Hon. David Saxe and Jeremy Weinstein Argue for Appellate Review Process within the Arbitral Process in NYLJ

Partner Hon. David Saxe and Associate Jeremy D. Weinstein co-authored an article in New York Law Journal entitled “Re-Examining the Footprint of Arbitration.” The authors recommended a more robust acceptance of an appellate review process within the arbitral process, given the high stakes at issue in arbitrations today.

While arbitration is commonly considered an efficient platform for litigants seeking to avoid traditional litigation, the authors argued that due to the wide latitude afforded to arbitrators coupled with New York law’s de minimis standard for confirmation, “one critical shortcoming of arbitration is the freedom arbitrators have to skirt precedent or to fashion unexpected award remedies.”

The authors examined when an arbitration award should be subject to vacatur, arguing that dissatisfied litigants should be given additional opportunities to challenge an improper or wrongly decided award. They referenced several cases, including Rose Castle Redevelopment II, LLC v. Franklin Realty Corp., where courts go to great lengths to uphold an arbitration award, even under circumstances that could warrant reversible error if decided in a judicial forum.

“The benefits and failings of arbitration can be summed up in one word – finality,” the authors wrote. “The finality and, incidentally, expediency of a resolution of a dispute through arbitration is only an advantage if either the arbitrator makes no mistakes, or the stakes are small enough that mistakes are acceptable in the interest of the continuing commercial relationship between the parties.”

Saxe and Weinstein suggested the widespread adoption of an appellate review process within arbitration, similar to the procedures offered by major ADR providers like JAMS and the AAA, which are rarely used due to the higher costs involved.

Until a meaningful appellate review process within the arbitral process is established, “the judiciary, which is all too frequently called upon in the confirmation process to review the record and the findings in an arbitration, should continue to keep a careful eye out for those situations that push the boundaries of prevailing law,” they wrote.

Subscribers to New York Law Journal may read the article here.