ARBITRATION
By Sam K. Abdulaziz
Abdulaziz, Grossbart & Rudman

As most of you should know, arbitration has become very prominent in construction disputes. Many, if not most of the contracts include an arbitration provision. One of the greatest benefits of arbitration is that you should be able to get an arbitrator or arbitrators who understand construction law. I was personally involved in a civil litigation and typically, just before the trial begins, the trial judge will call the parties into chambers to discuss certain matters before the trial begins. I had one trial judge who asked me “I see you subpoenaed the plans and specifications. Why did you do that? They are so big and they are so dirty.” I then wondered how such a trial judge could possibly handle a construction case given the fact that the judge didn’t understand the importance of the plans and specifications.


In addition to arbitration pursuant to state court, arbitration in the Federal Courts are called the Federal Arbitration Act (FAA). Among other things, the FAA provides expedited judicial review to confirm, vacate, or modify arbitration awards. A Federal Court must confirm an arbitration award unless it is vacated, modified, or corrected in accordance with the federal law. The federal law lists grounds for vacating an award including where the award was procured by “corruption, fraud, or undue means” or where the arbitrators were guilty of misconduct, or exceeded their powers. Some of the grounds for modifying or correcting an award, include “evident material miscalculation” “evident material mistake” and “imperfections in a matter of form not affecting the merits.”


Under California law, there is no such expedited judicial review unless the arbitration provision in the contract calls for it. Here, the court will follow what the parties agree to in the contracts. Under California law, an arbitration award can be modified or corrected in accordance with the arbitration provision in the contract, or if there is no provision that applies, in accordance with the law which is as follows:


Code of Civil Procedure section 1285 states “Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award.”


There are very specific rules that are required in this procedure. There are also restrictions and they are very hard to overturn.


California Laws - Correcting, Confirming or Vacating an Award.


Code of Civil Procedure section 1285.8 states: “A petition to correct or vacate an award, or a response requesting such relief, shall set forth the grounds on which the request for such relief is based.”


Code of Civil Procedure section 1286.2 states in part “…the court shall vacate the award if the court determines any of the following:

(1) The award was procured by corruption, fraud or other undue means.
(2) There was corruption in any of the arbitrators.
(3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator.
(4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.
(5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.
(6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision. However, this subdivision does not apply to arbitration proceedings conducted under a collective bargaining agreement between employers and employees or between their respective representatives.
(b) Petitions to vacate an arbitration award pursuant to Section 1285 are subject to the provisions of Section 128.7.


1286.4. The court may not vacate an award unless:

(a) A petition or response requesting that the award be vacated has been duly served and filed; or
(b) A petition or response requesting that the award be corrected has been duly served and filed and;
(1) All petitioners and respondents are before the court; or
(2) All petitioners and respondents have been given reasonable notice that the court will be requested at the hearing to vacate the award or that the court on its own motion has determined to vacate the award and all petitioners and respondents have been given an opportunity to show why the award should not be vacated.


1286.6. Subject to Section 1286.8, the court, unless it vacates the award pursuant to Section 1286.2, shall correct the award and confirm it as corrected if the court determines that:

(a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award;
(b) The arbitrators exceeded their powers but the award may be corrected without affecting the merits of the decision upon the controversy submitted; or
(c) The award is imperfect in a matter of form, not affecting the merits of the controversy.


1286.8. The court may not correct an award unless:

(a) A petition or response requesting that the award be corrected has been duly served and filed; or
(b) A petition or response requesting that the award be vacated has been duly served and filed and:
(1) All petitioners and respondents are before the court; or
(2) All petitioners and respondents have been given reasonable notice that the court will be requested at the hearing to correct the award or that the court on its own motion has determined to correct the award and all petitioners and respondents have been given an opportunity to show why the award should not be corrected.


1287. If the award is vacated, the court may order a rehearing before new arbitrators. If the award is vacated on the grounds set forth in subdivision (d) or (e) of Section 1286.2, the court with the consent of the parties to the court proceeding may order a rehearing before the original arbitrators.


If the arbitration agreement requires that the award be made within a specified period of time, the rehearing may nevertheless be held and the award made within an equal period of time beginning with the date of the order for rehearing but only if the court determines that the purpose of the time limit agreed upon by the parties to the arbitration agreement will not be frustrated by the application of this provision.


1287.2. The court shall dismiss the proceeding under this chapter as to any person named as a respondent if the court determines that such person was not bound by the arbitration award and was not a party to the arbitration.


1287.4. If an award is confirmed, judgment shall be entered in conformity therewith. The judgment so entered has the same force and effect as, and is subject to all the provisions of law relating to, a judgment in a civil action of the same jurisdictional classification; and it may be enforced like any other judgment of the court in which it is entered, in an action of the same jurisdictional classification.


1287.6. An award that has not been confirmed or vacated has the same force and effect as a contract in writing between the parties to the arbitration.
 

Attorney Sam Abdulaziz of Abdulaziz, Grossbart & Rudman has been practicing construction law for over 30 years. He has written a book called “California Construction Law” which is updated annually. He represents numerous construction trade associations and contractors. He appears at Contractors State License Board meetings and has argued a number of cases before the appellate courts, including the California Supreme Court dealing with the "Pay-If-Paid Clause." Abdulaziz, Grossbart & Rudman provides this information as a service to its friends & clients. This document is of a general nature and is intended to highlight areas of the subject matter being discussed and may not contain all of the information; it should not be used as a
substitute for legal advice. This document does not create an attorney-client relationship, or protect any confidential information until a written agreement is signed. You should seek the aid and advice of a competent attorney, accountant and/or other professional instead of relying on the presentation and/or documents. Sam Abdulaziz can be reached at:

Abdulaziz, Grossbart & Rudman
P.O. Box 15458
North Hollywood, CA 91615-5458
(818) 760-2000 - Facsimile (818) 760- 3908
info@agrlaw.net
www.agrlaw.net