The ABC’s of Arbitration – Part C (Enforcement of Awards)
The past two Briefs have discussed the first two phases of arbitration: Initiation and the conduct of the arbitration hearings. Now we consider the final and very critical stage, enforcement and collection.
Armed with a legally sufficient and binding agreement to arbitrate and an award, the successful party may still need enforcement if his adversary doesn’t pay or perform in accordance with the award.
Arbitration awards may be attacked by disappointed parties either upon valid grounds or, regrettably, merely for the purpose of postponing the successful party’s recovery.
Since neither the winner nor even the American Arbitration Association maintains a staff of sheriffs or other officers who can enforce (by legal force) the arbitration awards, enforcement must be obtained from the courts. Mechanics exist in practically every court system for the enforcement of arbitration awards-usually by fairly uncomplicated and speedy procedures.
Since court proceedings may be necessary for enforcement, the courts do reserve the right to refuse enforcement of any arbitration award procured by fraud or as the result of bribery or under circumstances where the unsuccessful party was not afforded a full opportunity to be heard by a fair and impartial arbitration panel.
Unless the unsuccessful party in the arbitration was denied a full, fair hearing by an impartial arbitration panel, the courts will generally enforce arbitration awards rendered in arbitration proceedings conducted pursuant to the parties’ binding agreement to arbitrate. This means that the courts usually will refuse even to consider arguments that the arbitrators were wrong either with respect to the facts in controversy or the applicable law-court decisions repeatedly declare that arbitrators are the sole judges of the facts and law. See, for example, Sisters of Mercy v. Mead & Mount Constr. Co., 165 Colo. 447, 439 P.2d 733 (1968).
The Uniform Arbitration Act (“Act”) in force in many states (including Colorado for arbitration agreements entered into after July 14, 1975) provides a vehicle for court enforcement of arbitration awards. It allows For simplified proceedings under which the successful party may have a judgment entered upon the award, but also gives the unsuccessful party an opportunity to either have the award judicially set aside, modified or clarified if appropriate. The unsuccessful party must under that Act, apply for relief within 90 days following his receipt of the arbitration award if the grounds are then known to him, failing which his opportunity for challenge is forever lost.
If no challenge is made to the award or if the court denies relief sought by the unsuccessful party, the Uniform Arbitration Act requires that the court confirm the award and enter judgment upon it.
The judgment entered upon an arbitration award is enforceable in the same manner as in any other court judgment-through proceedings to attach property, garnishment or by levy and sheriff’s sale of the unsuccessful party’s property to satisfy the judgment.
Except in very rare instances, the time lapse between commencement of an arbitration proceeding and entry of judgment upon a valid arbitration award is shorter than the typical lawsuit-if the arbitration and enforcement proceedings are promptly and diligently pursued. This is because of two factors: the arbitration hearing is usually held much earlier than a court trial because crowded court dockets are avoided, and arbitration awards are frequently rendered quicker than judgments in non jury cases.
However, a disgruntled party to the arbitration may nevertheless delay the ultimate outcome by the prosecution of an appeal from a trial court’s entry of judgment upon an arbitration award. In most court systems, this could mean another six months (minimum) to perhaps several years. However, the issues on appeal are more limited since the appellate court will not be reviewing the facts and law applicable to the issues in dispute-only the issues concerning the validity of the arbitration award itself, i.e. whether the arbitrators had jurisdiction and whether the unsuccessful party was afforded a full hearing by a fair and impartial arbitration panel.
Crowded dockets coupled with expensive discovery proceedings available in court cases are promoting greater use of arbitration. In the construction industry arbitration has become a much-used tool for resolution of disputes when the parties cannot otherwise settle. It is therefore important that construction people understand the arbitration process, its advantages and disadvantages.
Better yet, they should attempt to amicably resolve their disputes without any adversarial proceedings!
