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As permitted by the New Jersey Uniform Arbitration Act, the parties to a divorce proceeding entered into an arbitration agreement that provided for heightened judicial review. Even though the provision for heightened review was valid, the appellate court refused to address the merits of the award because the parties had bypassed the trial court.
In Hogoboom v. Hogoboom, A-2794-05T5, 2007 WL 1702820 (N.J. Super. Ct. App. Div. June 14, 2007), John and Kelly Hogoboom obtained a divorce by entering into a property settlement agreement that required John to pay alimony and child support. Under the agreement, John’s obligation to pay alimony would terminate upon Kelly’s remarriage, and his child support obligation would be renegotiated on a periodic basis.
Several years later, when Kelly and her boyfriend moved in together, John filed a motion seeking modification of his child support obligation and termination of his obligation to pay alimony. The parties agreed to submit the dispute to arbitration. The arbitration agreement contained a provision for heightened judicial review of any arbitration awards.
Following a three-day hearing, the arbitrator issued an award increasing John’s child support obligation but terminating his obligation to pay alimony. The trial court entered an order incorporating the arbitration award in its entirety.
On appeal, both parties argued the merits of the arbitration award. The Court refused to address the merits of the award, however. The problem was not the provision for heightened review because the New Jersey Uniform Arbitration Act expressly permits parties to contract for heightened review. See N.J. Stat. Ann. § 2A:23B-4(c). Instead, the Court refused to address the merits because the parties failed to seek initial review in the trial court, and as the Court noted, parties cannot “create an avenue of direct appeal” to the appellate court. Accordingly, the Court remanded the matter to the trial court for a review of the award.
Unlike the New Jersey Uniform Arbitration Act, most arbitration statutes are silent on whether parties can contract for heightened judicial review. Accordingly, in most jurisdictions, the permissibility of heightened review remains an open question. Some jurisdictions have construed their arbitration acts, though silent on the matter, as precluding contractual provisions for heightened review. See, e.g., Trombetta v. Raymond James Financial Servs., Inc., 907 A.2d 550 (Pa. Super. Ct. 2006).
The United States Supreme Court recently granted certiorari to resolve a circuit split on whether the Federal Arbitration Act allows parties to contract for heightened review. See Hall Street Assocs., L.L.C. v. Mattel, Inc., No. 06-989, 2007 WL 142533 (May 29, 2007).
Even in those jurisdictions that do not permit parties to contract for heightened review, parties can ensure legally sound arbitration awards by agreeing that the arbitrator must follow the law. See Rule 20(D) of the National Arbitration Forum Code of Procedure. That way, if the arbitrator disregards the law in issuing an award, the aggrieved party can seek vacatur on the ground that the arbitrator exceeded their powers. See, e.g., KeyClick Outsourcing, Inc. v. Ochsner Health Plan, Inc., 946 So.2d 174 (La. Ct. App. 2006) (finding that arbitrator exceeded his powers by misapplying the law where the arbitration agreement provided that “[t]he arbitrator shall have no authority to make material errors of law”).
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