Grounds For Appeal Go Beyond Those Allowed By Existing State And Federal Statutes
Perhaps the greatest risk with arbitration is that errors of fact and law are not grounds for appeal. The American Arbitration Association has now addressed that risk by adopting Optional Appellate Arbitration Rules effective November 1, 2013.
These optional rules expand the grounds for appealing an Underlying Award to include, “(1) an error of law that is material and prejudicial; or (2) determinations of fact that are clearly erroneous.”
Parties seeking to appeal an Underlying Award obtained from the AAA arbitrator must file a Notice of Appeal within 30 days of the date of the Underlying Award, a filing fee, a copy of the applicable arbitration agreement providing for appeal of the Underlying Award, and a copy of the Underlying Award. The AAA provides sample language for an arbitration agreement that anticipates appellate review by an AAA tribunal. Without such an agreement, a party still cannot unilaterally appeal.
The appellate tribunal will have three arbitrators, unless the parties agree to one arbitrator, and will have broad power to rule on the scope of its own jurisdiction.
While providing an added safeguard against errors of fact and law, the optional rules will add a new layer of expense and time, thereby narrowing the gap between arbitration and litigation in court. But choosing the arbitration appellate option may well be worth it, on a case-by-case basis, especially in large-scale commercial arbitration.