The Lawletter Vol 35 No 5, March 25, 2011
A certain degree of tension is on display whenever a party asks the court to resolve a matter concerning the arbitration process. This tension is heightened when one of the parties to the dispute objects to the arbitration proceeding and turns to the courts for relief. The extent to which a court may legitimately intervene in the arbitration was recently addressed by the Pennsylvania Supreme Court in Fastuca v. L.W. Molnar & Assocs., 10 A.3d 1230 (Pa. 2011).
In that case, the state supreme court was asked to review a trial court's order granting the plaintiff's motion to terminate a common-law arbitration proceeding after the arbitrator had entered "findings" which did not fully resolve all of the outstanding issues between the parties. The supreme court held that the arbitrator's interim "findings" did not constitute a final award within the meaning of the state's Uniform Arbitration Act, "and, thus, that the trial court had no authority under that section to review such findings." Id. at 1232. In addition, the supreme court concluded that the trial court lacked the inherent authority to terminate the arbitration proceedings before the arbitrator had issued a final award. Id.
In reaching this decision, the court first noted that the express language of the Arbitration Act limited judicial review to final arbitration awards. Id. at 1239. The "sine qua non of an award is its finality in disposing of all matters submitted by the parties to the arbitrator for his or her decision." Id. at 1240. Because the arbitrator's findings did not fully resolve all outstanding issues between the parties, they did not constitute a final award and so were not reviewable under the statute. Id.
Next, the supreme court addressed the question as to whether the trial court had the inherent power to review the arbitrator's interim award. The parties had contractually agreed to arbitrate their disputes. The plaintiff's subsequent dissatisfaction with the remedies the arbitrator had attempted to implement to settle the conflict and the length of time the arbitrator was taking to make an award were insufficient to confer equitable jurisdiction upon the trial court. Id. at 1246-48. If the arbitrator fails to act for an excessively long period of time, the state Arbitration Act allows the aggrieved party to move the trial court for an order removing the arbitrator and appointing a replacement. Id. at 1248. A similar remedy is provided under the American Arbitration Association's Commercial Rules of Arbitration. Id. at 1249. Because the statutes and rules provided an adequate remedy for the plaintiff, his argument for equitable intervention by the court was unavailing. Id.
The supreme court thus concluded that the trial court lacked the authority to enter the order purporting to terminate the arbitration. Consequently, the trial court's order was reversed, and the arbitration proceeding was reinstated. Id. at 1250.