Article

• Publication year: 2023
• Pages: 12

Article Vol. 36 No. 3 Pg. 12 Utah Bar Journal June, 2023

May, 2023

Vacating Arbitration Awards: What is the Standard?

by Craig E. Hughes

Introduction

As arbitration becomes more acceptable, it is not surprising that parties who lose in arbitration often do not easily accept awards issued by arbitrators. It is even less surprising that losing parties therefore regularly ask district courts to vacate arbitration awards.

Unfortunately, Utah's two current judicial standards for vacating arbitration awards are confusing. This is the express conclusion of the Utah Supreme Court in two important 2022 cases: Ahhmigo, LLC v. Synergy Co. of Utah, LLC, 2022 UT 4, ¶¶ 37-40, 506 P.3d 536, and Taylor v. Taylor, 2022 UT 35, ¶¶ 75-78, 517 P.3d 380.

The confusing standards for vacating arbitration awards are not helpful to litigants or the district courts. Litigants and courts are left with a lack of understandable, stable standards on which to rely. Fortunately, though, the Ahhmigo and Taylor courts recognize the problem. In dicta, the Ahhmigo and Taylor courts significantly clarify the link between the two different confusing standards for vacating arbitration awards and in the process express their firm dislike for one of the standards and approval of the other standard. But unfortunately - in the view of Ahhmigo and Taylor - the court has not yet been asked by litigants to abandon the particular standard the court has questioned and disfavored since at least 1996 in Buzas Baseball, Inc. v. Salt Lake Trappers, Inc., 925 P.2d 941 (Utah 1996).

In brief, in Ahhmigo and Taylor, the court drops all hints found in the numerous cases between 1996 and 2022, and all but begs litigants in a future arbitration case to expressly and formally request that the court abandon the disfavored "manifest disregard of the law" standard, thus allowing the court to formally adopt the favored "exceeding authority" standard as a guide to litigants and district courts in seeking and ordering vacatur of arbitration awards.

The Issues

How should litigants and judges navigate the current confusion regarding vacatur of arbitration awards? And what are the best options available to litigants who want to vacate or affirm an arbitration award?

Current Law

Currently, Utah litigants and courts may rely on two related but differing standards in vacating or modifying an arbitration award. The first standard is described by the appellate courts as the "manifest disregard of the law" standard. As the Utah Supreme Court clarified in Ahhmigo and Taylor, the manifest disregard standard is a "judicially created doctrine" derived from the Utah Uniform Arbitration Act (UUAA). The manifest disregard standard essentially means that if a court determines that an arbitrator, when issuing an award, manifestly disregarded generally established statutory and judicial law governing the particular conflict, then the court may vacate the arbitration award. Ahhmigo, 2022 UT 4, ¶ 39; Taylor, 2022 UT 35, ¶¶ 76-77.

So on one hand, we have a "judicially created doctrine" for vacating arbitration awards - the manifest disregard standard. On the other hand, in the words of the Ahhmigo and Taylor courts, we have a legislatively created doctrine for vacating arbitration awards.

This second, legislatively created standard is described in shorthand by the Ahhmigo and Taylor courts as the "exceeding authority" standard or is described more generally in terms of the UUAA. The "exceeding authority" term used by the courts comes from the legislatively created UUAA, which reads, "the court shall vacate an award made in the arbitration proceeding if .. an arbitrator exceeded the arbitrator's authority." Utah Code Ann. § 78B-11-124(1)(d).

Subparagraph (d) is just one of several legislatively created grounds for vacating an arbitration award found in the UUAA, id. § 78B-11-124(1)(a)-(f), but the Ahhmigo and Taylor courts

use subparagraph (d) as shorthand for all the grounds to make its important points regarding the distinction between the "manifest disregard" standard and the "exceeding authority" standard.

Since at least 1996, when the Utah Supreme Court issued Buzas, Utah district courts have relied most heavily on the judicially created manifest disregard standard in vacating arbitration awards. But the supreme court has been less than enthusiastic about affirming the validity of this standard. Further, courts' analyses of the relation between the manifest disregard and...