A large part of the advantage of arbitration is the finality of the result, stemming from the lack of a meaningful appeal rights on legal issues, contractual interpretation, factual determinations, or the dispute resolution process itself. Indeed, the Federal Arbitration Act, 9 U.S.C. §10, provides that an arbitration award is to be confirmed as a judgment unless one of four specific and narrow conditions for vacatur is met. Probably the most notorious instance of an appeal of an arbitration award (and certainly the one most likely to come up in cocktail party conversation) was decided in September 2015 by Judge Richard M. Berman of the United States District Court for the Southern District of New York – the successful appeal by All-Pro Quarterback Tom Brady and the NFL Players Association of Brady’s four game suspension based on accusations of complicity in a scheme to gain an unfair competitive advantage in an NFL playoff game. NFL Mgmt. Council v. NFLPA, No. 15-Civ.

When Brady appealed the suspension (through the Player’s Association or “NFLPA”) they were initiating an arbitration proceeding under the NFLPA Collective Bargaining Agreement (“CBA”) – which is the contract governing these parties’ relationship. It became a “federal case” (literally) as a motion to confirm, and cross-motion to vacate, an arbitration award under Section 10 of the Federal Arbitration Act, 9 U.S.C. § 10. Section 10 provides that a reviewing court may vacate an arbitration award where: (1) The award was procured by corruption, fraud, or undue means; (2) There was evident partiality or corruption in the arbitrators; (3) The arbitrators were guilty of misconduct in wrongly refusing to postpone the hearing, refusing to hear material evidence; or of any other misbehavior by which the rights of any party have been prejudiced; or (4) The arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award was not made.See 9 U.S.C. §10. Most state arbitration statutes, including Tennessee’s, have similar provisions.

The 2017 arbitration panel found the 2015 arbitration and award met the requirements of Rule 13504(a)(6)(C) and unanimously dismissed the arbitration. Walker filed a motion to vacate arguing that the 2017 panel was “guilty of misconduct” under 9 U.S.C. § 10(a)(3) and “exceeded its powers” under 9 U.S.C. § 10(a)(4). The district court disagreed, denied Walker’s motion to vacate, and granted Ameriprise’s motion to confirm.

The 2017 arbitration panel found the 2015 arbitration and award met the requirements of Rule 13504(a)(6)(C) and unanimously dismissed the arbitration. Walker filed a motion to vacate arguing that the 2017 panel was “guilty of misconduct” under 9 U.S.C. § 10(a)(3) and “exceeded its powers” under 9 U.S.C. § 10(a)(4). The district court disagreed, denied Walker’s motion to vacate, and granted Ameriprise’s motion to confirm.

In Badgerow, the Court must decide whether federal courts have subject matter jurisdiction to confirm or vacate an award under Sections 9 and 10 of the FAA, as opposed to Section 4, which governs petitions to compel arbitration. See 9 U.S.C. §§ 9 and 10 compared to § 4.As we stated in our June 16 blog, if the Court’s opinion is driven solely by the language of the act’s Section 4, it could have a far different result then the presumed purpose of the FAA – to facilitate enforcement of arbitration agreements.The Supreme Court’s prior decisions laid the groundwork for many of the interpretive concerns raised during the oral argument. For example, “[T]he Act is ‘something of an anomaly’ in the realm of federal legislation: It ‘bestow[s] no federal jurisdiction but rather require[es] [for access to a federal forum] an independent jurisdictional basis over the parties’ dispute.’

They apply a low threshold for admitting evidence, and they weigh the reliability and importance of the evidence as the hearing continues and issues evolve ... Also, many arbitrators liberally admit evidence in arbitration in order to obviate a later court challenge to their awards based on allegations of unfair preclusion of critical evidence."). The basis for setting aside an award for failure to receive evidence is in fact quite narrow.Under the Federal Arbitration Act, the “court . . . may make an order vacating the award upon the application of any party to the arbitration…where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy” 9 U.S.C.§ 10(a)(3) Section 10(a)(3) "cannot be read, however, to intend that every failure to receive relevant evidence constitutes misconduct which will require the vacation of an arbitrator's award." Newark Stereotypers' Union No. 18 v. Newark Morning Ledger Co., 397 F.2d 594, 599 (3d Cir. 1968).

The court granted the motion and the parties proceeded to arbitration, where they agreed that the arbitrator should decide whether the arbitration provision authorized class arbitration. The arbitrator decided that it did. Oxford filed an action in federal court to vacate that decision, arguing that the arbitrator exceeded his powers within the meaning of Section 10(a)(4) of the Federal Arbitration Act (FAA), 9 U.S.C. § 10(a)(4) (Section 10). The district court denied the motion, and the Third Circuit affirmed.

See generally Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15 (2d Cir. 1997); Goldgroup Resources, Inc. v. DynaResource de Mexico, S.A. de C.V., 994 F.3d 1181 (10th Cir. 2021); Ario v. Underwriting Members of Syndicate 53 at Lloyds for 1998 Year of Account, 618 F.3d 277 (3d Cir. 2010). Those courts have held that the set aside grounds under the Federal Arbitration Act (“FAA”), 9 U.S.C. §10, for domestic awards apply to awards encompassed by the Convention.The U.S. Court of Appeals for the Eleventh Circuit has been an outlier on this point, having held since 1998 that Article V of the Convention supplies the grounds for both the set aside and the refusal of recognition and enforcement of an award encompassed by the Convention. See Industrial Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1445–46 (11th Cir. 1998); Inversiones y Procesadora Tropical IMPORTS, S.A. v. Del Monte International GmbH, 921 F.3d 1291, 1301–02 (11th Cir. 2019) (reaffirming Industrial Risk). That may soon change, however, as a panel of U.S. Eleventh Circuit has asked the Court en banc to overturn that incorrect precedent.

Last year, we wrote about precedent in the U.S. Court of Appeals for the Eleventh Circuit holding that international arbitration awards issued in the U.S. and encompassed by the New York Convention can be vacated only under the grounds enumerated in Article V of the Convention. Now, the Eleventh Circuit en banc has overturned its prior precedent, aligning itself with all other circuits, which hold that the vacatur grounds under the Federal Arbitration Act (FAA), 9 U.S.C. §10 apply to international arbitration awards issued in the U.S.Corporación AIC, SA v. Hidroeléctrica Santa Rita S.A involved a Miami-seated arbitration between two Guatemalan companies. When the arbitral tribunal ruled in favor of Hidroeléctrica Santa Rita, Corporación AIC sought to set aside the award in the U.S. District Court for the Southern District of Florida. Corporación AIC based its set aside petition on 9 U.S.C. § 10(a)(4), which authorizes the set aside of an arbitral award where the arbitrators have exceeded their powers. The district court, however, dismissed the petition because Eleventh Circuit precedent (Industrial Risk M.A.N. Gutehoffnungshutte GmbH and Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte International GmbH) dictates that Article V of the Convention—not § 10 of the FAA—supplies the grounds for vacatur of an award encompassed by the Convention.A panel of the Eleventh Circuit upheld the district court’s ruling given the binding precedent, but urg

Many arbitration agreements address the finality of any resulting award, with differing and sometimes vague language. A number of readers might assume that regardless of the agreement language, federal courts still retain jurisdiction to review awards under the Federal Arbitration Act, 9 U.S.C. § 10 (FAA). As a recent Fourth Circuit opinion reveals, the interpretation is a bit more complex than that.