Law Lessons from DIA of Jersey City v. Fogari, App. Div. (A-2593-07T1; Decided February 27, 2009):

Picture by tunnelarmr

The Alternative Procedure for Dispute Resolution Act (“APDRA”), N.J.S.A. 2A:23A-1 to -19 was created to provide:
a new procedure for dispute resolution which would be an alternative to the present civil justice system and arbitration system of settling disputes. It is intended to provide a speedier and less expensive process for resolution of disputes than traditional civil litigation and would provide parties with rights that are not currently available under New Jersey’s Arbitration Act.
[Governor's Reconsideration and Recommendation Statement to Assembly Bill No. 296, at 1 (Jan. 7, 1987).]

The APDRA “is not self-executing. It is a voluntary procedure that only applies if it is invoked in a written agreement.” Mt. Hope Dev. Assocs. v. Mt. Hope Waterpower Project, L.P., 154 N.J. 141, 151 (1998). Parties to an APDRA proceeding are entitled to engage in discovery. N.J.S.A. 2A:23A-10. The dispute is heard by an umpire, N.J.S.A. 2A:23A-9, who is required to make an “award on all issues submitted for alternative resolution in accordance with applicable principles of substantive law.” N.J.S.A. 2A:23A-12(e). The award must be reduced to a writing, must “state findings of all relevant material facts, and make all applicable determinations of law.” N.J.S.A. 2A:23A-12(a).

Under the APDRA, an umpire’s award may be set aside or modified by the Superior Court on the following grounds:
c. The award shall be vacated on the application of a party who either participated in the alternative resolution proceeding or was served with a notice of intention to have alternative resolution if the court finds that the rights of that party were prejudiced by:
(1) Corruption, fraud or misconduct in procuring the award;
(2) Partiality of an umpire appointed as a neutral;
(3) In making the award, the umpire’s exceeding their [sic] power or so imperfectly executing that power that a final and definite award was not made;
(4) Failure to follow the procedures set forth in this act, unless the party applying to vacate the award continued with the proceeding with notice of the defect and without objection; or
(5) The umpire’s committing prejudicial error by erroneously applying law to the issues and facts presented for alternative resolution.
[N.J.S.A. 2A:23A-13(c).]

Moreover, subsection 13(b) of the APDRA requires that the umpire’s decision be founded upon “substantial evidence”:
In considering an application for vacation, modification or correction, a decision of the umpire on the facts shall be final if there is substantial evidence to support that decision; provided, however, that when the application to the court is to vacate the award pursuant to paragraph (1), (2), (3), or (4) of subsection c., the court shall make an independent determination of any facts relevant thereto de novo, upon such record as may exist or as it may determine in a summary expedited proceeding as provided for by rules adopted by the Supreme Court for the purpose of acting on such applications.
[N.J.S.A. 2A:23A-13(b).]

By contrast, the level of judicial review for awards made under the Arbitration Act, N.J.S.A. 2A:24-8, is essentially confined to whether the arbitrators engaged in wrongdoing or otherwise acted outside of the scope of their authority:
The court shall vacate the award [made under the Arbitration Act] in any of the following cases:
a. Where the award was procured by corruption, fraud or undue means;
b. Where there was either evident partiality or corruption in the arbitrators, or any thereof;
c. Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause being shown therefor, or in refusing to hear evidence, pertinent and material to the controversy, or of any other misbehaviors prejudicial to the rights of any party;
d. Where the arbitrators exceeded or so imperfectly executed their powers that a mutual, final and definite award upon the subject matter submitted was not made.
When an award is vacated and the time within which the agreement required the award to be made has not expired, the court may, in its discretion, direct a rehearing by the arbitrators.
[N.J.S.A. 2A:24-8.]

These limited grounds for review in the Arbitration Act substantially comport with the Court’s holding in Tretina, a case which arose in the context of reviewing a private arbitration award. See Tretina v. Fitzpatrick & Assocs., 135 N.J. 349, 352 (1994).

Although the judicial review provisions in the Arbitration Act and in the APDRA somewhat overlap, in that both statutes authorize an award to be set aside in instances of corruption, misconduct and the like, the APDRA is more demanding. The latter’s stiffer approach is particularly reflected in the APDRA’s requirements that, among other things, the award be supported by “substantial evidence,” N.J.S.A. 2A:23A-13(b), and that the award not be the product of “prejudicial error in applying applicable law to the issues and facts presented for alternative resolution.” N.J.S.A. 2A:23A-13(f).

 Print This Post