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Arbitration Award Vacated

Arbitration Award Vacated  

Global support and appreciation has been gained by the movement towards alternative dispute resolution (ADR) procedures. Before a case goes to trial, several courts, at both state and federal levels, require mandatory mediation or other sort of settlement conference. Arbitration, however, remains a commonly accepted method for settling building conflicts. As the conflict settlement method of choice, many traditional type construction contracts contain mandatory arbitration. In trade papers, the use of mini-trials, formal agreements or other processes, short of an actual trial, to promote the handling and settlement of a conflict by the parties is commonly debated and suggested. The quest for a simple, cost efficient, and party managed means of resolving disputes has reached the level of a major force in the world of business. Everyone involved in business, particularly contractors, must pay attention to the possibilities and alternatives because, if not handled efficiently, a major conflict or breach of contract challenge may mean the financial death of a project and, in many cases, the entire construction company itself. 


Arbitration is a Viable Alternative 

The establishment of arbitration as an agreed or obligatory dispute settlement mechanism dates back much further, but it was only two decades ago that the Supreme Court of the United States made it clear that the old hostility of the judiciary to arbitration had vanished. The courts would then allow the parties to use this pioneering ADR method, instead of blocking arbitration at any stage. The Federal Arbitration Act, 9 USC section1, et seq, and the Uniform Arbitration Act implemented by most States, have established the arbitration mechanism that was once shunned and prohibited by the courts as a direct challenge to their authority with formal approval and comprehensive procedures. 

Arbitration was soon adopted and included in the building sector, the American Institute of Architect's General Conditions and other common type contracts as the negotiated method for resolving conflicts between contracting parties. More recently, as a remedy for constitutional breaches, including Title VII disputes and lawsuits under other employee rights acts, a mandatory pre-dispute arrangement to use arbitration has been permitted in employment contracts. 


Limited Grounds for Review of an Arbitration Decision 

A definitive and binding judgement on the merits of a dispute is not contemplated in certain ADR procedures, even though their use is mandatory. The addition of obligatory mediation or review by a "Dispute Review Board," before arbitration or litigation is approved, is rapidly becoming a favourite of many parties. Any standard form contracts enable the architect or engineer of record to request a dispute for a decision before resorting to other procedures. Although, in most cases, these initial review steps are not definitive and binding because the parties are considering a further review of the whole dispute by litigation or arbitration. 

It's different with arbitration. Where arbitration, either by means of a pre-dispute agreement or a post-dispute agreement between the parties, is obligatory, its decision shall be binding. The reasons for the review are very limited and do not, in any case, allow for a full re-examination and a new judgement on the merits. 

The grounds for appeal of an arbitration settlement are given by the Federal Arbitration Act and the related Uniform Arbitration Act. The investigation shall be limited to the vacation of an award granted on the grounds of wrongdoing or fraud, or where the arbitrators are clearly partial or unethical, or where the arbitrator is guilty of misconduct in refusing to accept a reasoned postponement of the proceedings or in refusing to hear evidence, or where the arbitrators exceed their powers or imperfectly exercise those powers in such a way that the decision should not be made in the event that the arbitrators exercise those powers. The manner in which arbitration is conducted and not the content of the arbitration decision itself revolves around these bases for vacating an award. Without their consent, arbitrators are not allowed to explain or justify their decision. The courts are obliged to confirm and implement the arbitration award unless there is any objective evidence that the arbitration proceeding has not been conducted fairly or that the arbitration award has been rendered on claims or issues not even submitted for settlement or that are not within the discretion of the arbitrators to determine because of the terms of the arbitration agreement itself. 


 This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.

  • Arbitration Award Vacated
  • Arbitration is a Viable Alternative
  • Limited Grounds for Review of an Arbitration Decision

BY : Shivani Kinniwadi

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