A Litigator's Guide to Vacatur: Overturning an Arbitration Award

• Publication year: 2023
• Author: Written by Dana Welch

A LITIGATOR'S GUIDE TO VACATUR: OVERTURNING AN ARBITRATION AWARD

Written by Dana Welch^*

Despite your best efforts, you've come out on the losing side in arbitration. What are your options?

You can't appeal an arbitration award like in litigation. It may seem counterintuitive, but the lack of appeal is one reason parties opt for arbitration in the first place. Court cases, including appeals, can take years to resolve. The average arbitration typically takes less than a year. At its best, arbitration provides efficiency and, importantly, finality allowing disputants to move on with their businesses and lives.

This article is the flip side to another article written by this author in collaboration with Charles J. Mosley and Kelly Turner: Understanding Vacatur and Applications for Vacatur (2023) Dispute Resolution Journal, volume 77. That article, written from the arbitrator's perspective, explored how arbitrators can avoid applications for vacatur and vacatur. This article, however, written from the litigator's perspective, focuses on the possibilities for overturning an arbitral award. We provide a guide.

I. CONSIDER YOUR ODDS

Before deciding to file a vacatur application, you — and your client — should be aware about your chances of prevailing. While not nothing, your odds are slim. Studies of federal and state cases have found that, depending on the ground asserted, as few as 2.4% to 18% of vacatur petitions succeed.

That's because the grounds for overturning an arbitral award are strictly circumscribed. Your application for vacatur must be based on one of the statutory grounds described below, or one of the additional grounds California courts recognize, also addressed below.

II. THE STATUTORY GROUNDS — AND JUDICIAL GLOSS

The Federal Arbitration Act (FAA) provides four grounds for vacatur:

• Award procured by "corruption, fraud or undue means";
• "[E]vident partiality or corruption" in the arbitrators;
• The "arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced"; and

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• The "arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made."

(9 U.S.C. § 10(a).)

Since most disputes involve interstate commerce, the FAA provides the basis for the majority of vacatur petitions. However, parties are free to contract in their arbitration agreements for the application of the California Arbitration Act. That Act provides grounds for vacatur closely tracking those of the FAA. (See Code Civ. Proc., § 1285.4.)

California courts recognize two additional bases for vacatur: manifest disregard of the law, and ordering a remedy contrary to public policy.

A. "EXCEEDING POWERS"

"Exceeding powers" is the most common ground on which parties seek, and courts grant...