If the parties consent to arbitration, they decide to settle their dispute outside the confines and strict procedure of courtrooms. That said, arbitration awards are not automatically court judgments just because they resolve legal claims.
On the contrary, arbitration awards are just contracts between parties and are not independently enforceable under the law. For that reason, those individuals who receive an arbitration award need to take one final step and confirm the award by petitioning the court.
These petitions, however, can be the subject of much litigation in their own right. Parties will treat these petitions as a means of re-opening legal disputes the arbitration was designed to close. But it doesn’t need to be this way. At Underwood Law Firm, our attorneys are well-versed in the law surrounding arbitration and other methods of alternative dispute resolution. With our assistance, we can help litigants get through the arbitration process.
What is arbitration?
Arbitration is a dispute-resolution process that offers an alternative forum to the court system for the settling of legal claims. And it is indeed quite different from the judicial setting of a court of law. Stripped to its core elements, arbitration involves the parties proceeding to a third-party neutral arbitrator who essentially settles the dispute after both parties present their case.
While that sounds an awful lot like a judge in a courtroom, the whole process is much less formal. Yes, there can still be discovery procedures, pleadings to be filed, and a trial hearing. But, importantly, the rules of evidence and the rules of judicial procedure need not be observed. (CCP § 1282.2.)
This means that parties can have a much easier time presenting their case, especially if the arbitrator allows them to introduce hearsay into evidence, which is normally excluded in the court system. For this reason, and because the process can prove much cheaper and quicker, California has a long-established and well-settled policy of favoring arbitration as a speedy and inexpensive means of settling disputes. (Soni v. SimpleLayers, Inc. (2019) 42 Cal.App.5th 1071, 1084.)
That said, arbitration isn’t without its flaws. In a court, if the judge makes a mistake, the order or verdict can be appealed and corrected. But with arbitration hearings, arbitrators do not exceed their powers because they assign an erroneous reason for their decision. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 28.) Put simply, the remedies for arbitrator mistakes are minimal, even if they misapply the law.
What happens after you receive an arbitration award?
It is important to note that arbitration is ultimately a contract between the parties. They are entering into an agreement to use a setting other than the courtroom to settle their dispute. Thus, when an arbitrator issues an award, it is a contract between two private parties. Put another way, it isn’t independently enforceable. (Cinel v. Christopher (2012) 203 Cal.App.4th 759, 765.)
Just because you receive an arbitration award doesn’t mean the victorious party can go to the sheriff’s office and enforce the award or begin garnishing the other party’s wages of their own accord. They still ultimately need the court system to step in.
Under the Code of Civil Procedure, a party to an arbitration award may petition the court to confirm, correct, or vacate the arbitration award. (CCP § 1285.) Once the petition is filed, the court has only four total options: (1) confirm the award as given, (2) correct it, (3) vacate it, or (4) it can outright dismiss the proceeding.
In short, if a party to an arbitration wants their award to have the effect of an enforceable judgment, they need to petition the court to confirm the award. Though, it must be noted that the petition to confirm needs to be filed no later than four years after the arbitration award is issued. (CCP § 1288.)
When will an arbitration award be vacated?
The exclusive grounds for vacating an arbitration award can be found in Code of Civil Procedure section 1286.2. Some of the grounds are obvious. For instance, a court will throw an award out if it was procured by corruption or fraud or if the arbitrator(s) themself was corrupt.
But by far, the most common excuse that parties will argue is that the arbitrator exceeded their power, and the award cannot be corrected without affecting the merits of the decision. For example, a party will argue that an arbitrator’s mistake was so egregious that the award cannot simply be modified. The mistake affects the merits, so the arbitration award needs to be thrown out.
Those who receive the award would be glad to hear that this argument rarely, if ever, works. An arbitrator’s decision, no matter how egregious an error of law it may rely on, can’t be vacated unless the arbitrator exceeds their statutory or contractual powers.
And arbitrators do not exceed their powers merely because they assign an erroneous reason for their decision. (Moncharsh, 3 Cal.4th at 28.) If the law held otherwise, the principle of arbitral finality would be thrown out the window. The arbitrator’s decision should be the end, not the beginning, of the legal dispute.
What happens after a party seeks to confirm their arbitration award?
If a party wants to confirm their award, then they need to file a petition to confirm it. The petition needs to attach a copy of or set forth the substance of the agreement to arbitrate. It also must include the names of the arbitrators and a copy of the award and arbitrator opinion, if one exists. (CCP § 1285.4)
After this is filed, the respondent (the other party) needs to file a response that has to include essentially everything the petition did. But there’s a key difference. If the response is requesting that an award be vacated or corrected, then that response needs to be filed no later than 100 days from the date of service of the award, not the petition to confirm. (CCP § 1288.2.)
This 100-day limit is no joke. If the party who lost in arbitration does not serve and file a response or a petition to vacate within the statutory period, the award will be treated as final. (Douglass v. Serenivision, Inc. (2018) 20 Cal.App.5th 376, 385.)
How can the Attorneys at Underwood Law Firm Assist You?
Because arbitration is designed to offer parties a means of settling their disputes outside a courtroom, many litigants can be dismayed when they realize they need to go to court to make their arbitration award enforceable.
As each case is unique, prospective litigants would be well-served to seek experienced counsel familiar with arbitration and the petitions which follow. At Underwood Law, our knowledgeable attorneys are here to help. If you are concerned about your next steps following an arbitrator’s award, wondering how you can fight off a petition to confirm, or if you just have questions, please do not hesitate to contact our office.
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