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Judicial Review Under the California Arbitration Act

Judicial Review Under the California Arbitration Act

December 31, 2021
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Under the California Arbitration Act (“CAA”), an adverse award is subject to judicial review. Any party may petition the superior court to either vacate or correct the award. (Code Civ. Proc. § 1285.) But in most instances, such review is limited by statute, and such petitions face a number of substantive and procedural obstacles. Before seeking review of an arbitrator’s award, consider the following principles:

Generally, a party challenging an award may only petition to correct or vacate a final award. Where the award is interim, meaning it did not resolve all issues in the arbitration, a court lacks jurisdiction to vacate or correct it. (See Maplebear, Inc. v. Busick (2018) 26 Cal.App.5th 394, 407.) A party may seek writ review of an interim award, but such writ petitions are “extraordinary,” discretionary, and rarely granted.

Furthermore, judicial review of an arbitrator’s final award is very limited. The merits of the dispute are not considered and the award can only be vacated where: (1) the award was procured by fraud or corruption; (2) there was corruption in the arbitrator; (3) the arbitrator committed misconduct resulting in substantial prejudice; (4) the arbitrators exceeded their powers; (5) the arbitrator refused to postpone a hearing, hear evidence, or otherwise violated the CAA, resulting in substantial prejudice; or (6) the arbitrator refused to disclose grounds for disqualification. (Code Civ. Proc. § 1286.2.) Grounds for correcting the award are where there was a mistake, miscalculation, or a mistake as to form. (Code Civ. Proc. § 1286.6.) Thus, unlike typical appellate review of a lower court’s decision, under the CAA, legal errors committed by the arbitrator—no matter how egregious—are not grounds for challenging the award. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 11.)

One important exception to the limited grounds for review is that an arbitrator’s legal error may be reviewed where the parties’ arbitration agreement specifically provides for it. (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1340.) Thus, it is important to carefully review the language of the parties’ agreement. Moreover, a savvy party who regularly negotiates arbitration agreements might have the foresight to include such a provision in the agreement in order to avoid being stuck with an award that is contrary to law. It is wise to make sure the CAA actually applies to the dispute—the Federal Arbitration Act does not provide for review of legal errors, even where the parties have agreed to include it. (Countrywide Fin’l Corp. v. Bundy (2010) 187 Cal.App.4th 234, 238.)

Deadlines for bringing a post-award challenge can also be tricky. A petition to vacate or correct the award must be served and filed no later than 100 days after it is served. (Code Civ. Proc. § 1288.) But, where another party has moved to confirm the arbitration award, any response seeking to vacate it must be filed within 10 days. (Code Civ. Proc. § 1290.6.) Confirmation is mandatory when a party does not respond; thus, when a party has moved to confirm the arbitration award, it effectively shortens the 100-day period to file a motion to vacate because a court lacks jurisdiction to vacate the award where a party failed to file a response within 10 days. (See Rivera v. Shivers (2020) 54 Cal.App.5th 82, 93.) However, the inverse scenario is not the same—if a party brings a motion to confirm the award after 100 days, it does not extend the deadline to seek vacatur or correction. (Law Finance Group, LLC v. Key (2021) 67 Cal.App.5th 307, 319-321.) Thus, petitioners seeking to overturn an award must be vigilant as to both deadlines and if a petition to confirm is filed first, then file on the earliest of the two dates. Overall, if seeking vacatur or correction of an arbitrator’s award, make sure the award is “final,” identify an enumerated ground under the CAA to support the challenge, and pay very careful attention to the CAA deadlines. After all, failure to timely file a petition challenging an award will reduce long odds, to no odds. That said, given how limited judicial review is under the CAA (absent contractually expanded review), a party should carefully consider whether the costs of a post-award battle make it worthwhile to fire the first shot—filing the petition.

For More Information, Please Contact:

Patrick Burns
Patrick Burns
San Francisco, CA