When parties have an enforceable agreement to submit disputes to binding arbitration, courts are reluctant to review the merits of an arbitration award. If every award were subject to such review, the purpose and advantages of arbitration would be defeated. An award will be vacated only if an arbitrator exceeded the stipulated authority, violated public policy, or acted irrationally. An award is irrational if it is supported by no evidence whatsoever. These situations occasionally arise.
A New York court recently ordered that a delay damages award be vacated. The arbitrator failed to consider the claimant’s own substantial contribution to late project completion and also calculated delay damages at $1,000 per day, a figure which appeared to have been pulled from thin air.
The second case involves a private project owner naming an incorrect legal entity as the plaintiff in a suit against a contractor and subcontractor. The owner could not correct the problem without putting the claim outside the three-year limitation period of a statute. A California court was asked to bail out the project owner.
The third case addresses a Massachusetts public project owner’s use of the filed sub-bidder method of procurement. An electrical contractor alleged the owner had modified the electrical specifications in a manner that added work not customarily performed by the electrical trade.
