But Arbitration Panel Did Not Exceed Power In Panoche Energy Center v. PG&E.
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Under California law, parties to an arbitration can contractually limit an arbitrator’s powers, creating opportunities for vacating arbitration awards when the arbitrator exceeds the arbitrator’s powers – something not to attempt under federal law.
Panoche Energy Center, LLC v. Pacific Gas and Electric Company, A140000 (1/4 May 5, 2016) (Streeter, Ruvolo, Reardon) (unpublished) involves an arbitration in “a long-running dispute” between an electricity producer and a utility over which of them should bear costs to comply with a legislatively mandated program to reduce greenhouse gas. The arbitration panel stuck Panoche with the costs of implementing green house gas reduction, and Panoche petitioned to vacate the arbitration award under 1286.2(a)(5), “alleging its rights were ‘substantially prejudiced’ by the arbitrators’ refusal to ‘postpone’ the hearing ‘upon sufficient cause being shown’ (i.e., until regulatory proceedings were completed so that the outcome of those proceedings could be considered in the arbitration).” The trial court agreed that the arbitration was premature and vacated the award. PG&E appealed.
The parties had agreed: “The Parties are aware of the decision in Advanced Micro Devices, Inc. v. Intel Corp., 9 Cal.4th 362 (1994), and, except as modified by this Agreement, intend to limit the power of the arbitrator to that of a Superior Court judge enforcing California Law.”
Because Superior Court judges cannot adjudicate unripe cases, the Court of Appeal concluded that the arbitrator’s roles were contractually limited to the adjudication of justiciable controversies. However, the Court of Appeal then concluded that the controversy was neither unripe nor moot, reversing the court’s order vacating the arbitration award, and directing that the award be confirmed.