Michael S. Kimm v. Blisset, LLC.

In the case of Michael S. Kimm v. Blisset, LLC., et als., in an opinion decided on August 28, 2006, the Appellate Division of the Superior Court of New Jersey ( Docket No. A-0965-04T2)  dealt with issues concerning the scope of an arbitrator’s powers.    In the opinion, the Court drew distinctions between:  1) fee disputes between attorneys and clients; 2) arbitrations in Court annexed proceedings; and 3) arbitrations held pursuant to private agreements.  In addition, the Court focused on the meaning of the recently enacted  New Jersey Arbitration Act, N.J.S.A. 2 A: 23 B-1 to 32 as it relates to the powers of an arbitrator.   

The Court noted that, at its heart, arbitration is a creature of contract.  It is a favored remedy and arbitration agreements are liberally recognized.   It is state contract law principles that generally govern whether a valid agreement to arbitrate exists.

An arbitrator’s powers is generally limited by the agreement of the parties.  The Court therefore noted that where only one of the parties believes that the arbitrator was empowered to act, and there was no evidence of an actual agreement, the arbitrator has no authority to act at all.    If the parties have not agreed in advance, the parties cannot force an arbitrator to give reasons for the award or to write a decision  explaining  his or her view of the facts.

In New Jersey, agreements to arbitrate made on or after January 1, 2003, are governed by the revised New Jersey Arbitration Act.  N.J.S.A.  2 A: 23B – 3a.  This revised Act is based largely on the Uniform Arbitration Act of 2000, see Assembly Judiciary Committee Statement on Senate Bill No. 514, L. 2003 c.95, and codified at N.J.S.A. 2A:23B-1 to -32.  This statute replaces the earlier version of the Arbitration Act, see N.J.S.A. 2A: 24 – 1 to -11.

The earlier statute required a written contract or a written "agreement to submit" to arbitration, in order for a party to be required to proceed to arbitration.    The revised statute, by comparison, only requires a "record", which presumably might fall short of a formal, contractual writing.  In addition, under the prior statute, an arbitrator’s award had to be reduced to a judgment by a Court in order to be enforceable and the Court would have the ability to vacate, modify or correct the arbitrator’s award .  

Under the new statute, the grounds upon which a Court may vacate an award have been expanded and the new statute also empowers the Court to correct or modify an award. The earlier statute gave the Court the authority to vacate an arbitrator’s award if the arbitrator "so imperfectly executed (his) powers that a mutual, final and definite award" was not made.  The revised act specifically excludes an attack on an award, either by way of application to the arbitrator or the Court, on the grounds of imperfection, if the claim of imperfection is addressed to the merits of the award.  While an arbitrator may "clarify" the award, the arbitrator may not change his or her mind or reconsider the decision, in the guise of clarification.

Parties intending to have their disputes completely  resolved by arbitration should take care that any agreements they enter into deal clearly and concisely with the issue of what is to be arbitrated and how the arbitration is to be handled and be aware of the provisions of the New Jersey Arbitration Act.