Vanderbilt Law Review


Tom Cullinan

First Page



Arbitration is generally defined as a process in which parties voluntarily agree to submit a dispute to an impartial third person called an arbitrator,' who is often selected by the parties and is empowered to make a decision based on the evidence and the parties' arguments. Because of its contractual nature, arbitration claims a central role in settling today's commercial disputes. By structuring the agreement to fit their needs, parties can tailor the arbitration agreement to provide significant advantages over other forms of dispute resolution. For example, arbitration is generally faster, cheaper, and more private than litigation. The parties can also create their own discovery process and procedural devices. In addition, the arbitrator, who is usually better informed than judges or juries about trade customs and technologies, can conduct the proceedings in an informal setting at a non-stressful pace.s Moreover, arbitration reduces hostility and is, therefore, less disruptive of current and future dealings between the parties. Perhaps most importantly, though, arbitration is fully capable of dealing with today's complex business situations'o and can provide a wide range of relief."

To retain these advantages, and thus provide incentives for its use, arbitration must render a final and binding determination. While this requirement does not absolutely foreclose the availability of judicial review, it does require extremely circumscribed limits on its use."s Such a narrow level of review is crucial for two reasons. First, if arbitration awards were subject to greater judicial review, arbitration would become a mere stepping-stone to litigation. Losers unhappy with the determination and victors believing they were under-compensated would not hesitate to challenge in court what they perceived as inappropriate awards. Supplementing the arbitration process with non-deferential judicial review would eliminate many of the advantages originally gained using arbitration. Second, a system that constantly provided for a "second bite at the apple" would do little to establish the faith and confidence that any system of dispute resolution requires. Parties must believe that the award will be final, or arbitration loses its appeal as a true alternative to litigation. The Federal Arbitration Act ("FAA") satisfies this requirement by narrowly circumscribing judicial review of arbitration awards. Specifically, the FAA commands the courts to confirm all arbitration awards,, unless certain limited grounds for vacatur, modification, or correction are found to exist.