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Arbitrator Did Not Have the Authority (CPLR 7511) to Modify an Award by Adding Interest, Even If Interest Should Have Been Awarded as a Matter of Law

The Third Department determined the arbitrator did not have the authority to modify an award by including an additional amount for interest. Even if the interest should have been awarded initially as a matter of law, modification by adding interest exceeded the powers enumerated in CPLR 7511. The court explained the arbitrator’s authority in this context:

“[I]t has been recognized that an arbitrator’s power to modify an award is extremely limited and that, absent compliance with the statutory requirements, an arbitrator is without authority to modify an award” … . The statutory requirements for modification are set forth in CPLR 7509, which allows an arbitrator to modify his or her award upon the grounds set forth in CPLR 7511 (c) if a timely application for modification is made. Because a timely request was made by petitioner, modification was permissible if: “1. there was a miscalculation of figures or a mistake in the description of any person, thing or property referred to in the award; or 2. the arbitrators have awarded upon a matter not submitted to them and the award may be corrected without affecting the merits of the decision upon the issues submitted; or 3. the award is imperfect in a matter of form, not affecting the merits of the controversy”(CPLR 7511 [c]). The arbitrator determined that the first two grounds were inapplicable, but that modification was warranted because the failure to assess the requested interest constituted an imperfection in the form of the original award.

Supreme Court correctly determined that CPLR 7511 (c) (3) had no applicability to the modification at issue here, which significantly affected the amount of the award and “was not merely one of form, but one which affect[ed] the substantive rights of the parties” … . Even accepting as true that the arbitrator was obliged to award interest as a matter of law …, “[i]t is clear that an arbitrator’s award cannot be . . . modified due to an error of fact or law unless the correction comes within the corrective or regulatory sections of the CPLR” … . Because the error here does not, the arbitrator lacked authority to correct it … .Matter of David Frueh Contr., LLC (BCI Constr., Inc.), 2015 NY Slip Op 04913, 3rd Dept 6-11-15

 

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