This is the first of a multi-part series that will explain how to challenge unfavorable arbitration awards. Today’s article will focus on the grounds for vacating awards under the Georgia Arbitration Code (O.C.G.A. § 9-9-13 et seq.). Future installments will look at challenging awards under the Federal Arbitration Code (9 U.S.C. § 1 et seq.) and modifying arbitration awards under both state and federal rules.
A trial court’s ability to vacate an arbitration award is severely limited so as not to frustrate the legislative purpose of the Georgia Arbitration Code, which is to avoid litigation by resorting to arbitration. This caveat aside, the Georgia Arbitration Code provides five grounds for vacating an award. An award shall be vacated if the rights of the challenging party were prejudiced by any of the following:
- Corruption, fraud, or misconduct in procuring the award;
- Arbitrator bias;
- The arbitrator overstepping her authority or failing to make a final and definite award;
- Failure to follow the proper procedure required under the Georgia Arbitration Code, unless the party moving to vacate continued to arbitrate despite notice of this procedural failure and made no objection to proceeding; or
- The arbitrator’s manifest disregard for the law.
If an arbitration award is entered against a party who neither participated in the arbitration nor was served with an arbitration demand, that party can assert any of the previous arguments or rely upon one of three additional arguments:
- The parties never entered into a valid arbitration agreement;
- Failure to comply with the parties’ arbitration agreement; or
- The arbitrated claim is time-barred.
One of these grounds must apply in order for a trial court vacate an award. To initiate a challenge, a party must file an application to vacate arbitration award in the appropriate court within three months after receiving a copy of the award to be challenged.
Additionally, under certain circumstances, a trial court may refuse to confirm an arbitration award if a party challenges the subject matter jurisdiction of the arbitrator by, for example, claiming that the parties never had a valid agreement to arbitrate. A subject matter jurisdiction defense can be raised at any point prior to entry of the trial court order confirming the award.
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.