Orange County Lawyer Publication(Apr, 2017) – Arbitration Clauses, Part II

This article assumes the reader understands the basics of arbitration clauses, and delves into more complex and advanced concepts with respect to arbitration clauses. As arbitration has grown as an accepted dispute resolution process, it is not surprising that reported cases concerning arbitration have increased. In the past twenty years there have usually been several noteworthy cases reported at both the state and federal levels each year. Some of those cases have led to some advanced drafting considerations and opportunities, a few of which are discussed in the article.

Scope of the Arbitrator's View

In civil litigation, the power of the courtover the parties and the subject matter of the dispute are both discussed under the general topic of “jurisdiction.” In arbitration, “jurisdiction” is the term used to discuss the arbitrator’s power over the parties. “Arbitrability” is the term used to describe the scope of the arbitrator’s power to both decide particular claims and issues, and make awards of particular types of relief. There are three sources for an arbitrator’s subject-matter decisionmaking authority:

1. the parties’ arbitration agreement;
2. the applicable law and the cases construing the same; or
3. the applicable rules governing the arbitration.

Understanding and defining the scope of the arbitrator’s decision-making authority is important because, at the back-end of the process, one of the statutory grounds for vacating an arbitrator’s award is that the arbitrator exceeded or acted at variance to the scope of his or her authority.