SCA v. Armstrong: Anatomy of the Armstrong Arbitration Award
Part III.A: What are the Issues?
In Part II we discussed applicable arbitration law, so now let’s take a look at what issues the Court may need to address in the event the Armstrong Parties contend that the arbitration panel (the “Panel”)’s award exceeded its powers under the Federal Arbitration Act (a/k/a the “FAA”) and the Texas General Arbitration Act (the “TAA “).
The Federal Arbitration Act (a/k/a the “FAA”) and the Texas General Arbitration Act (the “TAA “) both authorize courts to vacate awards where arbitrators exceed their powers. See 9 U.S.C. § 10(a)(4) (2014); Tex. Civ. Prac. & Rem. Code § 171.088 (a)(3)(A) (Vernon 1997). If the New York Convention applies by way of Chapter 2 of the Federal Arbitration Act, then Chapter 1 of the Federal Arbitration Act would continue to apply because the Award was made in the U.S. And in any event, Article V of the Convention permits parties to defend against the enforcement of an arbitration award falling under the Convention on the ground that the arbitrators exceeded their powers. See Convention on the Recognition and Enforcement of Foreign Arbitral Awards at Art. V.(c) & V.(d).
Assuming they have been properly preserved and timely asserted, in a case such as this one, where there is no dispute about the existence or validity of the arbitration agreement, there are essentially five categories of issues concerning arbitral authority that may, if properly preserved, be addressed on a motion to vacate on the ground the arbitrators exceeded their powers:
- Issues concerning whether the parties delegated to the arbitrators—or were required to delegate to the arbitrators—the power to decide particular disputes;
- Issues concerning whether any nonsignatories to the agreement are bound by the agreement or consented to be bound by the award.
- Issues concerning whether the arbitration panel was properly constituted in accordance with the parties’ agreement;
- Issues concerning whether the panel’s award on the merits drew its essence from the parties’ agreement and thus was within the panel’s power to make; and
- Issues concerning whether the panel’s award exceeded a remedial limitation on the panel’s authority.
The degree of deference a court gives an arbitration panel when the court determines whether an award exceeds the arbitrators’ powers—that is, the “standard of review”—depends on the type of issue the exceeding powers challenge presents. As respects the Armstrong Award, there appears to be no dispute about the composition of the arbitration panel, so the universe of issues that may potentially arise on a motion to vacate is limited to Issue Categories 1,2, 4 and 5.
That Issue Categories 1,2,4 and 5 are still in play is evident from the Armstrong Award, which explains that the parties’ submissions presented, and the Panel resolved, the following four issues:
- Does this Arbitration Tribunal have the jurisdiction or authority to decide and resolve the existing disputes between the named parties?
- Which parties are properly subject to this Tribunal’s jurisdiction?
- What jurisdiction, if any, does this Tribunal have to award sanctions?
- If sanctions are appropriate, what sanctions should this Arbitration Tribunal award?
(Award at 2, 5.)
Our next segment, Part III.B, will focus on Panel Issue No. 1: the Panel’s authority to decide the disputes between the parties, which in arbitration parlance is sometimes also referred to as the Panel’s “jurisdiction,” the term the Panel used in the Armstrong Award. Specifically, we’ll examine the standard of review the reviewing court will likely apply to resolve the issue, discuss how the Panel resolved the issue and predict how we believe the Court will resolve the issue. Later segments will address Panel Issue Nos. 2 through 4.
Tags: Arbitrability, Arbitral Authority, Authority of Arbitrators, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Delegation of Authority, Essence from Agreement, Exceeding Powers, Federal Arbitration Act, Grounds for Vacatur, Judicial Review of Arbitration Awards, jurisdiction of arbitrators, Manifest Disregard of the Agreement, Manifest Disregard of the Contract, Manifest Disregard of the Law, New York Convention, Nonsignatories, Remedial Authority of Arbitrators, Texas General Arbitration Act
