Restricting Arbitrator's Authority in California
Generally, arbitrators must issue awards that "include a determination of all the questions submitted." (Code Civ. Proc., 1283.4.) However, to discharge this obligation, they may use "a multiple incremental or successive award process as a means, in an appropriate case, of finally deciding all submitted issues." (Hightower v. Superior Court (2001) 86 Cal.App.4th 1415, 1434; accord, Roehl v. Ritchie, supra, 147 Cal.App.4th at p. 351.)
Arbitrators may issue an award that constitutes a final determination on the matters before them, insofar as the issues can be resolved, while reserving jurisdiction to decide questions requiring resolution at a later time. (Hightower v. Superior Court, supra, 86 Cal.App.4th at p. 1434; Roehl v. Ritchie, supra, 147 Cal.App.4th at p. 351.)
Although an arbitrator has no power to use this process "to correct or modify the terms of an original award," we apply a deferential standard of review to the arbitrator's determinations regarding his or her contractual power to render a subsequent award, and "resolve any doubts in favor of upholding the second arbitration award." (Id. at pp. 350-351.)
To enforce the finality of arbitration, the statutes governing nonjudicial arbitration awards minimize judicial intervention. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10 (Moncharsh).)
Once a petition to confirm an award is filed, the superior court has only four courses of conduct: to confirm the award, to correct and confirm it, to vacate it, or to dismiss the petition. (United Brotherhood of Carpenters Etc., Local 642 v. DeMello (1972) 22 Cal.App.3d 838, 840; 6 Witkin, Cal. Procedure (5th ed. 1997)
Proceedings Without Trial, 566, pp. 1071-1072.) The trial court is empowered to correct or vacate the award, or dismiss the petition, upon the grounds set out in the pertinent statutes; "otherwise courts may not interfere with arbitration awards." (Santa Clara-San Benito Etc. Elec. Contractors' Assn. v. Local Union No. 332 (1974) 40 Cal.App.3d 431, 437; see also Moncharsh, supra, 3 Cal.4th at pp. 10-13.)
Absent exceptional circumstances, the Court will not examine an award for errors of fact or law.
As the California Supreme Court explained in Moncharsh, supra, 3 Cal.4th at page 10, the finality of arbitration awards is rooted in the parties' agreement to bypass the judicial system.
Accordingly, "it is the general rule that, 'The merits of the controversy between the parties are not subject to judicial review.' More specifically, courts will not review the validity of the arbitrator's reasoning. Further, a court may not review the sufficiency of the evidence supporting an arbitrator's award. . . . Thus, . . . with narrow exceptions, an arbitrator's decision cannot be reviewed for errors of fact or law." (Id. at p. 11.)
Such an exception may arise when the arbitrator imposes a remedy not authorized by the arbitration agreement (Advanced Micro Devices, supra, 9 Cal.4th at p. 375).
The general principles applicable to these circumstances were explained in Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362.
The California Supreme Court stated that "arbitrators, unless expressly restricted by the agreement of the parties, enjoy the authority to fashion relief they consider just and fair under the circumstances existing at the time of arbitration, so long as the remedy may be rationally derived from the contract and the breach." (Advanced Micro Devices, supra, 9 Cal.4th at p. 383.)
In such cases, the question before the court is "whether the award is 'so outre that [the court] can infer that it was driven by a desire to do justice beyond the limits of the contract.'" (Id. at p. 380, italics deleted, quoting Ethyl Corp. v. United Steelworkers of America (7th Cir. 1985) 768 F.2d 180, 187.)
However, because "arbitrators may not award remedies expressly forbidden by the arbitration agreement or submission," parties who wish to restrict the arbitrator's remedial authority "would be well advised to set out such limitations explicitly and unambiguously in the arbitration clause." (Advanced Micro Devices, at pp. 383, 381.)