Challenge to Arbitration Award Untimely

Once a party receives an arbitration award, it does not necessarily mean that it will voluntarily be paid. Frequently, the party receiving the arbitration award must have it confirmed by the court and converted into a judgment. However, the party against whom the award has been made may challenge the award and seek to have it vacated. If the dispute involves an agreement related to construction, the parties must follow the procedures set forth in the Construction Arbitration Act, Miss. Code Ann. §11-15-101, et seq. If the dispute is unrelated to construction, the parties must follow the procedures set forth in the Mississippi Arbitration Act ("MMA"), Miss. Code Ann. §11-15-1, et seq. In a recent decision, the Mississippi Court of Appeals found the party against whom an award had been granted failed not only to timely challenge the arbitration award but also failed to set forth sufficient grounds to justify vacating the arbitration award and reversed the trial court’s findings. [click here to view decision].

In reversing the trial court, the Court of Appeals first considered the timeliness requirements for vacating an arbitration award under both the MMA and the Federal Arbitration Act ("FAA"), 9 U.S.C. §§1, et seq. Under the FAA, a motion to vacate must be served within three months after the award is filed or delivered. 9 U.S.C.§12. However, under the MMA provides as follows:

An application to vacate or modify an award shall be made to the court at the term next after the making and publication of the award, upon at least five days’ notice, in writing, being given to the adverse party, if there be time for that purpose; and if there be not time, such court, or the judge thereof, may, upon good cause shown, order a stay of proceeding upon the award, either absolutely or upon such terms as shall appear just, until the next succeeding term of court.

 

Miss. Code Ann. §11-15-27.  Because the challenging party complied with neither of these provisions, the Court of Appeals found the trial court had erred when it concluded the challenger's motion for vacation was timely.

In addition, the challenger did not set forth any of the grounds that might justify the vacating of an arbitration award. These grounds are very limited and set forth in 9 U.S.C. §10(a) or under Miss. Code Ann. §11-15-23. Accordingly, the Court of Appeals reversed the trial court for finding otherwise.

Although this case dealt with the MMA, the Mississippi Construction Arbitration Act also has strict filing deadlines for challenging an arbitration award and extremely limited grounds for challenging an award. It is therefore imperative that upon receipt of the arbitration award contractors consult their lawyer or the Mississippi Construction Arbitration Act to determine the time limitations for modifying or vacating an arbitration award.

Can you Include a Right to Appeal an Arbitration Decision in your Arbitration Clause?

I recently came across a decision form the District Court for the Southern District of Mississippi that caught my attention. Although it was not construction related, it addressed a situation where the parties had included the right to appeal an arbitration award in their agreement to arbitrate. [click for decision] This would appear to be inconsistent with the concept of finality, which is one of the public policy reasons for arbitration. Further, under the Mississippi Arbitration Act, Miss. Code Ann. §§ 11-15-1, et seq. and the Mississippi Construction Arbitration Act, Miss. Code Ann. §§ 11-15-101, et seq. there are extremely limited grounds for having an arbitration award challenged.

Nonetheless, in this district court decision, the federal judge thought that even though there were no Mississippi court decisions addressing this issue, that if confronted with the question of whether parties could include a right to appeal an arbitration award for reasons stated in the arbitration clause, the Mississippi court would enforce the provision allowing an appeal. The district court, quoting the Fifth Circuit, stated that "when, as here, the parties agree contractually to subject an arbitration award to expand judicial review, federal arbitration policy demands that the court conduct its review according to the terms of the arbitration contract." (citation omitted)

There remain no Mississippi decisions adopting the position of the district court. However, this decision should highlight the need for contractors to carefully read arbitration clauses included in their contract. If you have concerns with any aspect of the arbitration clause, those concerns should be resolved before you sign the contract.

Can you Include a Right to Appeal an Arbitration Decision in your Arbitration Clause?

I recently came across a decision form the District Court for the Southern District of Mississippi that caught my attention. Although it was not construction related, it addressed a situation where the parties had included the right to appeal an arbitration award in their agreement to arbitrate. [click for decision] This would appear to be inconsistent with the concept of finality, which is one of the public policy reasons for arbitration. Further, under the Mississippi Arbitration Act, Miss. Code Ann. §§ 11-15-1, et seq. and the Mississippi Construction Arbitration Act, Miss. Code Ann. §§ 11-15-101, et seq. there are extremely limited grounds for having an arbitration award challenged.

Nonetheless, in this district court decision, the federal judge thought that even though there were no Mississippi court decisions addressing this issue, that if confronted with the question of whether parties could include a right to appeal an arbitration award for reasons stated in the arbitration clause, the Mississippi court would enforce the provision allowing an appeal. The district court, quoting the Fifth Circuit, stated that "when, as here, the parties agree contractually to subject an arbitration award to expand judicial review, federal arbitration policy demands that the court conduct its review according to the terms of the arbitration contract." (citation omitted)

There remain no Mississippi decisions adopting the position of the district court. However, this decision should highlight the need for contractors to carefully read arbitration clauses included in their contract. If you have concerns with any aspect of the arbitration clause, those concerns should be resolved before you sign the contract.

Appeals from School Board Orders--Do not delay!

If you are bidding on a project for a school board and are aggrieved by the decision to award the contract to another party, you must appeal the order "within ten (10) days from the date of adjournment of the meeting at which the order is entered."  Miss. Code Ann. § 37-7-115. The procedure for appealing the award decision is the same as set forth in Miss. Code Ann. § 11-51-75 and requires preparing and filing a bill of exceptions with the circuit court.  Because of the short time within which to appeal the decision, a contractor must not delay in deciding whether to appeal or walk away and fight another day.

Bid Protests--Time is not on your side

If you believe you have grounds for protesting the decision of a board of supervisors, or municipal authorities of a city, town, or village to reject a bid or award a contract, you need to act promptly. The clock is ticking and fast.

Under Miss. Code Ann. §11-51-75 (Rev. 2002) you have only ten (10) days from the adjournment of the meeting to appeal the adverse decision of the board of supervisors or municipal authorities to the circuit court. Do not wait for the official copy of the minutes to the meeting. Contact your legal counsel immediately since he/she will need to prepare a bill of exceptions (essentially a statement of the facts) that must be signed by the president of the board of supervisors or the municipal authority and presented to the circuit court clerk to perfect the appeal.

Remember, in the context of bid protests, if you delay you will lose the right to challenge the decision of the board of supervisors or municipal authority.