Arbitration – the word might seem quite familiar to you. For those who still have no idea what it is, arbitration happens to be an alternate way of resolving disputes outside the court. If you are taking action against an individual or an organization, you will be the claimant while the other party will be the respondent. Both of you will be presenting your case to a neutral person or the arbitrator.
Among the many dispute resolution approaches outside court, arbitration is the most popular one. An advantage of arbitration, according to general perception, its finality. But, to what extent an arbitration award is final and binding? Well, the Federal Arbitration Act has a big role to play here. How? Find out.
The Federal Arbitration Act
FAA or the Federal Arbitration Act happens to be a statute that was passed and brought into action back in the year 1925. The basic legal principles of arbitration in the US have links to it. The principle states that arbitration agreements concerning interstate or even foreign commerce must be valid. It should be irrevocable, and enforceable, except legal or equitable grounds with regards to revocation of a contract.
The FAA has the right to preempt laws laid down by the states that disallow the implementation of a construction arbitration agreement. Aside from that, the Federal Arbitration Act also considers and scrutinizes circumstances where you can change an arbitration award. Here we discuss the laws that help you understand the extent to which a specific arbitration award is final and binding.
Confirmation of an Award
The arbitration agreement gives an arbitrator the power to give out an award. However, the arbitrator does not have the power to enforce that particular award. In several cases, the losing party, which has agreed on arbitration, pays the arbitrator’s award. In case that doesn’t take place, the court makes the arbitration award enforceable. The Federal Arbitration Act sets a time frame of one year for the prevailing party. Within that particular time frame, the party needs to apply for an order to ratify the arbitration award.
However, the losing party has a time of three months to file a motion to forsake. If you file such a motion, the prevailing party can put forward a cross-motion to confirm the award. The court can give its judgment on the award in case the winning party sticks to its motion. However, you can appeal against the award. But then again, the grounds of appealing stays confined to the Federal Arbitration Act. The ground for forsaking, rectifying, or modifying an award, the details of which are as follows.
Rectification or Modification of an Award
A party can request modifying an arbitration award within three months. The Federal Arbitration Act offers three grounds on which you can carry out this. The party must note that the court doesn’t have the right to review the evidence that has been put forward to the arbitrator and give a different judgment. The FAA doesn’t give it that authority. The court can only review the defects or miscalculations that are present in the arbitration award.
Forsaking or Vacating an Award
Courts will only come into action and vacate a particular arbitration award if the petition brings a motion to vacate on the opposition party. However, this has to happen within a time frame of three months of the arbitration award. The contesting party can claim an appeal on various grounds. This includes claims that the award has been an act of fraud, misconduct, or corruption. To vacate an award, the Federal Arbitration Act offers three grounds. The arbitrator has no authority to review the evidence submitted and give out a different decision.
In short, an arbitration award is final and binding. However, a decision by a state or even a federal trial court is up for appeal and you can contest the decision in a different court. In other words, the chances of appealing against an arbitration award are much less in comparison to trial courts. But that shouldn’t be the only deciding factor. So, before you go for an arbitration or a court trial, evaluate the pros and cons effectively. Be sure if this is the right approach to resolve the dispute you are dealing with and go forward.