An Ohio appellate court held that an arbitration award issued by a forum that is not agreed upon by the parties in their arbitration agreement is invalid ab initio, and thus statutory time limits for seeking vacatur of the award do not apply.

In Citibank v. Wood, No. 2007 CA 48, 2008 WL 2390851 (Ohio Ct. App. June 13, 2008), Wood and Citibank entered into a credit agreement that contained an arbitration clause. The clause provided that if a dispute arose between the parties, either party could elect to arbitrate the dispute using one of the following: the American Arbitration Association, JAMS, or the National Arbitration Forum.

Wood later mailed Citibank a letter which purportedly switched the available arbitral forums to the National Arbitration Council or Blue Ridge Arbitration. In response, Citibank sent a letter to Blue Ridge that said Citibank has not agreed and will not agree to arbitrate disputes before Blue Ridge.

Wood defaulted, so Citibank sued in court and obtained a judgment against him. Subsequently, Wood pursued arbitration with Blue Ridge Arbitration, who issued an award in favor of Wood, finding that Wood had settled his account with Citibank in full. Citibank moved to vacate the award, and Wood moved to confirm, arguing that Citibank's motion to vacate was untimely.

The trial court vacated the award, holding that the Blue Ridge "award" was void ab initio and unenforceable for three reasons: (1) the parties did not mutually agree to arbitrate before Blue Ridge; (2) Wood had no right to unilaterally modify the credit agreement; and (3) courts have universally rejected awards issued by Blue Ridge and other sham "arbitration" companies.

On appeal, the Court affirmed the trial court's holdings. Citing precedent, the Court held that under the Federal Arbitration Act (FAA), "where the arbitration does not follow the format provided for in the arbitration agreement, the arbitration award is invalid ab initio." Accordingly, "[o]ne condition that must be followed for an arbitration proceeding to be valid under the FAA is employment of the agreed upon arbitrator."

The Court noted that the arbitration agreement between Citibank and Wood specifically limited the appropriate arbitrators to AAA, JAMS, or NAF. Consequently, the Court held that the Blue Ridge arbitration award was a legal nullity that was not subject to the timeliness provisions of the FAA for vacating an award because Blue Ridge was not one of the agreed-upon arbitrators. Hence, the Court affirmed the trial court and vacated the Blue Ridge arbitration award.