Limited Review of Arbitration Awards
Arbitration was developed as an alternative to litigation in the hopes that disputes could be resolved quickly and efficiently without expensive litigation. Judicial review of arbitration awards is extremely limited. If arbitration statutes and courts oversee arbitrators and their application of the law, any ruling of an arbitrator could be challenged in court and be vacated, thereby destroying the purpose for which it was created. Moreover, since arbitration is an informal process that generally does not allow for prolonged discovery, it results in less expense to the parties. And importantly, parties voluntarily select arbitration as an alternative dispute resolution method in their contracts with one another. It is presumed the parties bargained for the terms knowing the benefits and detriments to arbitration.
Overturning an Award
Under the Illinois Arbitration Act, the court may overturn an award if (1) the award was procured by corruption or fraud, (2) the arbitrator was partial, (3) the arbitrator exceeded his or her powers, (4) the arbitrator unreasonably refused to postpone the hearing or hear evidence, or (5) there was no agreement to arbitrate. 710 ILCS 5/12 (2010). If the arbitrators have acted in good faith, the award is conclusive upon the parties. Garver v. Ferguson, 76 Ill.2d at 7–8 (1979). There is a presumption that the arbitrators did not exceed their authority. Rauh v. Rockford Products Corp, 143 Ill.2d 377 (1991).
However, case law espouses another ground for vacating an award that is not provided for in the statute. While the award may not be set aside because of mistakes in judgement, fact or law, a court may reverse an award where a “gross error of law or fact appears on the award’s face.” Glasso v. KNS Companies, Inc., 364 Ill. App. 3d 124, 131 (1st Dist. 2006). To determine if there has been a gross error or fact or law, the court “must be able to conclude from an award’s face that the arbitrator was so mistaken as to the law that, if apprised of the mistake, he would have acted differently.” Herricane Graphics, Inc. v. Blinderman Construction Co., Inc., 354 Ill. App. 3d 151, 156 (2d Dist. 2004).
Arbitration awards should be construed, wherever possible, so as to uphold their validity. Merritt v. Merritt (1850), 11 Ill. 565 Further, there is a presumption that the arbitrator did not exceed her authority. Darst v. Collier 86 Ill. 96 (1877) To vacate an award based on partiality, it is necessary to show a direct, definite and demonstrable interest, on the part of the arbitrator, in the outcome of the arbitration. Saville International, Inc. v. Galanti Group, Inc., 107 Ill.App.3d 799, 800 (1982)
As stated by the United States Supreme Court when speaking about the deference accorded to arbitration awards:
“A contrary course would be a substitution of the judgment of the Chancellor in place of the judges chosen by the parties, and would make an award the commencement, not the end, of litigation.” Garver v. Ferguson, 76 Ill.2d at 9 (1979), quoting Burchell v. Marsh 58 US 344 at 349. (1854.)
If you have questions about an Illinois arbitration award and its potential for review, our attorneys are here to talk through your questions. Give us a call.