Arbitration Myths: Commentary by Federal Judge

In response to our post about an article titled “Arbitration Myths” published by the National Arbitration Forum, U.S. District Judge W. Royal Furgeson, Jr. sent us the following [unedited] commentary via e-mail:

Dear Friends:

To say that arbitration awards are “approved” by a court before becoming enforceable gives the impression that a court will actually examine the merits of the arbitrator’s award. Under the Federal Arbitration Act and the case law interpreting the Act, a court does not have the authority to review an arbitration award in the same way as an appellate court would. In fact, in many instances, the arbitrator is not even required to explain the reasons for the award, so no substantive review is possible. Instead, the court’s limited function is to basically insure that the arbitrator has had no conflict and that no fraud has occurred. Therefore, as a practical matter, the arbitrator can be wrong on the facts and the law and the award still must be enforced by the court so long as there is no conflict and no fraud. Simply stated, court approval does not involve an investigation into the merits of the award. One very important criticism of arbitration is that there is no real opportunity to have an award reviewed through an appellate process, which is important to understand.

Sincerely,

Royal Furgeson

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