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Bowen v. Amoco: Contracting for Expanded Judicial Review under the Federal Arbitration Act

J.D./B.C.L. candidate. I would like to thank Professor Catherine Rogers for her encouragement and helpful insight in the writing of this article. 1I would also like to thank my family and friends for their support throughout my law school career, especially my always patient wife Beth.

I. Introduction

Arbitration is generally defined as "[a] process of dispute resolution in which a neutral third party (arbitrator) renders a decision after a hearing at which both parties have an opportunity to be heard."2 Arbitration is intended to yield benefits for both the parties to the dispute and the court. For parties, arbitration is generally less expensive, quicker, less formal, and more private than a trial.3 In addition, parties contracting for arbitration have virtually unlimited control over the arbitration process. For instance, they may select the arbitrator(s) who will decide their dispute,4 and may even create their own discovery process and procedural devices.5 Courts benefit from arbitration by saving time and expense that would otherwise be spent litigating those disputes.6 This is true of federal courts under the Federal Arbitration Act (FAA)7 because all disputes pursuant to the FAA must have independent grounds for subject matter jurisdiction.8 Thus, disputes that are not arbitrated under the FAA would likely be litigated in the federal district courts,9 placing an additional strain on court resources.

In light of these benefits, it is not surprising that commercial arbitration is becoming more popular.10 Recently however, many parties to arbitration have become frustrated with the outcome of arbitrators' decisions.11 As one scholar has commented, "[i]n several conspicuous, high stakes disputes and untold lower profile arbitrations, arbitrators have rendered decisions that have fallen well outside the reasonable expectations of the parties."12 The primary problem for parties who have experienced or are concerned about such aberrant awards is the FAA's extremely high standards for review. These narrow standards are set out in Title 9, Section 10(a) of the United States Code which provides:

In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration-

(1) Where the award was procured by corruption, fraud, or undue means.

(2) Where there was evident partiality or corruption in the arbitrators, or either of them.

(3) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.

(4) Where ...

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