Can an arbitration award be vacated or appealed?
In a word, yes. Whether an arbitration is governed by the Federal Arbitration Act (which covers contracts involving interstate commerce) or the Revised Florida Arbitration Code (which covers only intrastate matters), a party can petition a court to vacate the arbitration award.
Code provisions governing the procedure for vacating an arbitration award, however, are designed to discourage parties from challenging the award. For instance, under Florida law, only a handful of grounds exist for vacating an arbitration award:the award was procured by fraud, corruption or other undue means; the arbitrator displayed “evident partiality” to one side, was corrupt, or committed misconduct; the arbitrator refused to continue the hearing upon showing of sufficient cause; the arbitrator exceeded his or her powers; the parties never agreed to arbitrate and maintained their objection throughout the proceeding; and the arbitration was conducted without proper notice of the hearing.
Under federal law, four grounds exist for vacating an arbitration award, as set forth in 9 U.S.C. § 10(a):the award was procured through corruption, fraud, or undue means; the arbitrator displayed “evident partiality” or corruption; the arbitrators are guilty of misconduct for refusing to postpone the final hearing; or the arbitrators exceeded their powers. While certain courts previously concluded that additional grounds exist for vacating an award, in 2008, the U.S. Supreme Court held in Hall Street Associates, L.L.C. v. Mattel,[1] that these statutory grounds were exclusive, and no other justification for vacating an arbitration award exists.
A petition to vacate should be approached with great caution. The Eleventh Circuit Court of Appeals, the federal appellate court for Florida, has held that the arbitrator is intended to be the “last decision maker in all but the most unusual cases.”[2] As such, it has instructed federal trial courts in Florida to impose sanctions against parties who seek to vacate arbitration awards without an objectively reasonable basis to do so. Courts have not shied away from doing so. The lesson here is that a petition to vacate should not be filed as a matter of course, and a party must carefully consider the pros and cons of filing a petition before doing so.
Florida state courts have not taken the same hard line against petitions to vacate arbitration awards. Florida law does permit a party to move for sanctions when an opposing party’s claim or defense is not supported by material facts or then-existing law. Nevertheless, Florida courts have found that “merely attempting to relitigate issues submitted to arbitration is not sufficient to satisfy the required finding, essential to liability under that [sanctions] statute, that there was a ‘complete absence of a justiciable issue of either law or fact . . . .'”[3]That being said, a party should still consider carefully any plan to challenge an arbitration award, to avoid fighting a costly sanctions battle.
[1]552 U.S. 576 (2008).
[2]B.L. Harbert Int’l, L.L.C. v. Hercules Steel Co., 441 F.3d 905, 913 (11th Cir. 2006), abrogated on other grounds by Frazier v. CitiFinancial Corp., 604 F.3d 1313, 1321 (11th Cir. 2010).
[3] Harris v. Haught, 435 So. 2d 926, 929 (Fla. 1st DCA 1983).
Please Note:Rabin Kammerer Johnson provides these FAQ’s for informational purposes only, and you should not interpret this information as legal advice. If you want advice as to how the law might apply to the specific facts and circumstances of your case, please contact one of our attorneys.
