Arbitration Award Overturned By Court

Arbitration decisions are rarely overturned. However, in a recent decision the court found it necessary to do so. Plaintiff entered into a contract with defendant to purchase a luxury condo unit, and provided deposit monies to defendant's attorney. When plaintiff failed to appear at the closing, defendant refused to return her deposit. The parties proceeded to binding arbitration, as required by their contract, and the arbitrator concluded that plaintiff was entitled to the return of her deposit. On appeal, the judge found that the arbitrator exceeded the scope of his powers by disregarding the clear terms of the parties' contract, essentially rewriting for plaintiff a better contract that the for which she had bargained. Noting that a court will vacate an arbitration award only under limited circumstances, the appellate panel affirmed the lower court's decision, finding that the arbitrator exceeded the scope of his authority by adding terms to the parties' contract.