Judicial Review of Arbitral Awards
Antoine, Olivier, Dispute Resolution Journal
There is a "middle ground" that must be sought between "pure efficiency and abstract justice" that provides the proper scope of judicial review of arbitration awards, says Olivier Antoine. That middle ground is a narrow review of awards that works in tandem with court-created general principles "potentially applicable to all grounds of review."
Antoine provides a comprehensive examination of the statutory and nonstatutory or contractual grounds of judicial review against a backdrop of important evolving case law.
Arbitration is the process by which private parties choose to submit a dispute to a neutral third party: the arbitrator. The arbitrator will decide the dispute and render an award that is deemed to be final and binding.
However, if one of the parties is dissatisfied with the outcome, he may enter an action to vacate1 the award before a judge.2 Conversely, if the losing party refuses to comply with the award, the other party will have to request the confirmation3 of the award before a judge to have the award enforced.
Those actions introduce a judicial officer in the arbitration process or, to be more specific, after the arbitration process. The judge will review the award with the standards of review provided by section 10 of the Federal Arbitration Act and relevant case law.4
One could question the rationale of this review; the parties having bargained for arbitration to avoid litigation, it would seem fair to make them comply with the outcome of the dispute resolution mechanism they bargained for, whatever it may be. However, the raison d'etre of the judicial review of arbitration awards resides in the conflict of two different public policies: the public policy favoring arbitration and the general public interest in having an acceptable arbitration process.5 For example, it is contrary to this public interest to enforce an award if the arbitrator was corrupted' by one of the parties.'
The scope of judicial review of arbitration awards necessarily determines the utility of the arbitration process.8 If the law provides a broad review on the merits, arbitration could become a preliminary step to litigation, a mere advisory process, or simply a private trial court whose awards will be reviewed by an appellate judicial officer. Conversely, if the law does not provide judicial review of arbitration awards, one could consider this process as a sort of "inferior system of justice"9 where, for example, one could be subject to a biased arbitrator. A "middle ground" has to be sought between pure efficiency and abstract justice.
The easiest way to resolve this quandary is to adopt a narrow" review of arbitration awards and general principles that will avoid useless litigation over awards. In addition to the very rigid interpretation of statutory and nonstatutory grounds of review, courts have created general principles potentially applicable to all grounds of review.
First of all the award is presumed to be valid,12 and the burden of proving invalidity rests on the party challenging the award. Secondly, there is generally no review for errors or misinterpretation of fact or law.'3 In the same fashion, the arbitration proceeding would not be invalidated if rules of evidence or procedure applicable to trials were not applied.'4 Thirdly, the court will apply the "harmless error" rule to determine vacatur of the award; in other words, vacatur will only be granted if the alleged fact was prejudicial to the party contesting the award.
Statutory Grounds of Judicial Review
Section 10 of the FAA states several grounds for vacating an award in a domestic case. The most commonly advanced attack on awards relies on the "corruption, fraud, undue means" and "partiality" language of section 10(a)(1)(2). Section 10(a)(3) and 10(a)(4), respectively dealing with "misconduct" of arbitrators and arbitrators "exceeding powers," are the two other grounds embodied in the FAA. …