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The Tenth Circuit Court of Appeals held that a contractual provision for heightened review did not apply to the arbitrators' venue determination because the party seeking vacatur could not demonstrate that the venue determination was based "on an incorrect or erroneous ruling of law."
In The Ridge at Red Hawk, L.L.C. v. Schneider, No. 06-4162, 2007 WL 1969681 (10th Cir. July 9, 2007), The Ridge filed a petition seeking vacatur of an arbitration award and invoking a provision in the arbitration agreement for vacatur "of any award that is based in whole or in part on an incorrect or erroneous ruling of law." In seeking vacatur, The Ridge claimed that the arbitration panel erred in determining that the proper venue for arbitration was Texas instead of Utah. Specifically, The Ridge argued that Utah, its principal place of business, was the proper venue because the agreement required the arbitration "be conducted in the principal place of business of the party against whom arbitration proceedings are brought." The district court dismissed the petition on the ground that the arbitrators' venue determination presented an issue of fact.
On appeal, the Court affirmed the dismissal of The Ridge's petition. Specifically, the Court held that The Ridge had "a contractual right to seek vacation or modification of an arbitration award only if the award 'is based in whole or in part on an incorrect or erroneous ruling of law.'" In reaching this holding, the Court reasoned that "[b]ecause the fact that an arbitration was held in an improper venue does not call into question the merits of the award," there was "no reason to conclude that the award was based…on an incorrect or erroneous ruling of law." Accordingly, with no possibility of finding legal error, the district court properly dismissed The Ridge's petition.
The Court also posited that the petition "cannot provide the court with a basis on which to conclude that venue was a purely legal determination." In accordance with the parties' agreement, the award did not contain "specific, written findings of fact and conclusions of law." Since there were no specific findings detailing the arbitration panel's venue determination, "the district court simply [could not] determine whether venue was a purely legal question," and "[a]bsent such a determination, The Ridge [could not] prevail."
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