe would provide a representative sample. …