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A Georgia Appellate Court upheld an arbitration award despite manifest disregard objections because there was no proof that the arbitrator was aware of the applicable law and it was deliberately ignored.
In Johnson Real Estate Investments, LLC v. Aqua Industrials, Inc., No. A06A1067, 2006 WL 3437888 (Ga. App. Nov. 30, 2006), Aqua Industrials, a subcontractor, pursued claims in arbitration against Johnson Real Estate Investments, LLC and Excellatron Solid State (referred to collectively as “Excellatron”) regarding the non-payment of select invoices for a contracting project. An award was issued in favor of Aqua Industrials. Excellatron moved to vacate the award on grounds of manifest disregard of law by the arbitrator. At the same time, Aqua Industrials moved to confirm the award.
The trial court confirmed the award in part, vacated in part as to one invoice, and remanded to the arbitrator for clarification and modification of the vacated portion. The arbitrator re-affirmed the award and his intention to award the amount of the invoice. The trial court vacated its order sua sponte, finding it “procedurally flawed.” It held that “an arbitration award can only be vacated in its entirety” and under Georgia law an arbitrator does not have to provide reasoning for its decisions. It subsequently granted Aqua’s motion to confirm the award and denied Excellatron’s motion to vacate.
The appellate court disregarded all of Excellatron’s assertions of error, including that the arbitrator manifestly disregarded the law as a basis for vacating the award. Excellatron did not establish “that the arbitrator knew the law and expressly disregarded it.’” (Punctuation and citation omitted). Ralston v. City of Dahlonega, 512 S.E.2d 300 (Ga. App. 1999). Excellatron argued that Invoice 19 had already been paid. However, there existed a separate provision in the contract which allowed an award of damages for bad faith. Excellatron further argued that it should not have been forced to pay a set-off to Aqua Industrials for supplies for a third-party.
Finally, Excellatron argued that Aqua Industrials should have been held liable for fraud, as it “[submitted] an invoice for work it did not perform.” The Court found these objections to be requests to “substitute its judgment for that of the arbitrator.” The Court would not “second guess the arbitrator’s interpretation of the contract;” it confirmed the trial court’s judgment.
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