Arbitration World

1. USE OF COMMERCIAL ARBITRATION

1.1 Describe the prevalence of commercial arbitrations as a method of settling disputes, both domestic and international.

There is an ‘emphatic federal policy in favour of arbitral dispute resolution’ in the United States and this policy applies with ‘special force’ to the resolution of international disputes (Mitsubishi Motors Corpn v Chrysler Soler-Plymouth, Inc 473 US 614 at 631 (1985)). Arbitration is used extensively in the United States to resolve all manner of commercial disputes. These arbitrations are facilitated by a variety of arbitral institutions that provide procedural rules to guide arbitrations, assist in appointing arbitrators, and help to administer arbitral proceedings.

2. LAW ON ARBITRATION

2.1 What are the principal sources of law and regulation relating to domestic and international arbitration? (Describe the role of federal or state laws and relevance of court decisions.)

Because the United States is a federal system, arbitration law is governed both by federal statutes enacted by the US Congress and by state laws enacted by the 50 state legislatures. The primary federal statute governing arbitration is the Federal Arbitration Act, first promulgated in 1925 (codified as later amended at 9 USC §1ff (FAA)). Each of the states also has a statute governing arbitration. Furthermore, because the United States is a common law country, both federal and state court decisions have the force of law.

The US Supreme Court has held that the FAA is substantive federal law that is applicable in state courts and which supplants inconsistent state laws with respect to all transactions affecting interstate commerce (Allied-Bruce Terminix Cos v Dobson 513 US 265(1995)), which includes all international transactions and virtually every commercial transaction. As a result, the federal statute dominates the law of arbitration, and the state statutes are usually relevant only where the FAA is silent and only to the extent that the state statutes are not inconsistent with it.

2.2 List and briefly describe relevant arbitration statutes, international treaties and conventions.

The FAA is the primary source of federal arbitration law in the United States, although provisions on arbitration are also found in the Patent Act and the Foreign Sovereign Immunities Act, among others. Chapter 1 of the FAA governs arbitrations whose site is in the United States; Chapters 2 and 3 implement the New York Convention and the 1975 Inter-American Convention on International Commercial Arbitration (the Panama Convention), respectively. Every state has its own arbitration statute. Most states and the District of Columbia have adopted versions of the Uniform Arbitration Act (UAA), in either its 1955 or 2000 form. Like the FAA, the UAA provides for arbitration of both future and existing disputes as do statutes in most of the remaining states. Three states have statutes that only allow for arbitration of existing disputes.

In addition to the treaties mentioned above, the United States is a contracting state to the Washington Convention establishing Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention), the North American Free Trade Agreement (NAFTA), and many bilateral investment treaties which, in defined circumstances involving alleged violations of foreign investor protections, provide for binding arbitral proceedings between one contracting state and individual investors of another contracting state.

3. PRINCIPAL INSTITUTIONS

3.1 What are/describe the principal institutions and/or government agencies that assist in the administration or oversight of international and domestic arbitrations?

Two main not-for-profit arbitration institutions support international and domestic arbitrations: the American Arbitration Association (AAA), which is the largest arbitration association in the world and is headquartered in New York (www.adr.org), and the CPR Institute for Dispute Resolution (www.cpradr.org). In addition, the Inter-American Commercial Arbitration Commission (IACAC) (www.sice.oas.org) is headquartered in the United States. There are also many regional arbitration centres and for-profit institutions, and many trade associations for particular industries provide their own dispute resolution mechanisms for industry-specific disputes.

4. ROLE OF THE NATIONAL COURTS

4.1 What is the relationship between agreements to arbitrate and access to the courts? Is there a presumption of arbitrability/policy support for arbitration? Will the courts stay court actions in favour of agreements to arbitrate?

The FAA provides that agreements to arbitrate ‘shall be valid, irrevocable, and enforceable, save upon any such grounds as exist at law or in equity for the revocation of any contract’ (9 USC § 2). It is firmly established under federal law that agreements to arbitrate must be enforced in accordance with their terms. Where a valid arbitration agreement exists, the FAA requires courts, upon the motion of a party seeking enforcement of the arbitration agreement, to compel arbitration and to stay any court disputes covered by the arbitration agreement.

The principles applied to determine the validity of the arbitration agreement are the same as those applied to determine the validity of contracts generally. Once a court determines that the parties have agreed to arbitrate, federal law imposes a strong ‘presumption of arbitrability’ to disputes regarding the scope of issues subject to arbitration (Moses H Cone Memorial Hospital v Mercury Construction Corpn 460 US 1 at 24–25 (1983)). This presumption may be slightly weaker in certain jurisdictions where the federal courts have held that a ‘narrow’ arbitration clause (one that defines only a limited category of disputes subject to arbitration) requires the reviewing court to determine first whether the underlying grievance falls into the scope of the arbitration clause. Federal courts in other jurisdictions apply the presumption of arbitrability directly regardless of the breadth of the clause.

4.2 May an arbitral tribunal rule on a party’s challenge to its own jurisdiction (‘competence-competence’)? Need a tribunal suspend its proceedings if a party seeks to test jurisdiction in the courts?

Federal law reverses the presumption of arbitrability with respect to the question of whether the parties agreed to arbitrate arbitral jurisdiction itself. The US Supreme Court has held that ‘clear and unmistakable’ evidence of the parties’ intent to arbitrate arbitrability is required to put the question of arbitrability before an arbitration panel (First Options of Chicago, Inc v Kaplan [1995] 514 US 938 at 944). Only a limited number of gateway questions are in fact jurisdictional questions of arbitrability. A court presented with a ‘procedural’ gateway question, such as time limits, notice, laches, waiver, delay, or other conditions precedent, presumptively should refer the question to the arbitral tribunal in the absence of agreement to the contrary (Howsam v Dean Witter Reynolds, Inc 537 US 79 at 85 (2002)).

Pursuant to the FAA, the reviewing court may stay the arbitration pending the resolution of the jurisdictional question. Without such an order, the arbitral tribunal need not suspend its proceedings.

5. USEFUL REFERENCES

5.1 Provide a selected bibliography of the most influential publications in or relied upon in the jurisdiction – books, journals, newsletters and pamphlets.

Books

American Arbitration Association A Guide for Commercial Arbitrators (American Arbitration Association, 1998) American Arbitration Association A Guide to Mediation and Arbitration for Business People (American Arbitration Association, 1996, amended 2003) American Bar Association, Section of International Law International Litigation Strategies and Practice (American Bar Association, 2005) American Bar Association, Section of Litigation Commercial Arbitration for the 1990s (American Bar Association, 1991) G B Born International Commercial Arbitration in the United States (Kluwer Law and Taxation, 2nd edn, 2000) T E Carbonneau Cases and Materials on Commercial Arbitration (Juris, 2000) J J Coe, Jr International Commercial Arbitration: American Principles and Practice in a Global Context (Transnational Publishers, Inc, 1997) D F Donovan and D W Rivkin International Arbitration and Dispute Resolution in International Joint Ventures (Practicing Law Institute, 2001) L E Edmonson Domke on Commercial Arbitration (The Law and Practice of

Commercial Arbitration) (West, 2005) J E Grenig Alternative Dispute Resolution (West, 2005) H M Holtzmann and J E Neuhaus A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer Law and Taxation, 1989)
R B Lillich (ed) Fact-Finding Before International Tribunals (Transnational
Publishers, Inc, 1992)

R B Lillich and Charles N Brower (eds) International Arbitration in the 21st Century: Towards ‘Judicialization’ and Uniformity? (Transnational Publishers, Inc, 1994)

Andreas F Lowenfeld International Litigation and Arbitration (West, 2005)
I R Macneil et al Federal Arbitration Law (Little, Brown & Co, 1994)
W M Reisman International Commercial Arbitration: Cases, Materials, and Notes on the Resolution of International Business Disputes (Foundation Press, 1997) D W Rivkin Model Law Decisions: Cases Applying the UNCITRAL Model Law on Arbitration, 1985–2001 (Kluwers, 2003) B J Roth et al The Alternative Dispute Resolution Practice Guide (Lawyers Cooperative Publishing, 1993)

Journals, newsletters and pamphlets

ADR and the Law (American Arbitration Association)
ADR Currents (American Arbitration Association)
Alternatives (CPR Institute for Dispute Resolution)
Arbitration International (Kluwer Law International)
American Journal of International Law (American Society of International Law) Award Service (Society of Maritime Arbitrators) The American Review of International Arbitration (Parker School of Foreign and Comparative Law, Columbia University) The Arbitrator (Society of Maritime Arbitrators) The Dispute Resolution Journal (American Arbitration Association) Dispute Resolution Magazine (American Bar Association, Section of Dispute Resolution)
The Dispute Resolution Times (American Arbitration Association)
International Arbitration Law Review (Sweet & Maxwell)
International Arbitration News (American Bar Association, International Commercial Dispute Resolution Committee) International Legal Materials (American Society of International Law) The International Newsletter (American Arbitration Association) Journal of International Arbitration (Kluwer Law International) Just Resolutions (American Bar Association, Section of Dispute Resolution) Mealey’s International Arbitration Reporter (Mealey Publications)

News and Notes from the Institute for Transnational Arbitration (Institute for Transnational Arbitration)
World Arbitration and Mediation Report (Juris Publishing Inc)
World Arbitration Reporter (Butterworths Legal Publishers)

American Arbitration Association Library

The AAA’s Library and Information Center on the Resolution of Disputes has a collection of over twenty-three thousand publications, including works in several languages on various aspects of arbitration practice. The AAA also compiles documents, legislation, court cases, and other significant materials to aid those with questions involving international commercial arbitration. The Library also makes available bibliographies in several categories of arbitration law and practice. One that may be of particular interest is Basic Documents of International Commercial Arbitration, which may be ordered from the AAA. The AAA Library and Information Center is located at:

1633 Broadway
New York, NY 10019–6708

Tel: +1 212 484 4127
Fax: +1 212 245 9572

Email: ReferenceDesk@adr.org

Website: www.adr.org In addition, the AAA website home page (www.adr.org) provides a variety of useful information, including AAA publications, a roster of neutral arbitrators, and various AAA rules.

6. AGREEMENT TO ARBITRATE

6.1 Are there form and/or content requirements for an enforceable agreement to arbitrate? How may they be satisfied?

The FAA and most state laws only apply to written agreements to arbitrate. The laws are generally silent, however, regarding the exact form of agreement required. State laws that have imposed mandatory language or form requirements on arbitration agreements have been voided for being inconsistent with the FAA. Written agreements include exchanges of letters and telegrams. Agreements to arbitrate can also be incorporated by reference. Provided that the parties have otherwise evidenced an intent to arbitrate, courts in the United States do not always require that the arbitration agreement be signed. Applying the FAA, some courts have held that that unsigned references to arbitration contained in agreements and forms on which both parties have acted are enforceable.

7. ARBITRABILITY

8. SEPARABILITY OF ARBITRATION CLAUSES

8.1 May an arbitral clause be considered valid even if the rest of the contract in which it is embedded is invalid?

The FAA and most state laws provide that an otherwise valid agreement to arbitrate is independent of the contract in which it is embedded, and may therefore survive even where the rest of a contract is held, in part or in whole, to be void ab initio. For example, a claim that a contract containing a broad arbitration clause is invalid because it was induced by fraud or for similar reasons, will be subject to arbitration as long as the allegations of fraud or illegality do not extend specifically to the arbitration clause itself (Prima Paint Corpn v Flood & Conklin 388 US 395 at 402–406(1967)).

9. QUALIFICATION/APPOINTMENT/LIABILITY OF ARBITRATORS

9.1 Are there specific provisions regulating the qualifications of arbitrators? Are there requirements (including disclosure) for ‘impartiality’ and ‘independence’, and do such requirements differ as between domestic and international arbitrations?

Neither the FAA nor state laws following the UAA include specific provisions regulating the qualifications of arbitrators.

The FAA provides that an award may be set aside upon a showing of ‘evident partiality’ on the part of any arbitrator, which generally includes close family relationships, significant past or present business or professional ties, and direct or indirect interest in the outcome of the case. The UAA, in its 2000 revision, specifies that an arbitrator with a material interest in the outcome of a proceeding or a substantial relationship with a party may not serve as a neutral arbitrator, and imposes disclosure obligations for all arbitrators. In addition, specific disclosure obligations are typically found in the arbitral rules applicable to a given dispute, including various AAA rules. US courts have vacated awards when arbitrators fail to disclose facts or relationships that may appear to compromise their independence.

Notwithstanding the rule against ‘evident partiality’, courts in the United States have generally approved of tripartite arbitral procedures in which each party appoints an arbitrator who is not neutral and where the two party-appointed arbitrators choose a third, neutral arbitrator. This scenario has only arisen in domestic arbitration cases, as the major international rules all prohibit the appointment of any arbitrators who are not neutral. Effective 1 July 2003, however, the AAA has modified its Commercial Arbitration Rules to reverse the traditional presumption in domestic arbitrations and to require party-appointed arbitrators to meet impartiality and independence standards unless the parties agree otherwise. The American Bar Association (ABA) and AAA have also revised, as of 1 March 2004, their Code of Ethics for Arbitrators in Commercial Disputes to reflect this altered presumption.

9.2 Are there provisions governing the challenge or removal of arbitrators? Do the courts or other jurisdictions play/have a role in any such challenge?

Neither the FAA nor state laws following the UAA contain specific provisions governing the challenge or removal of arbitrators. In a proceeding to set aside an arbitral award, US courts exercise broad authority to vacate the award on the grounds of partiality, corruption or misconduct of an arbitrator, but courts will not entertain such challenges prior to the issuance of an arbitral award. Generally, however, institutional arbitration rules, such as the rules of the AAA and CPR, contain procedures that allow a party to challenge the independence or impartiality of an arbitrator before the relevant arbitral institution either at the time of selection or during the course of the arbitration.

9.3 Does legislation govern, or have the courts developed rules regarding the liability of arbitrators for acts related to their decision-making function?

Although traditionally the issue has not been expressly governed by federal or state statutes, courts have held that an arbitrator is immune from civil liability for acts related to his or her decision-making function. This practice is codified in the most recent revision of the UAA (2000), which provides that arbitrators are immune from civil liability ‘to the same extent as a judge of a court of this state acting in a judicial capacity’. The 2000 UAA and courts have also extended arbitral immunity to arbitral institutions.

10. PARTY REPRESENTATION

10.1 Are there particular qualification requirements for representatives (‘counsel’) appearing in the jurisdictions?

A party representative is not usually required to have any particular legal qualifications or be admitted to practise law in the place of arbitration.

The Supreme Courts of California and Florida, however, have determined that an attorney representing a party in an arbitration in the state must be licensed to practise law in the state (Birbrower v Superior Court 949 P 2d 1 (Cal, 1998); Florida Bar v Rapoport 845 So 2d 874 (Fla, 2003)). Birbrower was modified by legislation which requires a lawyer who is not admitted to practise in California to register with the state Bar Association, associate him or herself with local counsel and submit to the local disciplinary rules (California Civil Procedure Code § 1282.4 (Deering, 2001)). The Florida Bar Association has adopted similar measures, albeit with more burdensome registration requirements. California does not distinguish between domestic and international arbitrations, while the Florida rule exempts foreign counsel in international arbitrations from registration requirements.

11. PLACE OF ARBITRATION/PROCEDURES

11.1 Are there provisions governing the place (seat) of arbitration, or any requirement for arbitral proceedings to be held at the seat?

There are no restrictions on the location where an arbitration may be held. In the event that the arbitration agreement does not itself provide for a specific arbitral forum, most state statutes and arbitral rules generally provide that the arbitral tribunal will designate the situs of the arbitration.

Arbitral proceedings do not need to be held at the seat of arbitration under US law and the rules of most arbitral institutions. However, the place of arbitration will determine the law applicable to arbitration proceedings, as well as the law governing proceedings for setting aside an award in an international arbitration.

11.2 Are specific procedures mandated in particular cases, or in general?

Except as provided by the parties’ agreement or applicable arbitral rules, arbitral tribunals enjoy broad, almost unlimited, discretion to resolve procedural issues as they see fit. The FAA imposes only minimal procedural requirements through its provision that certain procedural irregularities, such as the improper refusal to postpone a hearing or to hear pertinent evidence, may provide a basis to set aside an award. Some state arbitration statutes impose additional procedural requirements, such as those relating to notices of hearing, presentation of evidence, and default, to be used in arbitrations. Such requirements have at most only limited effect on arbitration as they are subject to the federal law preserving the parties’ right to structure their arbitrations, including the selection of procedural rules and delegation of procedural decisions to the arbitral tribunal, as they see fit.

12. EVIDENCE GATHERING

12.1 What is the general approach to the gathering and tendering of evidence at the pleading stage and at the hearing stage (production, discovery, privilege, use of witness statements etc)? Are there differences between domestic and international arbitrations?

Under federal law, parties and arbitral tribunals are free to select rules governing the arbitral procedure.

Under typical common law practice, parties attach to their pleadings basic documents on which they wish to rely. Some form of document discovery is common in domestic arbitration, although arbitral tribunals do not normally grant the broad discovery found in the civil courts. The FAA permits tribunals to summon witnesses and compel documents from both parties and non-parties. The 2000 revision of the UAA grants arbitral tribunals the power to use any discovery process applicable to assist the resolution of the dispute.

The major domestic arbitration rules in the United States provide for pre-hearing production of documents to be used in evidence and for discovery. Although arbitral tribunals are not bound by the Federal Rules of Evidence (where privilege rules are normally found in the United States) parties are free to, and routinely do, assert privileges in response to a discovery request.

While arbitral tribunals increasingly request sworn witness statements in lieu of direct testimony, especially in international arbitrations, oral witnesses’ testimony in arbitrations usually follows adversarial common law procedure with direct and cross-examination of witnesses. Under many state statutes, cross-examination is a right.

The International Bar Association’s Rules on the Taking of Evidence in International Commercial Arbitration (the IBA Rules) provide an additional reference point in international arbitrations taking place in the United States. Even where the parties have not expressly agreed to be bound by the IBA Rules, international arbitral tribunals and the parties frequently refer to them as relevant guidelines for the conduct of proceedings in a manner consistent with the flexibility and efficiency that parties choosing arbitration typically desire.

12.2 What powers of compulsion or court assistance are there for arbitrators to require attendance of witnesses or production of documents, either prior to or at the substantive hearing? Is there a difference between domestic and international tribunals or as between parties and non-parties? Do special provisions exist for arbitrators appointed pursuant to international treaties (ie bilateral or multilateral investment treaties)?

Section 7 of the FAA permits an arbitral tribunal to summon witnesses and to direct those witnesses to produce documents. Section 7 does not distinguish between parties and non-parties. Although the text of the FAA provides only the power to summon witnesses before the tribunal, some courts have held that this provision also allows tribunals to order that documents be produced prior to a hearing (other courts have expressly held to the contrary). Because of section 7, parties may petition a court to enforce a tribunal’s discovery order. Similarly, a tribunal’s discovery order may be challenged in a court. Upon a challenge by a non-party to a tribunal’s discovery order, courts will generally independently determine the relevance of the discovery order. Parties, having submitted to arbitral jurisdiction, generally cannot challenge such orders. Most state statutes contain similar discovery provisions, permitting enforcement by state courts.

Petitions to enforce an arbitral tribunal’s discovery order must be brought in the federal district court for the district in which the tribunal is sitting. Thus, the enforceability of a tribunal’s discovery order is subject to the limits of the federal court’s jurisdiction. A federal district court’s subpoena power is territorially limited to the state in which that court sits and 100 miles from the court. If an important witness lives beyond this territory, the arbitral tribunal may, if necessary, hold a hearing in a location from which it may subpoena that witness.

13. INTERIM MEASURES/ROLE OF THE TRIBUNAL

13.1 Are there special provisions relating to the granting of interim and preliminary relief? Have the courts recognised and/or limited any such authority? Do the courts themselves play a role in interim relief in arbitration proceedings?

Although the FAA is silent on the issue of interim measures awarded in aid of arbitration and the US Supreme Court has not decided the issue, courts typically enforce interim awards made by arbitral tribunals. The 2000 revision of the UAA expressly provides for enforcement of interim measures awarded by arbitral tribunals, and the AAA has recently added to its Commercial Arbitration Rules expedited procedures for obtaining emergency relief even prior to constitution of the arbitral tribunal. Because tribunals are generally considered to have exhausted their powers upon issuance of an award, interim awards should be labelled as such.

There is some controversy as to whether US courts have the authority to award provisional remedies in aid of international arbitration. The FAA does not expressly provide for such authority, and judicial decisions have been divided on the issue. In the past, some courts have held that granting provisional remedies is contrary to art II(3) of the New York Convention, which requires courts to refer the parties to arbitration. These courts have interpreted this language to divest courts of any jurisdiction over the dispute. However, more recent decisions have found no conflict between the New York Convention and the permitting of pre-award attachment. Thus, although the conflict still exists, a clear trend has emerged in favour of permitting interim measures in cases subject to the New York Convention.

14. TAXATION OF ARBITRATORS’ FEES

14.1 Does the state, or any of its sub-divisions, purport to tax domestically the fees of foreign arbitrators conducting hearings in the state? Is there a difference if the arbitration is ‘seated’ in the state or elsewhere?

Federal and state tax laws and regulations do not contain special provisions governing income earned from arbitration fees. Income earned from arbitration fees is taxable in the same manner as other income, subject to tax treaties between the United States and the arbitrator’s country of residence.

15. DEFAULT PROCEEDINGS

15.1 Are there provisions governing a tribunal’s ability to determine the controversy in the absence of a party who, on appropriate notice, fails to appear at or seek adjournment of the arbitral proceedings?

The FAA does not address the subject of default. If a party has received proper timely notice of the time and place of the hearing, courts have held that the arbitral tribunal may hear and decide the case in the party’s absence. Most state statutes expressly address default, permitting arbitral tribunals to proceed in the absence of a properly notified party.

16. THE ARBITRAL AWARD

16.1 Must an award take any particular form, eg in writing, signed, dated, place, the need for reasons, delivery etc?

The FAA and most state statutes require an award to be in writing. Usually the date and place of issuance must also be specified. The FAA does not require an award to be signed, but many states and most arbitration rules require signature by a majority of the arbitral tribunal members.

The FAA and most state laws do not require that reasons for an award be stated. The practice in many domestic arbitrations, reflected in the AAA Rules for domestic arbitrations, is to state only the holding of the award. By contrast, rules governing international arbitrations usually require an arbitral tribunal to give the reasons for the award unless the parties agree otherwise.

Although the FAA does not address the issue, most state laws require delivery of the award to the parties, personally or by certified mail. For the most part, registration or filing of an award is not required. Awards involving patents must be provided to the Commissioner of Patents.

16.2 Are there limits on arbitrators’ powers to fashion appropriate remedies, eg punitive or exemplary damages, rectification, injunctions, interest and costs?

In the absence of the parties’ agreement to the contrary, there are few limits on an arbitral tribunal’s powers to craft remedies. Generally, the tribunal may grant any relief it deems ‘just and equitable’ including injunctive relief (see eg AAA Commercial Rules, art 29). Punitive or exemplary damages are permitted in the 2000 revision of the UAA and by case law in most jurisdictions. Such damages may be limited by rule or agreement to cases where they would be permitted or required in a civil action, or to cases where they are needed to compensate for bad faith or dilatory tactics (AAA International Rules, art 28.5).

The FAA and most state statutes leave the award of costs to the discretion of the arbitral tribunal. Administrative costs for both domestic and international arbitrations under the AAA are fixed in a detailed schedule. In international cases, the arbitral tribunal may award the successful party the cost of its legal representation (AAA International Rules, art 31(d)). In domestic practice, parties bear their own legal costs unless the agreement provides otherwise.

17. RECOURSE FROM AN AWARD

17.1 Are there provisions governing modification, clarification or correction of an award?

An arbitral tribunal is generally considered to have exhausted its power once it renders a final award, and cannot modify or add to it, unless the arbitration agreement or applicable arbitral rules provide otherwise. However, some state laws permit arbitral tribunals to modify their awards upon the application of a party (eg 2000 UAA § 20), and some courts have held that tribunals have an inherent power to clarify their awards.

Courts may modify awards in limited circumstances. Under the FAA, a federal court may correct errors in calculation or description, formal imperfections not affecting the merits of the dispute, or rulings on a matter not submitted to the arbitral tribunal. In patent cases, parties may agree that a court may modify a prior arbitration award if a patent found valid in arbitration is held invalid in a subsequent court action (35 USC§ 294).

17.2 May an award be appealed to or set aside by the courts? If so, on what grounds and by what procedures?

There is no appeal on the merits from an arbitration award to a court. Courts may set aside an award on narrow grounds found in statute or case law.

Under the FAA and state statutes an award may be set aside only for reasons involving the integrity of the arbitral process (fraud or corruption, partiality, and other prejudicial misconduct, such as refusal to hear pertinent evidence), or if the arbitral tribunal exceeded its powers or failed to make a ‘final and definite’ award. Courts interpret each of these grounds restrictively, giving great deference to decisions made by the tribunal.

Some courts have added the additional, difficult to prove and rarely sustained, grounds of ‘manifest disregard’ of law or evidence. Although mistake of law is not a ground for setting aside an award, courts have stated that an award may be vacated for ‘manifest disregard of law’ if the arbitral tribunal was aware of, and chose to ignore, well-defined, explicit and clearly governing law. However, particularly outside of the consumer or employment context, awards are rarely, if ever, vacated on this ground.

Under the FAA and most state laws, the party seeking to set aside an award must petition a court to vacate the award within 90 days of its issuance. The court has discretion to direct a rehearing by the arbitral tribunal unless the arbitration agreement specified a time frame which has expired.

18. ENFORCEMENT OF AWARD

18.1 What are the procedures and standards for enforcing an award? Is there a difference between ‘domestic’ and ‘non-domestic’ awards?

There are differences in the procedures governing the enforcement of domestic and non-domestic awards. In practice, courts favour enforcement of arbitral awards, whether domestic or foreign. In both cases, an order ‘enforcing’ or ‘confirming’ an award may be enforced as if it were a judgment rendered by the court. As such, it may also be appealed to a higher court.

An award is ‘non-domestic’ if the underlying arbitration involved a foreign party or had some other significant connection with a foreign country. A proceeding to enforce a ‘non-domestic’ award must be brought within three years of the rendering of the award in the federal judicial district in which it was issued or in a proper district court under the federal venue statute. The award must be enforced unless it has been vacated under the FAA or enforcement can be refused under the New York Convention.

A proceeding to enforce a domestic award must be brought with in one year of the issuance of the award. Unless there is an independent basis for federal jurisdiction, such as diversity jurisdiction, actions to enforce domestic awards must be brought in state court.

19. CONFIDENTIALITY OF PROCEEDINGS

19.1 What are the confidentiality requirements of the arbitral process, ie existence of the arbitration, pleadings, documents produced, hearing, award?

The FAA does not address the confidentiality of arbitral proceedings or awards, although parties are free to include a confidentiality clause in their agreement or to choose rules providing for confidentiality. By tradition, commercial arbitration is considered private. However, federal district courts in Delaware, New York and Louisiana have held that arbitration documents cannot be withheld as confidential if requested in later civil litigation (Contship Containerlines v PPG Indus 2003 US Dist LEXIS 6857 (SDNY, 2003); Caringal v Karteria Shipping 2001 WL 874705 (ED La, 2001); United States v Panhandle Eastern Corpn 118 FRD 346 (D Del, 1988)). These decisions involved disclosure of materials from earlier international arbitrations. While the AAA Commercial Arbitration Rules are silent on the issue of confidentiality, the AAA’s International Arbitration Rules mandate that the arbitrators and administration will keep all matters concerning the arbitration confidential. The July 2003 modifications to the AAA International Arbitration Rules provide for redacted publication of arbitral awards.