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In upholding a trial court's decision to confirm a commercial arbitration award, the Virginia Supreme Court held that Virginia statutory law does not permit a court to vacate an arbitration award for violating public policy.
In BBF, Inc. v. Alstom Power, Inc., No 061317, 2007 WL 1651208 (Va. June 8, 2007), Alstom contracted with BBF to provide air-cooled condensers for a power plant Alstom was going to construct. Various disputes arose, which the parties submitted to arbitration. The arbitrator awarded BBF $2,738,178, which included liquidated damages.
Alstom moved to confirm the award. BBF moved to vacate the award asserting the arbitrators had violated public policy and exceeded their powers by awarding liquidated damages to Alstom.
The trial court held that although the arbitrators may have misapplied Virginia law regarding damages, they did not act outside the scope of their authority. BBF appealed the trial court's ruling.
The Court held that Code Section 8.01-581.010 does not allow a court to vacate an arbitration award because it violates public policy. Under Virginia law a court only has authority to decide whether the arbitrator had the authority to arbitrate the parties' claims rather than whether the arbitrator reached the legally correct conclusion. The arbitrators did not exceed their powers, as the parties empowered the arbitrators to award liquidated damages in their contract.
Finally, the Court noted that Code Section 8.01-581 does not allow a court to vacate an arbitration award merely because the arbitrator awarded relief that a court of law or equity could not grant.
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