(Id. at p. 33.) A trial court may vacate an arbitration award only as expressly authorized in section 1286.2.Grounds to Vacate an Award California Code of Civil Procedure §1286.2(a) allows a trial court to vacate an arbitration award if it determines: the rights of a party were substantially prejudiced by misconduct of a neutral arbitrator (§ 1286.2(a)(3)); the arbitrator exceeded his or her powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted (§ 1286.2(4)); or, the rights of a party were substantially prejudiced by the refusal of the arbitrator to postpone the hearing upon sufficient cause being shown or by the refusal of the arbitrator to hear evidence material to the controversy (§ 1286.2(a)(5)). Because the actual UM/UIM arbitration is so final and difficult to overturn, it is imperative that the parties adequately prepare for the arbitration and take the proceeding as seriously as possible.

The California Court of Appeal, Fourth District, Division One, issued the following decision on October 17, 2023:FCM Investments, LLC v. Grove Pham, LLC, et al., Case No. D080801: Though an agreement to privately arbitrate is an agreement to limited judicial review, California Code of Civil Procedure section 1286.2, subdivision (a)(3) nevertheless enables courts to vacate arbitration awards for arbitrator misconduct. In FCM, the Court of Appeal directed the trial court to vacate an arbitration award turning on an adverse credibility finding based on a key witness’s use of an English translator, giving rise to a reasonable impression of arbitrator bias.FCM signed an agreement to purchase real property from Grove with a provision requiring the parties to mediate, and then arbitrate disputes. After FCM filed a complaint alleging Grove engaged in dilatory tactics to prevent the sale, the parties went to mediation. The parties signed a joint addendum addressing the disputed issues, but tensions rose and FCM pulled out of the deal. The parties stipulated to arbitration before a retired superior court judge. The arbitrator concluded that Grove breached the joint addendum, justifying FCM’s cancellation of escrow. The arbitrator based the award mainly on an adverse credibility finding against Grove’s own

By adopting the AAA’s Rules, the agreement provided for a written decision, the court ruled.With respect to Cornejo’s judicial review argument, the court found that “Cornejo misapprehend[ed] the extent of judicial review required by Armendariz.” California Code of Civil Procedure section 1286.2 governs judicial review of arbitration decisions. Because the agreement did not preclude review under section 1286.2, the court held that the agreement satisfied Armendariz.UnconscionabilityUnder California law, an arbitration agreement would be invalidated if it is both procedurally and substantively unconscionable.

Subsequent to the award, Shulman petitioned the trial court to vacate the arbitration award on the ground that the arbitrator had failed to make certain disclosures required under the California Ethics Standards for Neutral Arbitrators in Contractual Arbitrations (the “California Standards”). Under California Code of Civil Procedure § 1286.2, failure of an arbitrator to make proper disclosures is grounds to vacate the award. The trial court found that the arbitrator had failed to make required disclosures and vacated the award, and the APG parties appealed.

In California, an arbitration award will stand unless the party challenging the decision can show (1) "the award was procured by corruption, fraud, or other undue means"; (2) "the rights of the party were substantially prejudiced by the misconduct of a neutral arbitrator"; or (3) an arbitrator failed to make a timely disclosure of a conflict which would be a ground for disqualification. Cal. Civ. Proc. Code § 1286.2. The Federal Arbitration Act includes similar limited grounds for vacating an award, with "evident partiality or corruption in the arbitrators, or either of them," being one ground.

Further, the CAA provides only limited grounds for judicial review of an arbitration award, such as fraud, corruption, misconduct, or that the award exceeded the arbitrators’ powers. Cal. Civ. Proc. § 1286.2. The Court then noted that, in prior cases interpreting the CAA, it ruled, “[I]n the absence of some limiting clause in the arbitration agreement, the merits of the award, either on questions of fact or of law, may not be reviewed except as provided in the statute.”