Originally from: AAA Yearbook on Arbitration and the Law - 24th Edition

I. Introduction

A traditional argument for arbitration is that it is to be a means for achieving a quick and cost-efficient resolution of disputes. One of that view’s key tenets is that arbitration awards are regarded as final and nonappealable judgments. Arbitration tribunals serve as surrogates for trial judges, juries, and appellate justices all rolled into one decision-making body. These panels or tribunals manage the process like trial judges; decide fact issues like juries; and employ their collective analysis, experience, and wisdom to finally decide the issues before them under the arbitration agreement, presumptively guided by legal and equitable principles. This process is fairly well accepted as a distinct alternative to the traditional court system.

Arbitration remains a popular alternative dispute resolution tool in cases involving parties who may wish to avoid being haled into unfamiliar local courts or before uncertain juries, or who wish for greater privacy, seek specific subject-matter expertise, want a streamlined and informal process, or who prefer quicker resolutions than ordinarily might occur in traditional litigation with long and drawn-out appeals.

Arbitration critics, on the other hand, complain that the characteristic informalities of arbitration and its lack of appellate review permit arbitrators to decide cases based on a flawed analysis of the facts or a failure to follow controlling principles of law, principles on which the parties structured their dealings in the beginning or on which they conducted their relations thereafter. In addition, parties have begun to bring into arbitration expanded discovery and other aspects of the judicial system that can blur the distinctions between the two, while eroding potential cost savings. Consistent with these trends, many parties have sought to preserve the benefits arbitration can provide while also obtaining appellate review of arbitral awards for reversible legal errors. However, the Federal Arbitration Act (“FAA”) and the model general arbitration act as adopted in most states, provide for only a limited number of grounds on which a party may have a court overturn an arbitration award. These statutory limitations often conflict with the parties’ contractual intent leading to confusion regarding the extent to which parties can contractually structure judicial review for arbitration awards. The United States Supreme Court recently addressed that confusion, at least in part.