APPEALING ARBITRATIONS IS….UNAPPEALING
Updated: Dec 19, 2021
Over the past two years, using mediations and arbitrations to dispose of cases has exponentially increased. Mediations work when the parties can collaborate towards a settlement of their case. Arbitrations have also proven to be very popular and effective in bypassing courts to accelerate obtaining a decision from an individual arbitrator, or via a panel. Arbitrations are effective in disposition of cases because
They can jump a case to the head of the line
There is an openness and flexibility in having motion practice heard by the arbitrator
The case can be disposed of in a fraction of the time it takes for a case to be considered, heard and tried by the courts
The overwhelming majority of cases do not provide an easy method to appeal, thus effectively disposing of the case
These points make arbitration attractive (and cost-effective); however, I believe the difficulty in appealing a case via arbitration is what sets this type of ADR apart.
First, New York courts have a long history of narrowly construing the grounds for non-recognition of arbitral awards, which effectively takes away any legitimacy questions. Second, a request to add an issue post-decision or attempting to re-open a case once a decision is made is not up for consideration under New York law. The Court of Appeals, under Hanson & Co v. Everlast World’s Boxing Headquarters, 2009 NY Slip Op 07328, has held that “an arbitrator may not reconsider an award - regardless of whether the request is couched as a clarification or modification - if the matter was not previously raised in arbitration.” This highlights the importance of making sure issues are defined clearly and that all issues are appropriately raised prior to an award being decided.
Third and importantly, New York Courts have a long history of favoring the enforcement of arbitration awards and very narrowly construing any grounds for vacatur. This falls in line with international practice and follows the New York Convention, dating back to 1959. The grounds to be considered are that, 1) the award was procured by corruption, fraud or undue means; 2) there was evident partiality or corruption by the arbitrators; 3) the arbitrators were guilty of misconduct in refusing to hear evidence pertinent and material to the controversy or of any other misbehavior by which the rights of any party have been prejudiced; or 4) the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. The US Supreme Court has held these criterion are exclusive. The bar is therefore set quite high to reverse the ruling of an arbitrator.
Courts have held that an arbitration award must be upheld when the arbitrator offers “even a barely colorable justification for the outcome reached.” NSB Advisors v. CL King Associates, 2018 NY Slip Op 32533. It has even been held that mere errors of law are insufficient grounds to vacate an arbitral award. Matter of Yarmak v. Pension Financial Services Inc., 2017 NY Slip Op 00433. Yarmak exemplifies the deferential treatment given to arbitrators under New York Law and the narrow grounds under which vacatur or modification is permitted under CPLR 7511.
New York has a strong public policy favoring arbitrations, which is why courts will only consider an appeal involving extreme action taken by an arbitrator. In addition to getting finality through the arbitral process, the benefits of utilizing arbitrations allow for
calling witnesses, presenting evidence, bringing motions and having a hearing. It is essentially an expedited bench trial. The client gets finality and instead of a case taking years to be resolved, it can be disposed of within months.
With all of this in mind, trial attorneys should want an experienced arbitrator and preferably one with judicial experience. As a former NYS Supreme Court Justice engaged in arbitrations at Rosenbaum Mediations, I bring over fourteen years of experience successfully resolving thousands of cases and issuing numerous decisions at bench trials and in motion practice. Additionally, I have the necessary experience to arbitrate cases of any size and complexity. I have published numerous decisions and have been known for getting matters resolved in a very timely manner.
The courts are doing their very best to move their heavy caseloads along, but it is still a long wait for civil jury or bench trials to get on the docket. Consider fast tracking your case by using ADR and choosing an experienced, retired but active judge to arbitrate your dispute!
~ Hon. Matthew Rosenbaum (ret.) is a retired NYS Supreme Court Justice and founder of Rosenbaum Mediations, PLLC. He has resolved thousands of cases, both small and highly complex. He currently has resolved over 96% of ADR matters. For more information, go to www.RosenbaumMediations.com.