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

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September 14, 2013 at 1:38 pm


Law Lessons from SHELDON PEPPER, ETC. VS. CURTIS SADLEY PEPPER CONSTRUCTION COMPANY, INC., ET AL. VS. CURTIS SADLEY, App. Div., A-5656-11T2 / A-3459-11T2, May 24, 2013:

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).



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