Georgia Supreme Court Protects Arbitration Awards Against Court Review

Supreme Court and Lady Justice

Arbitration provides a forum in which parties can resolve disputes without going to court. Both Federal and Georgia law promote arbitration by limiting the ability of parties to challenge arbitration awards in court. The extent of that protection under Georgia law was at issue before the Georgia Supreme Court in Adventure Motorsports Reinsurance, Ltd. v. Interstate National Dealer Services, Case No. S21G0008 (decided December 14, 2021).

That case arose out of a set of agreements relating to the sale of motorsports vehicle service contracts. The parties disagreed about how funds were to be divided under the various agreements but agreed to resolve their disputes in arbitration. After the arbitrator made an award, one party challenged that award in court. The party contended that the arbitrator had manifestly disregarded the law in making the award. Manifest disregard of the law as one of the grounds for setting aside an arbitration award under Georgia law. The trial court initially confirmed the award, but the Georgia Court of Appeals reversed, concluding that the arbitrator had ignored express contract language in making the award.

On further review, the Georgia Supreme Court reversed the decision of the Court of Appeals. The Georgia Supreme Court noted that establishing a manifest disregard of the law required more than a finding that the arbitrator had committed a legal error. To set aside the award on that basis, the party challenging the award needed to show that the arbitrator displayed a specific intent to disregard the law. The Georgia Supreme Court concluded that the party challenging the arbitration award had not met that high standard. That the arbitrator had offered a different interpretation of the relevant provisions of the contracts did not show a manifest disregard of law.

This decision reinforces the high bar that exists for challenges to arbitration awards. When agreeing to arbitration, parties should always understand that their ability to have a court second-guess the decision of the arbitrator is extremely limited.

The opinion is available at https://www.gasupreme.us/wp-content/uploads/2021/12/s21g0008.pdf

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