Originally from:

AAA Handbook on Commercial Arbitration, Third Edition

CHAPTER 28

A PRACTICAL APPROACH FOR EXPANDING THE REVIEW OF COMMERCIAL ARBITRATION AWARDS: USING AN APPELLATE ARBITRATOR

Paul Bennett Marrow

I. Introduction

In Chicago Typographical Union v. Chicago Sun-Times,  Judge Richard Posner observed there was no reason an appellate review of arbitral awards couldn’t be available as part of the arbitration process itself. Until recently this suggestion has received little attention in the literature. In this article the practical implications of implementing appellate arbitral review are discussed in detail.

Many lawyer and lay persons see arbitration as risky because of the possibility of a rough arbitrator or an arbitrator who makes a mistake in applying law. Having a mechanism for the review of an award can assure the parties that arbitration isn’t an arbitrary and unruly process beyond the reach of the law. The failure of an arbitrator to properly apply the law can lead to an appearance of “lawlessness”  and in some extreme cases can even be characterized as a “manifest disregard” of the law. The problem is that while manifest disregard for the law may be grounds for vacatur,  mere error in the application or understanding of the law is not.  The finality of an arbitration award is a double edged sword. On the one hand finality speeds things along and minimize costs. On the other, finality presents a risk that an arbitrator may not get it right. For many attorneys the risk is seen to be so great that the recommend against the arbitration process. Providing for an arbitral appeals process would help overcome such concerns.