American Arbitration Associations-JAMS-arbitration-arbitration appeal
Arbitration awards can be appealed
By:   //  Consumer News

by Carol Thompson

It is not possible to appeal an arbitration award to a court on the usual appellate grounds under federal or state law. Under the Federal Arbitration Act, which governs most arbitrations, a party may petition a court to modify or vacate an arbitration award, but the grounds are extremely narrow — basically that the arbitrator was corrupt, evidently partial, engaged in misconduct regarding evidence or scheduling, or exceeded his or her powers, according to a story authored by Joan C. Grafstein of JAMS and posted on the Law360 website.
“The finality of arbitration awards is often touted as one of the advantages of arbitration, saving parties both time and money. Parties considering arbitration as an alternative to litigation, however, may worry about the risk of arbitrator error in an award that cannot be appealed to an appellate court on familiar legal grounds. They may be especially concerned in “bet-the-company” cases or where they think the risk of error may be greater such as in highly complex or single arbitrator cases. In response to these concerns, several major arbitration providers offer parties an optional appeal within the arbitration process based on the parties’ agreement. CPR published its Arbitration Appeal Procedure in 1999; JAMS issued its Optional Appeal Procedure in 2003; and in 2013 the American Arbitration Association created its Optional Appellate Arbitration Rules,” Grafstein wrote.

CPR, JAMS and the AAA have rules for how, when and on what grounds parties may appeal an arbitration award. All three providers require a record of the original arbitration, prohibit the appeal tribunal from remanding to the original arbitrator(s), and include suggested language for parties wishing to agree to an appeal process.

The CPR procedure is available to parties to any binding arbitration in the U.S., whether under CPR rules or otherwise, who agree to use it in their basic agreement or in a post-dispute arbitration agreement. Preconditions for an appeal are: the original arbitrator(s) were required to apply the law; a record of all hearings and evidence in the original proceeding exists; and the award includes written findings of fact and conclusions of law, according to Grafstein.

The JAMS procedure provides for the same standard of review by the Appeal Panel (normally three JAMS neutrals) that the first-level appellate court in the jurisdiction would apply to an appeal from a trial court decision. Parties may agree at any time to the JAMS optional appeal procedure, including after the award is rendered. Appeals must be filed within 14 calendar days after the award has become final and cross-appeals must be filed within seven calendar days of service of the appeal.

The AAA procedure requires that the parties by stipulation or in their contract provide for the appeal of an arbitration award. The award appealed may have resulted from an AAA arbitration or otherwise. Grounds for appeal are that the underlying award is based upon (1) an error of law that is material and prejudicial, or (2) determinations of fact that are clearly erroneous. An appellant/cross-appellant may be assessed costs and attorneys’ fees if not determined to be the prevailing party. Unless the schedule is modified for good cause, the appeal tribunal shall render a decision within 30 days of service of the last brief, according to Grafstein.

The story notes, “When considering an appeal process, counsel should consider if their clients and opposing counsel and parties have differing arbitration knowledge and experience. Counsel and parties should thoroughly discuss the distinctly different appeal procedures offered by leading arbitration providers in determining whether such a procedure would be appropriate and, if so, which procedure would best serve their needs and likely be accepted by the other party.”

Image: Flickr/ Miles Nicholls

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