ARBITRATION OUTLINE

I. Background and Enforceability of Arbitration Agreements

A. AMFInc v. Brunswick Corp. (1985) – parties entered into agreement to enter into non-binding
arbitration. Held that arbitration agreements were enforceable as an equitable remedy under the
FAA.
B. Cheng-Canadian v. Renaissance (1996) – issue of arose out of a wrongful termination suit in
which the employee handbook had an arbitration clause that allowed for an arbitration to be run
by managers of the hotel/employer.
i. Held that they did not have to go to arbitration, because it did not allow for a 3rd party
decision maker, a final judgment, or a level of impartiality.
C. Kabia v. Koch (2000) – Guy brought action for libel and slander for things stated in an
arbitration of People’s Court. Held that the action should be dismissed, because judicial
immunity still applied in arbitration.
D. C&L Enterprises v. Indians – Indians signed a contract that contained an arbitration
clause for a roof. Indians proposed the terms of the contract. The contract was breached by the
Indians, and they claimed sovereign immunity.
ii. The SC held that the arbitration clause was binding on the Indians.
iii. Reasoning: Contracting for arbitration clauses effectively waived the sovereign
immunity.
II. General Contract Law Defense
A. There is an emphatic federal policy towards arbitration.
B. If it is in writing, the defenses are limited to ordinary contract defenses.
C. FAA has been declared by the legislature to be a substantive law; therefore, it pre-empts any
state statutes.
D. Substantive arbitability – whether or not they have already agreed to have arbitration (courts)
E. Procedural arbitability – whether or not it follows the procedure of the arbitration (arbitrator)
F. Prima Paint Corp. v. Flood & Concklin Mfg. Co (1967) – prima bought the other,
and there was a blanket arbitration clause. They found out that it was actually entered into by
fraud, and they complained that it was not to be arbitrated.
i. SC held arbitrator got to hear it, unless the fraud was specific to the arbitration clause.
G. First Options v. Kaplan – (1995) Kaplan’s were a stock trader and his wife, who had not
themselves, signed the arbitration agreement. Agreement was between the clearinghouse and the
investment company. The clearinghouse sued them, saying they were individually liable.
i. SC held it was for the cts to decide whether or not they decided to arbitrate, because they
had not signed the arbitration agreement themselves.
H. Terminex v. Dobson – if you try to get the benefits of the contract, then you are held to that
contract.
I. Defenses to Arbitration agreements:
i. Laches – equitable defense, when someone sits on their rights for so long that it
prejudices the other party.
ii. Waiver by estoppels – when you waive something such that going back in would unduly
prejudice the other party
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 iii. How to waive your right to arbitrate-
1. Take action inconsistent with arbitration
2. Engaging in detailed, protracted litigation
3. Filing a counter-claim rather than a motion to compel
4. Conducting extensive discovery
iv. *Knowledge of right to arbitration, acts inconsistent with it, and causes prejudice on the
other side.
J. Specht v. Netscape Communications Corp. (2002) – there was downloadable software, and
immediately upon hitting enter it gave away all of your information, and thus a suit. The
arbitration clause was buried inside another window of terms and uses, but you clicked “I agree.”
i. Held was unR and unforeseeable they would have looked through it, and thus did not
manifest an assent to the arbitration clause.
K. Badie v. Bank of America (1998) – Bank sent extra attachments along with monthly
statements, telling the customers that they were adding an ADR agreement to their contract.
i. Held there should be no arbitration, because it was not part of the existing, original
contract.
L. Hill v. Gateway – ordered a computer, and the attached paperwork included a contract with
an arbitration clause that would take effect after day 30. After that time, Gateway filed a motion
to compel arbitration.
i. Held this shrink-wrap contract was enough to manifest assent to the contract, and the
arbitration agreement stood.
M. Gibson v. Neighborhood Health Clinics – woman got the employee manual, and part of it had an
arbitration agreement.
i. Held this contract lacked consideration, no arbitration.
N. Circuit City v. Adams – the employee signed a contract of adhesion with the employer,
because it forced them to arbitrate and limited remedies, and did nothing against the company.
i. Held it was a K of adhesion, and therefore unconscionable, making the agreement void.
O. Engalla v. Permanente Medical Group – guy sued for medical malpractice suit, and
they had entered into an arbitration group that they said was the faster, cheaper way of doing it.
But the company kept pushing off the arbitration agreement over and over. They claimed that it
was fraud in the inducement on behalf of the arbitration clause.
i. SC held it would stay in court, since the arbitration agreement was entered into by fraud.
P. Hooters of America, Inc v. Phillips (1999) – Lady quit filing suit of sexual harassment.
Employer sought arbitration, and was denied, so he made an interlocutory appeal. The
arbitration agreement allowed for the employer to select the arbitrator, and select the group in
which the arbitrator was supposed to come from, including the third neutral.
i. Held doing so violated the good faith and fair dealing, and therefore struck down the
arbitration agreement.
III. Binding Non-Signatories to Agreements to Arbitrate
A. Thomson-CSF, S.A. v. American Arbitration Association
i. Rule: Non-signatories can be bound, when reached by theories of contract and agency
law.

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 B. Sherk v. Alberto-Culver – distinguishes Wilko b’c transaction was an international one.
Submitting a statutory claim to arbitration is permissible. This was a Securities Exchange Act
claim that was found to be arbitral
C. Alexander v. Gardner Denver – Ct held that unionized employee’s earlier exercise of the
compulsory arbitration provision in a collective bargaining agreement did not preclude him from
later pursuing a Title VII discrimination claim in a judicial forum.
D. EEOC v. Waffle House – US Sup. Ct held an employee’s agreement to arbitrate does not
preclude the EEOC from seeking to recover in court relief such as damages, back pay, or
reinstatement on behalf of the employee.
E. Doctor’s Assoc. v. Cassarotto – Conspicuous notice of arbitration on k.
IV. Procedural Issues
A. Green Tree Financial Corp. – Alabama v. Randolph (2000) – There was a decision
as to whether the arbitration agreement could be appealed after arbitration was compelled and
claims dismissed, and finally if it was unenforceable due to possible prohibitive costs to arbitrate.
i. Held (1) decisions to arbitrate are final judgments and can be appealed, and (2) possible
prohibitive costs do not automatically make the arbitration unenforceable, because they
are too remote to be seen.
B. Discover Bank v Vaden- The court remanded the case to determine whether there was subject
matter jurisdiction, holding that the arbitration agreement does not create subject matter
jurisdiction under the FAA, but the underlying dispute itself
i. Now, court held it was the underlying subject matter of the complaint.
C. Ansari v. Qwest Communications Corp. – there was an arbitration agreement that agreed to
arbitrate in DC. This claim was brought in Colorado federal court.
i. The Court denied arbitration, holding that a ct in one jdx cannot compel arbitration in
another jdx.
D. Specialty Bakeries v. Robhal, Inc. – there was an arbitration agreement, and after filing for
arbitration in state court, the federal court had a motion for preliminary injunction.
i. Held the fed ct could grant an injunction of a state action pending arbitration.
V. Arbitrability of Federal Statutory Claims
A. Wilko v. Swan – customer pled a breach in a securities act, and there was a marginal
arbitration agreement. The guy wanted to send it to arbitration even though it’s a statutory claim.
i. Held it was an improper forum since there could be a result that was less than law.
(Later overturned)
B. Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc. – there was an agreement
between the American company and the Japanese company that had an arbitration agreement.
There was a breach in the contract.
i. Held they had K for it, there was a treaty that makes them enforceable, and so they
enforced it even though it was a statutory claim.
C. Shearson American Express v. McMahon – (1987) Plaintiffs were customers of a
brokerage firm. There were 2 customer agreements that had arbitration clauses. They brought
actions based on state contract law, SEC claims, and RICO claims.
i. The SC held all the claims must be arbitrated.
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 ii. Rule: Burden is on the party opposing the arbitration to show that the statute implicitly or
expressly waived the right to arbitration.
iii. Rule: If there is an irreconcilable conflict between arbitration and the statute, then it can
also waive the right to arbitration.
D. *Gilmer v. Interstate/Johnson Lane Corp – (1991) Guy started employment with D
and contract included an agreement with arbitration, and when he was let go he was 62, so he
brought a claim based on ADEA for age discrimination.
i. Held it was appropriate and upheld arbitration on the ADEA, EEOC claim.
E. In re US Lines, Inc. – (1999) Arbitration agreement between the insurance co and this co;
US Lines was claiming bankruptcy, and there was suing for asbestos from its employees. The
insurance clubs had agreements to pay the employees first.
i. SC held this was a core proceeding and thus is within the discretion to be heard by the
bankruptcy court.
ii. Rule: Bankruptcy courts have exclusive jurisdiction over core proceedings of equity
claims.
iii. *IF it is a core proceeding, then bankruptcy court has power to stay arbitration. If not a
core proceeding, then they lack the power.
F. In re American Homestar – plaintiffs bought a mobile home, and part of the contract
included a warranty with arbitration provisions.
i. SC held it should be sent to arbitration because it was not expressly or implicitly
prohibited and that it did not adversely affect the underlying purpose of the action.
ii. And even though the FTA interpreted it to preclude enforcing binding arbitration,
because it expressly prohibits binding arbitration. The SC said they owe no such
deference when the agency’s interpretation is unreasonable.
VI. Arbitrability and Statutory Rights and Remedies
A. Green tree financial of Alabama v. Randolph – Randolph brought suit under TILA
act, and her agreement included an arbitration clause. She contended that it failed to protect her
from potentially substantial costs of litigation, and therefore kept her from pursuing federal
statutory claims in arbitration.
i. SC sent it to arbitration because there was no evidence to show that it would put any kind
of burden on her, and it is her burden to prove that the substantial costs would keep her
from it.
VII. FAA and State Law and the Scope of the FAA
A. Background
i. Ala. Code said there should be no binding pre-dispute arbitration.
ii. The USAA was the original arbitration act, that was seen only as an article 3 procedural
law, and following Erie, it was simply only available in federal court.
iii. Erie Railroad v. Thompkins – there is no federal substantive law, so you must
apply state law.
iv. Then they codified it and called it the FAA.
v. Burnhart v. Polygraphic – even though they said the FAA was substantive, they
still upheld the state law.

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 vi. Prima Paint – stood for the seperability doctrine, and that the arbitration clause was
special, and could be upheld unless that’s what’s being attacked.
vii. Moses H. Coan v. Mercury Construction Company – said it was not only
substantive law, but also that it was favored.
B. Southland v. Keating – (1984) there was an agreement between the owner of a bunch of 7-
11s and the franchisees. The agreement continued an arbitration agreement. There was a claim,
brought in state court including claims of fraud, breach of fiduciary duty, and a violation of the
California Franchise Investment Law. They purported that arbitration was not allowed under the
CFIL.
i. Held FAA pre-empted the state law under the supremacy clause, and further that it was
applicable in both federal and state courts.
C. Allied-Bruce Terminex (1995) – In AL, which still had the statute that did not favor pre-
dispute arbitration, there was a K signed that included an arbitration clause, for termite control in
this one particular house in Birmingham. The lower courts held that the FAA was not applicable
in this case, because the K didn’t “involve commerce” as the FAA purported.
i. SC held you shouldn’t look at whether the parties contemplated that it would affect
interstate commerce, but rather that it actually involved commerce, which was enough in
this case to say that it affected interstate commerce.
D. Citizens v. Alafabco – In AL, there were a couple debt-restructuring agreements that
included arbitration agreements subject to the FAA in order to fund growing a corporation.
Citizens reneged on the deal to send the money, and Alafabco sued.
i. SC held it should go to arbitration because the FAA was to be construed broad, and that
these kind of agreements also involved commerce.
E. Circuit City Stores v. Adams – guy signed an employment contract that had an arbitration
agreement.
i. SC held it should go to arbitration, because the exception to employees of seamen,
railroad workers, or any other class of workers engaged in foreign interstate commerce
did not extend to all employment contracts.
F. Little v. Allstate Insurance Co. – there was a dispute that involved insurance coverage,
and the contract had an arbitration clause. The VAA doesn’t allow for arbitration of insurance
claims. The McCarron Ferguson Act leaves insurance regulation to the states.
i. SC held not only does the FAA pre-empt the VAA, but also that the VAA was not made
specifically to regulate insurance, therefore it is invalid.
ii. Factor Test as to whether there was insurance:
1. Whether the practice has the effect of transferring or spreading a policyholder’s
risk
2. Whether the practice is an integral part of the policy relationship between the
insurer and the insured; and
3. Whether the practice is limited to entities within the insurance industry
G. Cruz v. PacifiCare Health Systems – guy suing for unfair business practices and false advertising
in connection with PacifiCare’s sale, marketing, and rendering of medical services, and they
sought injunctive relief

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 i. SC upheld Boughton which didn’t allow for arbitration of general public injunctive relief;
however, all other claims could be arbitrated, even if it involved private injunctive relief.
H. Discover Bank v. Superior Court – there was a suit for deceptive practices with an arbitration
agreement involved.
i. Held class actions are allowed in arbitration, but in this case it was not allowed because
the state law that they had it precluded arbitration.
VIII. Choice of Law Issues
A. Volt Information Sciences, Inc. v. Board of Trustees of the Leland Stanford
Junior University (1989) – There was a construction k, with an arbitration clause, stating
that arbitration should be performed in the state in which the construction was to take place.
They asked to stay the proceedings according to state law which said you must do so when 3rd
parties who were not signatory you must stay the action pending the court.
i. Held FAA is not pre-emptive of state law when the parties themselves contracted to be
governed by it.
B. Mastrabono v. Shearson Lehmon Hutton Inc – couple went to arbitration that was
supposed to be under the choice of law of New York and then the NASD agreement allowed it
and was awarded punitive damage, which was affirmed by the district court. The appellate court
reversed because there was a NY statute that didn’t allow for punitive just for arbitration.
i. Held punitive damages were allowed, pre-empting the state law because they were
allowed to get it under NASD.
IX. Enforcing International Agreements
A. The New York Convention r’qs countries w/in it that they will recognize arbitration
agreements that are in writing between parties.
i. Deals w/commercial dealings of international parties.
1. Commercial may mean employment under the Convention.
ii. District Courts have jdx to send something to arbitration via the Convention, but does not
have the auth. to take over the case in Fed court.
B. Kahn Lucas Lancaser Inc. v. Lark International Ltd. – one is a US company, the other was a
Chinese company, and agreement was on purchase orders that had not been signed by Lark.
i. Held it had to be signed by both parties under the Convention.
C. Jones v. Sea Tow Services Freeport Ny Inc. – there was a Couple owned a boat, and
their boat overturned. In order to get it towed they had to sign an agreement that said it would
agree to English Law. All parties were American.
i. Held the convention did not apply to domestic individuals.
D. Bautista v. Star Cruises – (2005) A steam boiler from Norway exploded in the Port of Miami
killing 6 crewmembers, and injuring 4 (the plaintiffs in this action). All employment contracts
contained an arbitration clause, under the convention.
i. Held New York Convention precluded the FAA §1 exemption of seaman k, because it
was a commercial legal relationship governed by the international treaty and not the
domestic policy.
E. E.A.S.T. v. M/V ALAIA – (1989) Advance, a Liberian company had a k w/ E.A.S.T., an
American company, to charter goods to Venezuela. The k included an arbitration agreement

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 pursuant to the New York Convention to be arbitrated in London. Liberia is not a signatory to
the convention, but the D’s did answer the claim in person in LA.
i. Held this should go to arbitration, because the idea is not the nationalities parties but the
forum state, which was London.
F. FILANTO, S.P.A. v. CHILEWICH INTERNATIONAL CORP. – memorandum for another
shipment of shoes, which included a provision stating that the Russian K that applied, and
specifically the arbitration agreement. The Italian company said that they agreed with the memo,
but not the arbitration clause agreement.
i. Held since there as such presumption in favor of arbitration, especially in the context of
international law, then the memo still applies to arbitration.
G. Ledee v. Ceramiche Ragno – Italian Company had a contract with a Puerto Rican Co. to have
exclusive rights to sell ceramic tiles. There was public policy in Puerto Rico that it had to be
done in Puerto Rico.
i. Held FAA applied, according to those questions you apply, and then held the FAA pre-
empted state law in favor of arbitration.
ii. Questions to Ask to determine whether FAA applies:
1. Is there an agreement in writing to arbitrate the subject of the dispute?
2. Does the agreement provide for arbitration in the territory of the signatory of the
Convention?
3. Does the agreement arise out of a legal relationship, whether contractual or not,
which is considered as commercial?
4. Is a party to the agreement not an American citizen, or does the commercial
relationship have some reasonable relation with one or more foreign states?
H. Rhone Mediterranee v. Lauro - Held that the Italian law did not render the arbitration agreement
null and void because it wasn’t a recognized defense of fraud, duress, etc, and that it did not
contravene fundamental policies of the forum state.
I. Richards v. Lloyds of England – Held stay was appropriate because English law still allowed for
a sufficient remedy (like fraud) for the plaintiffs.
J. Jain v. DeMe’re’ –There was no forum clause in the contract.
i. Held state did have jurisdiction under the Convention, and compelled arbitration in
Illinois under § 4.
K. Tolaram Fibers v. Deutsche Engineering – Held it was to be held in the district court of NC
where it was filed, since the ICC did not pick a specific place
X. Arbitration Proceeding
A. Cycle of the Proceeding
i. There is a demand
ii. There is an answer
iii. Possible discovery
iv. Then there is possibly a pre-hearing
v. Then there is a true hearing set
vi. Then a “verdict”
B. Val-U Construction Co. v. Rosebud Sioux Tribe –

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 i. Held there was no SI b’c they waived it in the arbitration clause, and that the arbitration
was still valid even though they didn’t go because they had notice, and ignored it.
XI. Selecting Arbitrators
A. Astra Footwear Indus v. Harwyn Int’l, Inc. –Held it was the intention of the companies to have
the New York Chamber of Commerce do it, not the ICC, and then finally that because the NYCC
didn’t do it anymore it did not vitiate the arbitration clause, and it would still be sent to
arbitration.
B. Commonwealth Coatings Corp. v. Continental Casualty Co. – Contract between
the parties included agreement to arbitrate all controversies. The selection process said that each
party would pick one, and those 2 would pick the 3rd. The 3rd arbitrator had worked with the
petitioner over the last several years and also worked on some of these deals that the claim had to
do with. There was no disclosure on behalf of any of the parties, and the party with the
unfavorable result until afterwards.
i. Held just b’c you went to arbitration did not mean that you gave up the right to an
impartial arbitrator, and that disclosure was important, and vacated the judgment.
C. Merit Insurance Co. v. Leatherly Insurance Co. – 2 insurance companies had a contract with each
other, and it included an arbitration clause. The process, based on picking of the parties, had
placed an arbitrator that was once the supervisor, loosely, with one of the parties 14 years earlier,
and they hadn’t spoke since. This was never disclosed to the other party.
i. Held it was not appropriate to hold someone without ties to this kind of standard, and
reversed the ruling that vacated the judgment.
D. Positive Software v. New Century – Arbitrator was there, and had previously worked extensively
with the attorney for one side, but did not disclose this to the other side.
i. Court vacated the arbitration award because it was an on-going relationship, and
arbitrators have a duty to disclose.
E. Aviall, Inc. v. Ryder System, Inc. – The contract between the parties called for KPMG, one
party’s auditor, to be the arbitrator in case of dispute. One party sought to disqualify him as an
arbitrator because of impartiality.
i. Held it wasn’t appropriate because it did not provide for pre-award removal, since they
had a remedy later.
XII. Provisional Remedies
A. Merrill Lynch v. Salvano – 2 guys had left Merrill lynch for a competitor and they had an
agreement with arbitration clause that said that they were not to take away clients later. They
left, and had arbitration, and then Merrill had brought action somewhere else, and asked for a
TRO. They got it, the court in NY ordered arbitration and finally got empanelled, and then there
was an extension of the TRO.
i. Held original TRO was appropriate, but not the extension, because that was something
that the arbitrators could have done.
B. McCreary Tire v. CEAT – McReary sued a foreign corporation, and had an order to arbitrate, in
Massachusetts. They then brought this action for an attachment in another place.
i. Held it doesn’t matter, you agreed to arbitrate, so you have to.
C. Carolina Power & Light Co. v. URanex – American company had a contract with a French
company that sold uranium. There was a breach in the contract, and there was an arbitration

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 agreement and they went. They sought to get an attachment of a debt owed to URanex, because
it was the only asset of the D in the US.
i. Held they could get the attachment.
D. Contichem v. Parsons shipping co. – There was a contract for a ship and had an arbitration
agreement in London. They agreed to that, but asked for a TRO to get an attachment for the
bank account.
i. Held it was improper to have an attachment where the garnishee had not yet r’cd the
property.
E. Zuver v. Airtouch Communications – there was an arbitration agreement, and the contract said
that there was a confidentiality provision and an award of punitive damages that was
unconscionable. While there were others that were not bad, including the arbitration agreement.
i. Held severability clause did not make the arbitration agreement unconscionable, and they
were ordered to go.
F. Parilla v. IAP Worldwide Services, Inc. – employment agreement that provided for the AAA
rules to be evoked. The District Court held that it was unconscionable with regards to the
confidentiality provision.
G. The Court reversed the district court holding that they had to go to arbitration, because you can
sever out the ugly bad phrases according to the contract.
XIII. Consolidated and Class-wide Arbitration
A. Green Tree Financial Corp v. Bazzle – There was a motion to make it a class. The
agreement was silent as to whether this was ok.
i. Held if you don’t want class-wide arbitration you should put it in the k, because if it’s
silent or ambiguous then class-wide arbitration is allowed.
XIV. Discovery
A. Hay Group v. EBS Acquisition – 2 non parties are seeking suit, but there was also arbitration.
The court subpoenaed these 2 non-parties, to show a critical part of this contract.
i. Held you cannot subpoena outside people to do it, but you can compel them to come and
bring the documents.
B. Deiulemar Campagnia v. M/V Allegra – whether the arbitration was allowed to keep the ship
there because of an extraordinary circumstance of them leaving the discovery. Dispute arose out
of the condition of the ship, and moving it could lead to the change of that condition.
i. Held there was an extraordinary circumstance here in order to allow arbitrators to make
this happen.
XV. Pre-hearing Procedure and Motions Practice
A. Schlessinger v. Rosenfeld, Meyer & Susman – there was arbitration over a payment due a former
law partner in his resignation. The arbitrator awarded the defendants via summary adjudication.
i. Held both the California Arbitration Act and the AAA allowed for the arbitrator to use
summary adjudication.
B. Bowles Financial Group v. Stifel, Nicolaus & Co. - there was arbitration, and the dispute was
over the compensation. The appellee here repeatedly, and purposefully gave the arbitrator the
other side’s offer of settlement. The Arbitrator said that he did not take it in consideration when
he gave the award.

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 i. Held arbitration award was appropriate, even though the attny purposefully did this,
because he didn’t take it in consideration, so they couldn’t prove that it was
fundamentally unfair.
C. Tempo Shain Corp. v. Berteck, Inc. – There was a contract over a patent product; former
president was unable to testify, and the arbitrators said that they had other evidence of what he
was going to say, and held for Tempo. Berteck then disagreed with the award.
i. Held it should be vacated, b’c the testimony was appropriate.
ii. A ground for setting aside award is the arbitrator failing to admit material evidence.
XVI. ENFORCING ARBITRAL AWARDS
A. Gov’t of India v. Cargill (1989) – not made in timely manner; too indefinite b’c award was lump
sum
i. Whether delaying in issuing an award will vacate an award? No. Time limit to
render award is a directory limitation not mandatory one; delay did not prejudice party
ii. Lump sum award – arbitrator may award lump sum award w/o disclosing their rationale
for it; cts will not inquire into the basis of the award unless arbitrator rendered in
“manifest disregard” of the law or unless the facts of the case fail to support it
iii. There was no itemization b’c they didn’t ask for one – most will not give itemized award
unless parties K for it. Ask for it at prehearing conference.
B. Dev. of Resources Corp. v. Gov’t of Islamic Rep. of Iran – attempt to obtain review of merits of
award
i. Change of gov’t in Iran – believed they didn’t have to honor any k w/US
ii. 3 things allowed in award review to be made w/in 30 days of award:
1) get interpretation of award;
2) make additional award as to claims presented in arbitral proceedings but
omitted from award;
3) request for correction of errors in computation, clerical or typos
C. Colonial Penn Ins. Co. v. Omaha Indemnity Co. – Issue whether second award “clarifying”
original award exceeded arbitrators powers; and circumstances under which an arbitral award
may be corrected b’c of erroneous assumption of fact.
i. Issue: When does an arbitrator’s power to decide a case cease? It ceases when the
award is issued.
ii. functus officio – “the office has performed” Common Law Doctrine:
1) arbitrator can correct mistake which is apparent on face of his award;
2) where award does not adjudicate an issue which has been submitted, arbitrator
has not exhausted his job & may render subsequent determination;
3) where award (although seemingly complete) leaves doubt whether the submission
has been fully executed, ambiguity arises which arbitrator is entitled to clarify.
iii. Policy reasons for functus officio doctrine precluding arbitration panel from reconsidering
award are not applicable to Cts:
1) Ct is not subject to “isolated activity”;
2) Ct not subject to “evil of outside communication and unilateral influence”
3) Ct must necessarily exercise some review of arbitral award when a motion is
before it.

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 iv. Arbitration awards must be upheld even when there has been “errors . . .in determination
of factual issues”
v. Cts may only remand to arbitrators for clarification
vi. Once made an arbitral award is final & binding
vii. funtus officio – does not apply where parties have agreed to go back to arbitrator after an
award
viii. Until final award is made the arbitrator ‘s mandate still continues and not functus officio
ix. There is no appeals process except by K.
x. Arbitrators are not allowed to issue subsequent awards; only allowed to arbitrate issue
they were hired for; can only clarify 1st award if a mathematical error occurs
XVII. Enforcing and Challenging Domestic Arbitration Awards
A. In Domestic Arbitrations arbitrators rarely give reasons for award
B. Presumption – arbitrators took a permissible route to the award
C. Grounds for Vacating Domestic Arbitration Award
i. Where the award was procured by corruption, fraud, or undue means;
ii. Where there was evident partiality or corruption in the arbitrator(s);
iii. Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon
sufficient cause shown, or in refusing to hear evidence pertinent & material to the
controversy; or any other misbehavior by which the rights of any party have been
prejudiced; and
iv. Where the arbitrators exceeded their power, or so imperfectly executed them that a
mutual, final, and definite award upon the subject matter submitted was not made.
D. Cts rarely vacate an award on grounds of fraud, corruption of undue means
E. One rare exception is Bonar v. Dean Witter – where expert lied about qualifications.
F. A.G. Edwards & Sons, Inc. v. McCollough – claimed award procured by corruption, fraud or
undue mean; claimed arbitrator refused to hear material evidence; lack of arbitral stmt of reason;
undue means; Fraud & undue means go hand-in-hand; just b’c assert frivolous defense does not
vacate an award.
i. Issue: Whether a frivolous defense will set aside an arbitral award? No. Undue
means –on part of arbitrator
ii. Undue means – more than necessary; not proper; illegal and denotes something wrong,
according to the standard of morals which the law enforces; covered in §10 of FAA;
iii. Offering meritless defense - part & parcel of business litigation
iv. Fraud – must show
1) not discoverable upon the exercise of due diligence prior to arbitration;
2) materially related to an issue in the arbitration; and
3) established by clear & convincing evidence.
G. Harter v. Iowa Grain – claimed “evident partiality” or corruption in arbitrators
i. Issue: Just because an arbitrator has some association w/business doing arbitration
does not mean there is evident partiality.
ii. Evident partiality exists when an arbitrator’s bias is “direct, definite and capable of
demonstration rather than remote, uncertain, or speculative

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 iii. Disqualifying arbiters w/experience in the business would eviscerate the goals of
arbitration
iv. Arbiters must have expertise in industry sector at issue but must be commercially
disinterested in the particular dispute.
H. Goldfinger v. Lisker – claimed they had a joint venture and Lisker owed G ½ million dollars;
i. Ex parte communication w/arbitrator – if it gives appearance of impropriety that is
enough to vacate the award;
ii. Misconduct on part of arbitrator;
iii. Unless auth. to do so in k arbitrator cannot do independent investigation
XVIII. Dealing with diversity jdx and jdx minimum in enforcing arbitral award
A. Cortez Byrd Chips, Inc. v. Bill Harbert – Whether FAA is restrictive allowing a motion to
confirm, vacate, or modify an award to be brought only in district in which award was made; or
permissive, permitting motion either where award was made or in any district proper under the
general venue statute
i. Held: FAA permissive.
ii. Multi-state transaction and where the best place to appeal the award
iii. Can be done anywhere there was a general venue;
XIX. Hall Street Assoc. v. Mattel – Only standard of review for Arbitration awards is §10 of FAA.
XX. 14 Penn Plaza v. Pyett - If have collective bargaining K – it can waive rights; held that a union
may waive the individual employee's right to a judicial forum for the litigation of a federal age
discrimination claim.

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