A court cannot vacate an award on public policy grounds that are not discernible on the face of the award, according to a New York state appellate court.

In Metrobuild Associates, Inc. v. Nahoum, No. 2831, 602211/06, 2008 WL 2130431 (N.Y. App. Div. May 22, 2008), Nahoum and Metrobuild entered into a construction contract for residential remodeling. The contract contained an arbitration agreement. After the contract was signed, Nahoum assigned it to his wholly-owned business.

After a dispute arose over the project, Metrobuild demanded arbitration. Nahoum participated in the proceedings. The arbitrator ultimately entered an award in favor of Metrobuild. Metrobuild sought confirmation of the award, but, for the first time, Nahoum challenged the validity of the arbitration agreement on public policy grounds, arguing that because Metrobuild was not a licensed contractor, the agreement was part of an illegal, unenforceable home remodeling contract. See N.Y. City Admin. Code § 20-387(a) (generally forbidding the enforcement of home improvement contracts with unlicensed contractors).

The trial court vacated the award, holding that, although part of the construction project was commercial for a home business, part of it was residential, and therefore the contract was unenforceable. Metrobuild appealed, alleging that the trial court did not give proper deference to the arbitrator's award.

The Court agreed, noting that nothing in the arbitrator's award characterized the project as either residential or commercial. Because there was no basis for vacating the award on its face under the rationale advanced for vacatur by the trial court, the Court remanded the matter for confirmation