This is the second of a multi-part series explaining how to challenge unfavorable arbitration awards. Today’s article will focus on the grounds for vacating awards under the Federal Arbitration Act (FAA) (9 U.S.C. § 10). Future installments will discuss modifying arbitration awards under both state and federal rules.
As is true of Georgia courts under the Georgia Arbitration Code, a court’s ability to vacate an arbitration award under the FAA is severely limited so as not to frustrate the legislative purpose of avoiding litigation by utilizing arbitration. However, Congress also intended that both parties to an arbitration are entitled to an impartial tribunal. Thus, an arbitration award may be vacated under the following circumstances:
- where the award was procured by corruption, fraud, or undue means;
- where there was evident impartiality or corruption in the arbitrators, or either of them;
- where the arbitrators were guilty of misconduct in refusing to postpone the arbitration hearing even where sufficient cause was shown, or in refusing to hear evidence pertinent and material to the controversy; or any other misbehavior by which the rights of any party have been prejudiced; or
- where the arbitrators exceeded their power, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
Typically, to initiate a challenge under the FAA, a party must file its motion to vacate the award in federal district court within three months after the award is filed or delivered. Specifically, unless otherwise specified in the parties’ underlying arbitration agreement, the application should be made in the district in which the original arbitration award was made.
In addition to the parties to an arbitration, a third-party may make an application to vacate arbitration awards, under certain circumstances, if that third-party is adversely affected or aggrieved by the award.
The first installment of this series focused on the grounds for vacating awards under Georgia Arbitration Code (O.C.G.A. § 9-9-13). If you would like guidance on whether you might be able challenge an arbitration award or have any other questions about arbitration, please contact me.