Law Lessons from Fawzy v. Fawzy, 199 N.J. 456 (2009), A-38/39-08; July 1, 2009:

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Arbitration is “‘a method of dispute resolution involving one or more neutral third parties who are usu[ally] agreed to by the disputing parties and whose decision is binding.’” Wash. Auto. Co. v. 1828 L St. Assocs., 906 A.2d 869, 878 (D.C. 2006) (quoting Black’s Law Dictionary 112 (8th ed. 2004)). “Our courts have long noted our public policy that encourages the ‘use of arbitration proceedings as an alternative forum.’” Wein v. Morris, 194 N.J. 364, 375-76 (2008) (quoting Perini Corp. v. Greate Bay Hotel & Casino, Inc., 129 N.J. 479, 489 (1992)).

Arbitration’s object is the final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner, of the controversial differences between the parties. Arbitration can attain its goal of providing final, speedy and inexpensive settlement of disputes only if judicial interference with the process is minimized; it is, after all, meant to be a substitute for and not a springboard for litigation.
[Barcon Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179, 187 (1981).]

“Although arbitration is traditionally described as a favored remedy, it is, at its heart, a creature of contract.” Kimm v. Blisset, LLC, 388 N.J. Super. 14, 25 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007); see also McKeeby v. Arthur, 7 N.J. 174, 181 (1951) (“An arbitration agreement is a contract and is subject, in general, to the legal rules governing the construction of contracts.”). It is for that reason that binding arbitration cannot be imposed by judicial fiat.

“In the absence of a consensual understanding, neither party is entitled to force the other to arbitrate their dispute. Subsumed in this principle is the proposition that only those issues may be arbitrated which the parties have agreed shall be.” In re Arbitration Between Grover & Universal Underwriters Ins. Co., 80 N.J. 221, 228-29 (1979). As the Court stated in Garfinkel v. Morristown Obstetrics & Gynecology Associates, P.A., 168 N.J. 124, 132 (2001):
In respect of specific contractual language, “[a] clause depriving a citizen of access to the courts should clearly state its purpose. The point is to assure that the parties know that in electing arbitration as the exclusive remedy, they are waiving their time-honored right to sue.” Marchak [v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993)]. As we have stressed in other contexts, a party’s waiver of statutory rights “must be clearly and unmistakably established, and contractual language alleged to constitute a waiver will not be read expansively.” Red Bank Reg’l Educ. Ass’n [v. Red Bank Reg’l High Sch. Bd. of Educ., 78 N.J. 122, 140 (1978)]. In the same vein, a “court may not rewrite a contract to broaden the scope of arbitration[.]” Yale Materials Handling Corp. v. White Storage & Retrieval Sys., Inc., 240 N.J. Super. 370, 374 (App. Div. 1990).

In 2003, the Legislature adopted the Arbitration Act, which in most respects mirrors the Uniform Arbitration Act. L. 2003, c. 95. The Act, which exempts arbitration between employers and employees under collective bargaining agreements, N.J.S.A. 2A:23B-3(a), recognizes the contractual nature of the arbitration remedy and sets forth the details of the arbitration procedure that will apply unless varied or waived by contract, N.J.S.A. 2A:23B-4. Within the Act are specific provisions governing the arbitration process, including those detailing the method for initiation of the proceedings, N.J.S.A. 2A:23B-9; the conduct of the arbitration process itself, N.J.S.A. 2A:23B-15; and the issuance of the award, N.J.S.A. 2A:23B-19. The Act prescribes standards for confirmation, N.J.S.A. 2A:23B-22; vacation, N.J.S.A. 2A:23B-23; and modification of an award, N.J.S.A. 2A:23B-24. Under the Act, a court will vacate an arbitration award only if:
(1) the award was procured by corruption, fraud, or other undue means;
(2) the court finds evident partiality by an arbitrator; corruption by an arbitrator; or misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding;
(3) an arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to consider evidence material to the controversy, or otherwise conducted the hearing contrary to section 15 of this act, so as to substantially prejudice the rights of a party to the arbitration proceeding;
(4) an arbitrator exceeded the arbitrator’s powers;
(5) there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection pursuant to subsection c. of section 15 of this act not later than the beginning of the arbitration hearing; or
(6) the arbitration was conducted without proper notice of the initiation of an arbitration as required in section 9 of this act so as to substantially prejudice the rights of a party to the arbitration proceeding.
[N.J.S.A. 2A:23B-23(a).]

A modification of the award may be ordered by the court if:
(1) there was an evident mathematical miscalculation or an evident mistake in the description of a person, thing, or property referred to in the award;
(2) the arbitrator made an award on a claim not submitted to the arbitrator and the award may be corrected without affecting the merits of the decision upon the claims submitted; or
(3) the award is imperfect in a matter of form not affecting the merits of the decision on the claims submitted.
[N.J.S.A. 2A:23B-24(a).]

The scope of review of an arbitration award is narrow. Otherwise, the purpose of the arbitration contract, which is to provide an effective, expedient, and fair resolution of disputes, would be severely undermined. Barcon Assocs., supra, 86 N.J. at 187.

An arbitrator, like a judge, is supposed to rule based on the evidence adduced by the parties during the arbitration proceedings and not on information that he has privately gleaned from other sources.

[In contrast, see: What is Mediation?]
[See also: N.J. Court Rule 1:40 -- COMPLEMENTARY DISPUTE RESOLUTION PROGRAMS]

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