Right To Challenge Arbitration Award Cannot Be Waived By Contract
July 20th, 2015
A subcontract arbitration clause states that the parties may take steps to confirm an arbitration award, but agree not to challenge any award. A Georgia appellate court has held that the restriction on challenging an award impinges on the Georgia Arbitration Code and is unenforceable. Thus, the losing party in the arbitration can pursue an action to vacate or modify the award per the arbitration law. The case is Atlanta Flooring Design Centers, Inc. v. R.G. Williams Construction, Inc., 2015 Ga. App. LEXIS 471 (July 16, 2015). The Georgia appellate court cited cases under the Federal Arbitration Act to the same effect, that grounds existing under the FAA to vacate an award “may not be waived or eliminated by contract.” The Georgia court thus held that the subcontract clause “conflicts with and frustrates Georgia public policy as expressed in the [Georgia Arbitration Code], and is void and unenforceable” to the extent it would deny a party the right to challenge an award. A concurring judge wrote to express “serious concerns” about any agreement to bar judicial review. The concurrence noted that safeguards inherent in the arbitration laws “would be eviscerated, and the integrity of the arbitration process could be compromised,” should courts be allowed only to rubber stamp arbitration awards. Agreed.