When contractual limits on arbitral authority are not heeded, arbitrator exceeds his powers


Arbitration, as a vehicle through which parties may resolve disputes, is favored in New Jersey. Malik v. Ruttenberg, 398 N.J. Super. 489, 494-95 (App. Div. 2008). Arbitration is “‘meant to be a substitute for and not a springboard for litigation.'” N.J. Tpk. Auth. v. Local 196, I.F.P.T.E., 190 N.J. 283, 292 (2007) (quoting Local No. 153, Office & Prof’l Emp. Int’l Union v. Trust Co. of N.J., 105 N.J. 442, 449 (1987)). Therefore, where the parties elect arbitration as the forum for resolution of a dispute, it “operates as a trial court, and [j]udicial review of [the awards rendered by it] is extremely narrow, generally confined to matters of corruption or errors appearing on the face of the award.” Ukranian Nat’l Urban Renewal Corp. v. Joseph L. Muscarelle, Inc., 151 N.J. Super. 386, 396 (App. Div.), certif. denied, 75 N.J. 529 (1977).

Because arbitration is a favored remedy in New Jersey, a court will vacate an arbitration award only under limited circumstances. Fawzy v Fawzy, 199 N.J. 456, 470 (2009). To do otherwise, would be to severely undermine its purpose, which is to provide an “effective, expedient, and fair resolution of disputes.” Ibid. The limited circumstances upon which a court may vacate an arbitration award include, as alleged here, “evident partiality by an arbitrator” and if an arbitrator exceeded the arbitrator’s powers. N.J.S.A. 2A:23B-23(a) (2) and (4).

Arbitrators exceed the scope of their powers when they disregard the terms of the parties’ contract or rewrite the contract for the parties. Cnty. Coll. of Morris Staff Assoc. v. Cnty. Coll. of Morris, 100 N.J. 383, 391 (1985). See also Commc’ns Workers of Am. v. Monmouth Cnty. Bd. of Soc. Servs., 96 N.J. 442, 448 (1984) (noting that when contractual limits on arbitral authority are not heeded, arbitrator exceeds his powers). To be enforced, an arbitration award must draw its essence from the terms of the agreement executed between the parties. Cnty. Coll. of Morris Staff Assoc., supra, 100 N.J. at 392. “When the arbitrator[s’] words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.” Policemen’s Benevolent Ass’n v. City of Trenton, 205 N.J. 422, 429 (2011).

An arbitrator’s factual determinations are not reviewable by a court. Ukrainian Nat’l, supra, 151 N.J. Super. at 396. Furthermore, a court reviewing an arbitrator’s decision may not substitute its own judgment for that of the arbitrator, “regardless of the court’s view of the correctness of the arbitrator’s interpretation.” N.J. Transit Bus Operations, Inc. v. Amalgamated Transit Union, 187 N.J. 546, 554 (2006).

NOTE from Paul G. Kostro, Esq.: If you are interested in Mediation; or have issues relating to Divorce, Domestic Violence, Child Support; Landlord-Tenant Matters; Contracts; Business Formation or Disputes; or Other Legal Matters, please call me to schedule an appointment — I can be reached by telephone at (908)232-6500; or by Email.


NOTE: My Law Office is located at 116 South Euclid Avenue, Westfield, Union County, NJ. Telephone: 908-232-6500; Paul@Kostro.com

NOTE: This Blog/Blawg, NJ Family Issues, is managed by Paul G. Kostro, Esq., an attorney/lawyer/mediator and collaborative law practitioner in Westfield, Union County, New Jersey.

NOTE: My legal and mediation services are offered to clients in Fanwood 07023; Garwood 07027; Kenilworth 07033; Mountainside 07092; New Providence 07974; Roselle Park 07204; Roselle 07203; Elizabeth 07201; Linden 07036; Plainfield 07060; Rahway 07065; Summit 07901; Westfield 07090; Berkeley Heights 07922; Clark 07066; Cranford 07016; Hillside 07205; Scotch Plains 07076; Springfield 07081; Union 07083; Winfield; Carteret 07008; Dunellen 08812; East Brunswick 08816; Edison 08817; Jamesburg 08831; Metuchen 08840; New Brunswick 08901; Old Bridge 08857; Perth Amboy 08861; Sayreville 08871; South Amboy 08878; South River 08877; Avenel 07001; Colonia 07067; Iselin 08830; Woodbridge 07095; Somerset 08873; Somerville 08876 and Watchung 07069, New Jersey.