In most instances, parties to an arbitration comply with arbitrators' awards. But not always.
An award is not directly enforceable. When the non-prevailing party in an arbitration fails to comply with the terms of an award, the prevailing party must then seek court assistance to obtain compliance. In legal jargon, the prevailing party must ask the court to “confirm” the award. Once a court confirms an arbitrator's award, that award has the identical effect of a court judgment. In fact, upon confirmation, the confirmed award actually is a court judgment!
At that point, if the non-prevailing party still fails to comply with the now-confirmed award, the prevailing party has all of the legal tools available the same as if the matter had been filed in court from the beginning. These tools include having a sheriff levy upon the personal property of the non-prevailing party. This personal property can include bank accounts, motor vehicles, jewelry, boats, computers, accounts receivable, and even household furniture. The judgment confirming the award also constitutes a lien on any real estate that the non-prevailing party owns or acquires in the state where the award is confirmed.
The non-prevaining party can oppose an application to confirm an award. However, the grounds for successfully opposing the application are extremely limited. Those grounds are specified in laws that guide the court where confirmation is sought. The grounds recognized in New Jersey are in a statute designated N.J.S. 2A:23B-23:
- the award was procured by corruption, fraud, or other undue means;
- the court finds evident partiality by an arbitrator; corruption by an arbitrator; or misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding;
- an arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to consider evidence material to the controversy, or otherwise conducted the hearing contrary to section 15 of this act, so as to substantially prejudice the rights of a party to the arbitration proceeding;
- an arbitrator exceeded the arbitrator's powers;
- there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection pursuant to subsection c. of section 15 of this act not later than the beginning of the arbitration hearing; or
- the arbitration was conducted without proper notice of the initiation of an arbitration as required in section 9 of this act so as to substantially prejudiced the rights of a party to the arbitration proceeding.
- the award was procured by corruption, fraud, or undue means;
- there was evident partiality or corruption in the arbitrators, or either of them;
- the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
- the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
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