Originially from: World Arbitration and Mediation Review (WAMR)

Case Commentary
California State Court Rejects Party Right
to Increased Judicial Scrutiny
In early 2002, a California court of appeal held that arbitrating parties
could not agree to expand the judicial authority to review arbitral awards to
include a review of the merits of the arbitrator’s determination. The case involved
an arbitration agreement between a physician and a hospital. The agreement
required that the arbitrator provide a written award, that the proceedings be
transcribed, that the award include the arbitrator’s findings of fact and conclusions
of law and “shall be supported by law and substantial evidence.” Moreover, “a
court shall have the authority… to vacate the arbitrator’s award… on the basis
that the award is not supported by substantial evidence or is based upon error of
law….” The court further ruled, in Crowell v. Downey Community Hosp. Fdn.,
95 Cal. App. 4th 730, 115 Cal. Rptr. 2d 810 (Jan. 28, 2002), that an arbitration
agreement containing such a provision could not be enforced because:
The provision for judicial review of
the merits of the arbitration
agreement was so central to the
arbitration agreement that it could
not be severed. To do so would be to
create an entirely new agreement to
which neither party agreed.… The
parties to the contract here agreed to
the arbitration with judicial review of
errors of law and fact. Without that
provision, a different arbitration
process results…
According to the state appellate court, the principle of party autonomy in
contract could not overwhelm the statutory grounds for the judicial review of
awards set out in the California Arbitration Act (Sections 1286.2 and 1286.6) and
the general pronouncement of the California Supreme Court in Moncharsh v.
Heily & Blase, 832 P.2d 899, 10 Cal. Rptr. 2d 183 (1992) (Moncharsh). As to the
statutory law, the appellate court concluded, after a thorough review of the
statutory provisions, that:
None of the grounds for vacating or
correcting an award suggests that a
court can review the merits of an
award for errors of law or lack of
adequate supporting evidence.