Petition to Vacate or Alter Arbitration Award in Texas

What Is a Petition to Vacate or Alter Arbitration Award?

A judicially created reason to set aside an arbitration award exists when an award violates public policy, is based upon a manifest disregard of the law, or the arbitrators did not conduct a fundamentally fair hearing. (Federal Arbitration Act "FAA" §10(a)(1) through (3).) If an arbitration award is not vacated, modified or corrected, the award must be confirmed. (9 U.S.C. § 9; P & P Indus., Inc. v. Sutter Corp.(1999) 179 F.3d 861, 870.)

How to Structure the Motion

The court requires that the motion include:

a statement of jurisdictional subject matter of this action pursuant to sections 171.081 and 171.096(c) of the Texas Civil Practice & Remedies Code
a statement validating that Venue is proper pursuant to Chapters 15 and 171 of the Texas Civil Practice & Remedies Code,
a copy of the agreement to arbitrate,
a statement of the issues arbitrated by the parties,
a statement of the status of the arbitration before the arbitrators, and
a proposed court order by the applicant to be signed by the judge pursuant to Texas Civil Practice and Remedies Code Section 171.092.

(Id. § 171.085.)

Section 171.088 of the Texas Civil Practice & Remedies Code provides the guidelines for vacating an Arbitration Award and states in relevant part:

On application of a party, the court shall vacate an award if:

the award was obtained by corruption, fraud, or other undue means;
the rights of a party were prejudiced by: evident partiality by an arbitrator appointed as a neutral arbitrator; evident partiality by an arbitrator appointed as a neutral arbitrator; corruption in an arbitrator; misconduct or wilful misbehavior of an arbitrator... the arbitrators

exceeded their powers
refused to postpone the hearing after a showing of sufficient cause for the postponement;
refused to hear evidence material to the controversy; or
conducted the hearing, contrary to Section 171.043, 171.044, 171.045, 171.046, or 171.047, in a manner that substantially prejudiced the rights of a party; or there was no agreement to arbitrate, the issue was not adversely determined in a proceeding under Subchapter B, and the party did not participate in the arbitration hearing without raising the objection.

A party must make an application under this section not later than the 90th day after the date of delivery of a copy of the award to the applicant. A party must make an application under Subsection (a)(1) not later than the 90th day after the date the grounds for the application are known or should have been known.

The Court’s Decision

The Court's power to review an arbitration panel award is quite limited; indeed, it is "among the narrowest known to the law." (Bowen v. Amoco Pipeline Co.(2001) 254 F.3d 925, 932.) A court may only vacate an arbitration award for reasons enumerated in § 10 of the FAA,(9 U.S.C. § 10) or for a handful of judicially created reasons. (Denver & Rio Grande W. R.R. Co. v. Union Pac. R.R. Co.(1997) 119 F.3d 847, 849.)

The means for reviewing an arbitration award is narrow, and courts must indulge every reasonable presumption in favor of the arbitration award. (Providian Banco Servs. Thomas (2008) 255 S.W.3d 411, 415; Int’l Bank of Commercv. Int’l Energy Dev. Corp.(1998) 981 S.W.2d 38, 4243.) Courts apply the terms of an arbitration agreement according to their in meaning. (Providian Bancorp Servs., 255 S.W.3d at 415.) “An arbitration award has the same effect as the judgment of a court of last resort.” (Int’l Bank of Commerce, 981 S.W.2d at 42.) As such, “a trial court reviewing the award may not substitute its judgment for the arbitrator’s merely because it would have reached a different conclusion.” (Id.)