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In Spinal Concepts, Inc. v. Curasan, AG, No. 3:06-CV-0448-P, 2006 WL 2577820 (N.D. Tex., Sept. 7, 2006), the United States District Court for the Northern District of Texas partially vacated an arbitrator’s award on the basis of a contractual provision allowing for de novo review of issues of law.
Curasan, a supplier of bone-graft substitute, entered into an agreement with Spinal Concepts for the exclusive distribution of its products. When a dispute arose regarding the minimum amount of product Spinal Concepts was required to purchase, an arbitrator ruled in favor of Curasan.
Normally, judicial review of such an award would be limited. In this case, however, the parties had inserted a clause in their arbitration agreement providing for full de novo review of issues of law decided in the arbitral award. Accordingly, the Court took issue with the arbitrator’s decision to supply missing terms in the agreement.
While parties usually select arbitration as an exclusive, more efficient form of dispute resolution, an arbitration agreement is merely a “creature of contract,” and parties may structure their dispute resolution procedures however they deem appropriate. See Gateway Techs., Inc. v. MCI Telecomms. Corp., 64 F.3d 993, 996 (5th Cir. 1995). And in many jurisdictions, contractual provisions requesting expanded judicial review of awards will be respected by reviewing courts.
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