A real estate arbitration case in Idaho has raised questions about the language necessary to make an arbitration award “final and binding” in accordance to their interpretation of the Federal Arbitration Act. In this case, the award did not say outright that the award was “non-reviewable,” which left the door open to appeal and potentially being overturned.
The Background of this Influential Financial Arbitration
In the case of Swenson, et. al. v. Bushman Investment Properties, et. al, the award was given to the plaintiffs. This was a dispute over some real estate investments that went badly. The judge looked over the evidence and awarded damages to the plaintiffs. As the plaintiffs made the motion to confirm the arbitration award, DBSI, Inc., one of the defendants, made a motion to vacate the award.
The language in the parties’ contracts, as well as in the arbitration award, seemed to be clear. In the contracts, it was stated specifically that “any award rendered…shall be final and binding on each and all of the parties” and that both parties are “waiving their judicial rights to discovery and appeals.” As tight as this language sounds, it was not quite enough to prevent a judicial review.
The Relevance to the Federal Arbitration Act
There are specific reasons that an arbitration, be it consumer contract, employment contract or real estate arbitration, can be brought before an appellate court for review. The ruling of an arbitration could be biased, in manifest disregard of the law, or as a result of abuse of authority. In these rare cases, appeals for review can be made in accordance to the FAA.
In this case, it was decided that the language of the award, as well as the contracts, did not have enough clarity to remove all judicial review. The court suggested that the words, “final and unreviewable for error of law or legal reasoning of any kind,” or simply “non-reviewable” would suffice to prevent any judicial review.