As more and more contracts are including arbitration provisions, it is important for parties to understand what submitting to arbitration truly entails. One of the most important issues that arises is when a party wants to vacate or modify an award. Often parties are not aware that their options are limited in this regard.
Historically, grounds for challenging or vacating an arbitration award in Florida have been narrow and limited to certain statutory reasons:
Statutory Grounds for complete vacatur of an award:
- Award was procured by fraud, corruption, or other undue means;
- Evident partiality, corruption, or prejudicial misconduct by an Arbitrator occurred;
- Arbitrator abused his/her discretion in conducing the hearing;
- Arbitrator exceeded his/her powers;
- Parties did not agree to arbitrate; or
- Arbitration was conducted without proper notice.
Statutory Grounds for modification/correction of an award:
- Arbitrator made an evident miscalculation of figures or mistake in the description of any person, thing, or property reference in the award;
- Award included a matter that was not submitted to arbitration and the award can be corrected without affecting the merits of the issues that were submitted to arbitration; or
- Award is imperfect as a matter of form, but the imperfection does not affect the merits.
Subsequently, case law began developing that expanded the means for challenging/vacating an arbitration award to include non-statutory grounds. Those non-statutory grounds included:
- Arbitrator manifestly disregarded the law;
- Award was arbitrary and capricious;
- Enforcement of the award would violate public policy; or
- Arbitration agreement specified additional grounds for challenging an award.
These non-statutory grounds for vacatur and modification have now been eliminated by Florida and Federal case law:
Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008).
In Hall Street, the Supreme Court explicitly held the grounds stated in the Federal Arbitration Act for vacating, modifying, or correcting an arbitration award constitute the exclusive grounds for vacatur and modification. The parties cannot, even by contract, expand upon the statutes.
Frazier v. CitiFinancial Corp. LLC, 604 F.3d 1313 (11th Cir. 2010).
In Frazier, the Eleventh Circuit enlarged and clarified the holding in Hall Street to include abolishment of all judicially created (non-statutory) avenues for vacatur, modification, and/or correction of an arbitration award.
Visiting Nurse Assn. of Florida, Inc. v. Jupiter Medical Center, Inc., 154 So.3d 1115 (Fla. 2014), cert. denied, 135 S. Ct. 2052 (2015).
To settle a split amongst the Fourth and Fifth district courts of appeal, the Supreme Court of Florida published its opinion in Visiting Nurse, solidifying the law in Florida. The Court reasoned that regardless of whether parties looked to Federal or Florida statutes, the bases for vacating or modifying an award cannot be supplemented judicially or contractually in light of the Hall Street holding.
The judiciary has made it clear that parties are limited to the statutory means for challenging, modifying, or vacating an arbitration award. With this in mind, it is important for parties to truly evaluate the potential impact of arbitration provisions before executing their contracts.
Elizabeth B. Ferguson
Board Certified Construction Lawyer
Partner / Practice Group Leader