Arbitration Questions

This week, perhaps because of the recent depiction of an arbitration on a couple of episodes of HBO's popular Sunday night show, Silicon Valley, I've been getting some queries on the process. One question was whether confidential matters could be disclosed when the arbitrator renders detailed findings of fact and conclusions of law in a reasoned award. Often we are asked not to provide reasoned awards for this purpose. Confidentiality can be preserved is through the use of confidentiality agreements or by including liquidated damages clauses within the arbitration provisions of the subject contract itself. Parties subject to such an arbitration clause agree that they would be entitled to specified damages for breach upon disclosure of information designated as confidential. Another topic that arose was whether there is a right to appeal an arbitrator’s award as one might a judgment rendered in a trial court. Under the Federal Arbitration Act (FAA), a court must confirm an arbitration award except in limited circumstances. The FAA provides few grounds for vacating an arbitration award. In fact, the U.S. Supreme Court has confirmed only a handful of exclusive means for vacating an award under the FAA. These are limited to narrowly defined procedural irregularities and are difficult to prove, except in egregious cases. A few courts have vacated awards based on review of an arbitrator’s “manifest disregard of the law,” but federal circuits remain split as to whether that constitutes valid basis for independent review. However, appellate review under the American Arbitration Association's (AAA) recent optional rules is now available. The rules provide parties with a streamlined, standardized review of arbitral awards. AAA maintains this appellate rubric remains consistent with the objective of an expedited, cost effective and just arbitration process. An appellate arbitral panel applies a standard of review more expansive than that allowed by existing federal and state law in vacating awards. This process was really developed for large, complex cases where parties heavily value the ability to appeal. Parties may use these rules with agreement by contract or stipulation. Appeals are only permitted on the grounds that the underlying award is based on errors of law that are material, prejudicial or is made on clearly erroneous determinations of fact. Generally, AAA appeals will be determined upon the written documents submitted by the parties, with no oral argument, and completed in about three months. Interestingly, the parties may apply the rules whether or not the underlying award was conducted pursuant to AAA or International Centre for Dispute Resolution (ICDR) rules. See rules here-- http://bit.ly/1cDPGXy