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A federal district court in New Jersey refused to vacate an arbitrator’s award where the party challenging the award alleged only that the arbitrator failed to apply the terms of the parties’ agreement.
In FDS International v. Seko Worldwide, Inc., No. CIVA06CV1023 PGS, 2006 WL 2528579 (D.N.J. Aug. 31, 2006), FDS petitioned the court to vacate an arbitration award in Seko’s favor. In support of its petition, FDS argued that the award should be vacated because the arbitrator reached her decision by “undue means.”
As the Court noted, New Jersey case law defines undue means as “a situation in which the arbitrator has made an acknowledged mistake of fact or law or a mistake that is apparent on the face of the record.” FDS alleged only that the arbitrator failed to apply the terms of the parties’ agreement. The Court held that this allegation failed to establish that the award was procured by undue means.
The Court indicated that an arbitration agreement may call for expanded judicial review, stating: “The growing trend . . . is that commercial setting, private sector, non-labor related arbitrations are afforded a more limited judicial review and any expansion of such a review should be provided in the parties’ contract.”
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