Litigation: Ways to Appeal Arbitral Awards
Consider these options if you prefer arbitration.
July 21, 2010 at 08:00 PM
4 minute read
The original version of this story was published on Law.com
When it comes to arbitration, corporations typically fall into one of the three categories: those who favor arbitration whenever it is appropriate for a particular transaction, those who will not agree to arbitration unless they have no alternative, and those who have no policy and, therefore, make ad hoc decisions whenever the issue is raised on a particular matter. Often, companies that have developed an anti-arbitration bias have done so because of a single, bad experience. All it takes is one case in which an arbitral tribunal reached an aberrant decision that was significantly deleterious to the company. Because of the very limited grounds for appealing arbitral awards, the company had no recourse and, as result, forswears arbitration companywide.
Thus, the “appeal” issue is somewhat paradoxical when it comes to arbitration. On the one hand, the finality of an arbitral award and the fact that there will be little or no time and money spent on the appeal of awards has historically been seen as a strength of arbitration. Yet others believe that the lack of an appeal makes arbitration too risky. Perhaps this is more readily understandable as a function of the size of the case. One prefers finality in the smaller cases, yet wants some type of recourse in the large dollar cases.
One manner in which some companies dealt with the issue was to include in their agreements provisions that expanded the grounds on which courts could vacate arbitral awards beyond those found in the New York Convention and the Federal Arbitration Act. The courts initially split on the issue of whether such provisions were enforceable. In Hall Street Associates, L. L. C. v. Mattel, Inc., 552 U.S. 576 (2008), however, the Supreme Court resolved the matter and held that parties may not, by agreement, expand on the statutory grounds for challenging arbitral awards.
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