Tuesday, October 11, 2016

Why Arbitrations Tend to Go on Too Long ...

Royal Alliance Assocs., Inc. v. Liebhaber, No. B264619 (D2d4 Aug. 30, 2016)

It’s pretty hard to get an arbitration award vacated. The arbitrators error, even a really really bad one, is not enough. But one way to do it is to show that the arbitrator refused even to hear evidence. Which is what happened here. 

During an informal hearing, Party A gave an informal explanation of her conduct in an effort to exonerate herself. The opposing party had doubts about the veracity of those statements, and asked to question A. The arbitrators—it was a three arbitrator panel—said no, in reliance on the rules of their arbitral forum. They then proceeded to rule in A’s favor, specifically noting in their decision that the found A’s explanation to be credible.

That goes too far, even for arbitration. Code of Civil Procedure § 1286.2 requires vacation of an award when the arbitrators commit misconduct, exceed their powers, or refuse to hear evidence material to the dispute. Regardless of whether the panel complied with their own rules, refusing the hear relevant evidence—such as the cross examination of a witness whose credibility is key to the whole case—crosses a red line. See Code Civ. Proc. § 1286.2(a)(5).

Affirmed.

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