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Current Developments in the Commercial Divisions of the
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Posted: December 14, 2015

First Department Refuses to Vacate Arbitral Award

On December 8, 2015, the First Department issued a decision in Matter of Abell v. JetBlue Airways Corp., 2015 NY Slip Op 08975, affirming a decision of Justice Bransten of the New York County Commercial Division, denying a motion to vacate an arbitration award.

The petitioners in Matter of Abell argued for vacature under Section 10(a) of the Federal Arbitration Act on the ground that the arbitrator exceeded his authority under the parties’ agreement. The First Department rejected this argument, explaining:

Petitioners failed to meet their heavy burden of showing that the arbitrator did not even “arguably” interpret the parties’ employment agreement in rendering his award and therefore he exceeded his arbitral powers pursuant to Section 10(a) of the Federal Arbitration Act (see Oxford Health Plans LLC v Sutter , ___ US ___, ___, 133 S Ct 2064, 2068 [2013]). It is apparent from the face of the award that the arbitrator analyzed the agreement and subsequent amendments closely and carefully, and that is all that is required to preclude the court from overruling him (id. at 2070-2071).

This decision illustrates the limits of judicial review of arbitration awards. As the Supreme Court put it in the Oxford Health Plans case cited by the First Department: “an arbitral decision even arguably construing or applying the contract must stand, regardless of a court’s view of its (de)merits.” It is a rare case where an arbitrator will so far off the rails as to exceed his authority under that permissive standard.

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