Q: Hello, can you tell me how I, as a civil arbitrator, ensure that the award I render is legally binding?
I have a certificate as a civil arbitrator, which certificate was endorsed by Hon. Gerald Popeo of Utica City Court, Utica, NY. Recently, two opposing attorneys asked me to arbitrate a civil matter between their respective clients. These two attorneys require that the arbitral award I would ultimately render must be LEGALLY BINDING. Is there a provision with Article 75 of the CPLR which specifically addresses whether an arbitration award is legally binding?
Your Arbitration is pending in New York so the controlling statutes are in the Civ.Prac.Law.Rules, specifically 7510 and 7511--these statutes specifically deal with the Confirmation and Vacatur of an Award. There are some additional attendant statutes that may seem obvious but I will cite them anyway so you have a fuller understanding. 7507 states: "the award shall be in writing, signed and affirmed by the arbitrator making it within the time fixed by the agreement." It goes on to say: "The arbitrator shall deliver a copy of the award to each party in the manner provided in the agreement, or, if no provision is so made, personally or by registered or certified mail, return receipt requested." Now, focusing on the specific issues of the ruling. 7510 states: The court shall confirm an award upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 7511. Therefore, we must review 7511. There are two substantive cases to vacate: the first is when both parties appear and participate; the second is when one of the parties does not appear.
7511(a): The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate if the court finds that the rights of that party were prejudiced by: (i) corruption, fraud or misconduct in procuring the award; or (ii) partiality of an arbitrator ...; or (iii) an arbitrator, ...making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made; or (iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection. The keys to enforcing the Award is that the Arbitrator not act with fraud (i), partiality-which is an undisclosed relationship--it does not mean that you believed one party and not the other; (ii) exceeding your power simply refers to the nature of the dispute as limited by the arbitration provision in the contract. Thus, if two parties dispute who should pay for something that the receiving party claims was defective, you can award damages to the seller (based on believing his claim that the goods conformed to the contract, or that the buyer failed to reasonably notify the seller and allow him to cure. If you go outside the nature of the dispute and insert in your award something having nothing to do with the dispute, such as a claim against another company for the damages, you will have exceeded your authority. Also, certain arbitration provisions exclude attorneys' fees. This has been litigated: some courts have allowed them under the general powers of an Arbitrator, most do not allow them. One of the arguments for granting attorneys fees is an argument I have successfully confirmed. Paragraph (iv) wipes out any argument that the loser made during the Proceeding, if the party continued with the arbitration knowingly, without objection. Without objection has been litigated, and Courts generally require the objecting party to walk out--a tough decision because they are putting all their chips on "red."
The other basis for vacating an award applies when one of the parties simply does not appear. My room to answer this question is limited, so I will try to answer the balance of your question under the same question; however, if I am unable, or you have any other questions, you can call me at 212-244-8722, or David@Relkinlaw.com. I hope this was helpful.
You might also be able to check with the American Arbitration Association (AAA) and National Arbitration and Mediation (NAM) for additional insight here. Good luck
See my answer given below concerning the confirmation of an award when both parties appear. The second section, granting vacatur (vacating your Award) is: 7511 (a)(2): "The award shall be vacated on the application of a party who neither participated in the arbitration nor was served with a notice of intention to arbitrate if the court finds that: (i) the rights of that party were prejudiced by one of the grounds specified in paragraph one [those already discussed below]; or (ii) a valid agreement to arbitrate was not made; or (iii) the agreement to arbitrate had not been complied with; or (iv) the arbitrated claim was barred by limitation under subdivision (b) of section 7502."
This provision applies the four applicable horsemen of the Apocolypse in 7511 (a)(1), but (a)(2) adds slightly technical issues: whether there was "an agreement to arbitrate"--usually, this is an easy question since an agreement will be found in almost any case, even without a writing. The statute of limitations issue appears to raise a significant issue but firstly, this only applies to the date when the Demand was served, not some later date. But New York Courts have, for some time now, ignored this issue to a vanishing point. The Courts have stated that, if under any theory, the victorious party could have won, which is to say, under even the longest statute of commercial disputes: six years, the Courts will not strike down the Award.
I already provided you with my contact information. Call me with any questions.
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