Can Parties Tell Courts What to Do? Expanded Judicial Review of Arbitral Awards
37 Pages Posted: 15 Sep 2008
Abstract
Arbitration is a private system of justice, made possible by the parties' consent. In the United States, a court's ability to interfere with this private adjudicatory process or to set aside an arbitral award has been severely limited by the United States Federal Arbitration Act. Recently, parties to arbitrations held in the United States have sometimes asked for judicial review of an award for errors of law or fact. The question raised by this is whether the parties have the right to expand the grounds on which a court can review an arbitral award. The answer depends on the proper interpretation of the FAA.
This Article will focus on the various policies behind the two different interpretations of the FAA's grounds for review. It concludes that while both positions raise important questions, the better interpretation of the FAA permits expanded judicial review. However, there are a number of pitfalls that parties need to consider before they seek expanded judicial review of arbitral awards.
Part II will consider the conflicting circuit court positions regarding the proper scope of judicial review under the FAA, with an analysis of the rationales supporting each position. Part III will then examine domestic enforcement issues which arise when parties have agreed to expanded judicial review, including different approaches which may be taken by state and federal courts. Part IV will consider the complexities of international enforcement of arbitral awards, particularly the tendency of some courts to enforce awards even though they have been vacated in the place where made, and will focus on problems of enforcement internationally when expanded review has been sought. The Article concludes that even though the better legal arguments support expanded judicial review, the practical problems with enforcement of awards subjected to expanded judicial review remain significant.
Keywords: arbitration, FAA, party's consent
JEL Classification: K40, K41
Suggested Citation: Suggested Citation