The Expanding Scope of Judicial Review of Arbitration Awards: Where Does the Buck Stop?

Summary

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Arbitral awards are subject to judicial review under § 10 of the Federal Arbitration Act (FAA). The scope of this review is narrow. Section 10(a) of the FAA vests courts with jurisdiction to review an arbitration award only where the process has been "tainted in certain specific ways." This provision is the source of authority for most judicial review of arbitration awards. The flip side of expanding judicial review is limiting its scope. Public policy supports limited judicial participation in arbitration proceedings. Court decisions authorizing expanded judicial review by contractual agreement have been harshly criticized on the ground that this contravenes public policy. In sum, it is clear that judicial standards of review, like judicial precedents, are not the property of private litigants. That said, federal appellate courts must continue to develop predictable precedents involving statutory grounds for judicial review.

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Extract

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The Expanding Scope of Judicial Review of Arbitration Awards: Where Does the Buck Stop?

Arbitration is a contractual form of dispute resolution. It involves submitting the parties' dispute to one or more impartial decision makers for a final decision that is binding on the parties. Most often the parties agree to put an arbitration clause in their transaction documents (known as a future disputes clause); less often they agree to arbitrate a dispute after the dispute arises by entering into a submission agreement. The parties typically provide in their arbitration or submission agreement the range of issues to be decided by the arbitrator, the scope of relief the arbitrator can award, and many of the procedural aspects of the process itself. The role of the judiciary in the arbitration process is limited. Yet it cannot be said that there is a body of reliable, uniform precedents to guide parties when an appeal is appropriate on statutory or common law grounds.

This article examines the statutory and common law bases for judicial review of arbitration awards and how courts have interpreted them. Part I provides an overview of the legal grounds for judicial review under the Federal Arbitration Act (FAA). Part II discusses the common law "manifest disregard of the law" doctrine. Part III addresses the issue of parties establishing their own standard of judicial review. Part IV discusses various policy considerations that support the finality of arbitration awards.

In the early 20th century, arbitration agreements were made specifically enforceable by federal legislation. The first modern arbitration statute in the United States was New York's Arbitration Act of 1920.' Soon thereafter, Congress enacted the United States Arbitration Act of 1925, often referred to by U.S. practitioners as the Federal Arbitration Act (FAA) .2 The FAA represents strong pub...

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