It has always been possible to argue (albeit with difficulty and often with little success) that an arbitration award should be vacated because it manifestly disregards the law. However, lately, more and more construction lawyers are relying on a different argument – if an award doesn’t conform to the contract, then the arbitrator has exceeded his/her authority, and the award should be overturned.
If an arbitrator decides issues which the parties have not actually submitted for a determination by the arbitrator, then the arbitrator is exceeding his or her authority. An arbitrator is limited to interpreting only those provisions within that agreement which called for the arbitration in the first place, and he must construe those provisions according to their plain and ordinary meaning. Applying extraneous principles to the agreement would be inappropriate.
While it is still an uphill challenge to overturn any arbitration award, these developments are surely encouraging.
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