SW Legal studies in Business

Errors by Arbitrators Not Grounds for Review by Courts
Description Appeals court upheld the refusal of a district court to review an arbitration panel award that did not specifically address all issues submitted and was "incomprehensible." Since the arbitrators stated that they had reviewed all issues, there was no basis for review in court.
Topic Alternate Dispute Resolution
Key Words Arbitration; Award; Gross Error; Finality; Reviewability
C A S E   S U M M A R Y
Facts IDS sued competitor Royal for tortious interference with IDS contracts. Because both firms are securities broker-dealers and members of the National Association of Securities Dealers, the dispute went to arbitration. "Arbitration was conducted in 154 sessions over a period of 14 months ... resulting in an award so incomprehensible that three years later the judges and the parties are still trying to figure it out." IDS asked the district court to vacate the arbitration panel's award on the ground that the panel had done such a bad job that no one could understand the award. The district court asked the arbitrators to review the matter. The panel stated that it had reviewed all the issues and the award was complete. IDS appealed to the court that the award did not address various specific complaints made by IDS. The judge refused to intervene and confirmed the award. IDS appealed.
Decision

Affirmed. Unless there is a specific ground for vacating an arbitration award it must be confirmed. The Federal Arbitration Act specifies the grounds for challenging an award in court, such as a failure to consider the issues presented. The fact that the arbitrators did not address all claims made by IDS does not mean that they did not consider them. If the trial judge determines that the arbitrators considered all claims, then there has been a final award, even if nothing specifically was stated about certain claims. "The requirements of finality and definiteness are ones more of form than substance. They must not be confused with whether the arbitrators' award was correct or even reasonable, since neither error nor clear error nor even gross error is a ground for vacating an award."

Citation IDS Life Insurance Co. v. Royal Alliance Associates, Inc., F.3d (2001 WL 1084406, 7th Cir., 2001)

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