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Refusing to vacate an arbitrator's award in an automobile dealership partnership's dissolution, a New Jersey appellate court held that an unambiguous non-appealability clause between two sophisticated businesspeople of relatively equal bargaining power was enforceable and did not violate public policy.
In Van Duren v. Rzasa-Ormes, 2007 WL 1853988 (N.J. Super. Ct. App. Div. June 29, 2007), a dispute arose between Van Duren and Rzasa-Ormes, partners in twelve automobile dealerships. To avoid litigation, the parties entered into a binding arbitration agreement that was "not subject to an appeal to any authority in any form." They appointed an arbitrator and submitted to him questions of valuation and division of their respective interests.
The arbitrator entered a decision essentially vesting each party with full ownership of the dealerships that each had operated individually since June 2000. Van Duren sought to confirm the arbitration award. Rzasa-Ormes moved to vacate, asserting the no-appeal clause violated public policy. The trial judge confirmed the award and Rzasa-Ormes appealed.
The Court held that a non-appeal clause foreclosing judicial review beyond the trial court level was enforceable and did not violate public policy. Generally, a party may waive the right to appeal provided it is explicit and there is sufficient consideration, as public policy favors encouraging litigants to accept as final decisions of courts of original jurisdiction. Additionally, both parties were highly sophisticated businesspeople of relatively equal bargaining power and represented by counsel.
The Court noted that while a waiver of appellate review was acceptable, an agreement completely barring judicial review at the trial level violated public policy. Such a clause eliminates all judicial scrutiny, which prevents courts from applying standards set forth by the legislature and courts.
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