SW Legal studies in Business

Courts May Review Major Mistakes by Arbitrator
Description

Appeals court held that courts have authority to review evident material mistakes made by an arbitrator, but may not modify errors in awards due to mistakes made by the complaining party about the evidence it presented to the arbitrators.

Topic

Alternate Dispute Resolution

Key Words

Arbitration; Court; Appeal; Evident Material Mistake; Modification

C A S E   S U M M A R Y
Facts

American Multi-Cinema (AMC) leased space in two shopping centers from Baker. The lease called for AMC to pay Baker a portion of the real-estate taxes on the properties. The two argued about how much AMC should pay Baker, and the matter was submitted to a three-member arbitration panel. It awarded $866,425 to Baker. Baker then sued AMC to enforce the award. AMC filed a motion to correct the award with the arbitration panel, but the panel held the motion was untimely. AMC then counterclaimed against Baker in court, contending the award was improperly calculated because AMC had underestimated the amount of taxes it had in fact paid one year. The miscalculation was an “evident material mistake” that would allow the court to have jurisdiction to modify the award. The trial court agreed that taxes had been improperly calculated and reduced the award by $78,425. Baker appealed.

Decision

Reversed and remanded. Judicial reviews of arbitration awards are narrowly limited. A court may modify or correct an arbitration award when there is an evident material miscalculation of figures or an “evident material mistake” in the description of any person, thing, or property referred to in the award. The error here was not an evident material mistake within the meaning of the Federal Arbitration Act. The error was because AMC did not supply the arbitration panel correct information about payments it made, not because the panel made a mistake. Its original decision stands; the courts will not review such matters.

Citation

AIG Baker Sterling Heights, LLC v. American Multi-Cinema, Inc., 508 F.3d 995 (11th Cir., 2008)

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