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  • Writer's pictureGeorge Marco

ERRORS OF FACT OR LAW MAY NOT BE SUFFICIENT TO VACATE AN ARBITRATOR’S AWARD

In March 2024, a trial court in New York confirmed an arbitrator’s award, requiring that a property owner pay its contractor the sum of $589,913.36, even though the award may have been based upon errors of fact or law.  Gowanus Park, LLC v. KSK Construction Group, LLC, 2024 NY Slip Op 30726 (Sup. Ct. Kings Cnty).


In Gowanus, a contractor commenced an arbitration proceeding against a property owner, pursuant to an arbitration provision in the parties’ contract, for alleged monies due concerning construction of a four-story building in Brooklyn, N.Y.  The property owner asserted a counterclaim for delay damages and incomplete and defective work.  After a hearing, the arbitrator awarded the contractor damages for work completed and rejected all of the property owner’s counterclaims.  Thereafter, a trial court confirmed the arbitration award holding that “it is well settled that even where an arbitrator’s award ‘contains errors of law and fact committed by the arbitrator’ the decision will not be vacated and that ‘the courts should not assume the role of overseers to mold the award to conform to their sense of Justice.’"

 

Accordingly, the trial court confirmed the arbitrator’s decision to reject all the property owner’s offsets against the contractor, even if made in error.

 

Comment:

It has long been the law in New York that an arbitration award will not be vacated unless it is “utterly arbitrary or violative of public policy”.  Thus, lower courts “are not empowered to vacate an award merely for errors of law or fact committed by the arbitrators”.  Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 N.Y.3d 471 (2006).  Because judicial review of an arbitration award is extremely limited contractors should take this into account before agreeing to an arbitration clause in a contract. Indeed, while arbitration on its face may seem more expedient and cost efficient than litigating in a court of law, the downside is that an unfavorable arbitration award will most likely not be vacated even if based upon errors in fact or law.

 

About the author: George Marco is an attorney practicing in the field of construction law. He also holds a Bachelor of Science in Mechanical Engineering and was previously employed as a Project Manager for a public improvement contractor.


If you would like more information regarding this topic or any other related to construction law please contact George Marco at george@gmarcolaw.com or call (516) 464-2320.


Disclaimer: This article is for informational purposes only and not intended to serve as legal counsel.



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