BFV Perspectives, Georgia Business Disputes, | May 29, 2018

Challenging Arbitration Awards Under Federal Arbitration Act—Part II

Today’s post continues a multi-part series explaining options for challenging arbitration awards. This post focuses on the grounds for modifying awards under the Federal Arbitration Act (“FAA”, 9 U.S.C. § 11). 

This series previously discussed “Challenging Arbitration Awards Under the Georgia Arbitration Code (Part I),” “Challenging Arbitration Awards Under the Georgia Arbitration Code (Part II),” and “Challenging Arbitration Awards Under the Federal Arbitration Act (Part I).”

A party may apply to modify an arbitration award in the federal court in and for the district in which the award was originally made. Obtaining a modification is difficult because the FAA imposes a heavy presumption in favor of confirmation of arbitration awards.  Accordingly, a court’s review is narrowly limited and an award may only be modified under the following circumstances:

  1. There was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing or property referred to in the award;
  2. The arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted; or
  3. The award is imperfect in matter of form not affecting the merits of the controversy.

Keep in mind that the party challenging the arbitration award bears the burden of asserting both sufficient and plausible grounds for doing so. For example, in Bryant v. CFRA Holdings, LLC, 2018 WL 1426363, at *2 (N.D. Ga. Jan. 16, 2018), the movant argued that an arbitration award should be modified because “there was a ‘material mistake’ in the calculation and determination of the award.” 

Even though modification is permissible on this basis pursuant to 9 U.S.C. § 11(a), the Northern District of Georgia denied the request, among other reasons, because the movant failed to also include plausible factual allegations to support his claim.  See id. 

To initiate a challenge, a party must file an application to modify the award with the appropriate federal court within three (3) months after the award is filed or delivered.  

BFV Perspectives, Georgia Business Disputes, | May 29, 2018