The parties to an international joint venture agreed to arbitration to be held under ICC Rules in San Francisco. Under the terms of their arbitration clause, the arbitration panel was instructed to issue a written award that was to include “detailed findings of fact and conclusions of law;” the federal district court for the Northern District of California could then:
vacate, modify or correct any award (i) based upon any of the grounds referred to in the Federal Arbitration Act, (ii) where the arbitrators’ findings of fact are not supported by substantial evidence, or (iii) where the arbitrators’ conclusions of law are erroneous.
An award was ultimately rendered, but the district court resolutely refused to look into the arbitrators’ findings of fact or conclusions of law: It found that its “options” were “limited” by the provisions of the FAA “and may not be extended by agreement of the parties.” So the court restricted its inquiry to the “permissible statutory grounds” found in s. 10 of the Act, and summarily confirmed the award. The arbitrators had not "exceeded their powers."1 While they had indeed---as instructed-applied at least some version of California law, they were hardly required to apply California law "without error."