THE FOURTH DEPARTMENT REJECTED SUPREME COURT’S RULING THAT THE ARBITRATOR “MANIFESTLY DISREGARDED SUBSTANTIVE LAW” AND THAT THE ARBITRATION AWARD WAS “IRRATIONAL,” EXPLAINING THE CRITERIA FOR BOTH (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined that none of Supreme Court’s grounds for vacating the arbitration award were valid. The arbitrator did not “manifestly disregard the substantive law.” The award was not “irrational.” The Fourth Department explained the criteria for both:

… [T]he court determined that the arbitrator manifestly disregarded “substantive law” applicable to the parties’ dispute when the arbitrator distinguished, rather than applied, two prior arbitration awards that petitioner and the court read as favorable to petitioner’s position on the timeliness issue. That was error. “The effect, if any, to be given to an earlier arbitration award in subsequent arbitration proceedings is a matter for determination in that forum” … . Neither petitioner nor the court identified any “substantive law applicable to the parties’ dispute” to support application of the doctrine of manifest disregard of law … . In any event, even if the two prior arbitration awards constituted substantive law, inasmuch as the record establishes that the arbitrator considered, but distinguished, those arbitration awards, we conclude that petitioner failed to establish that the arbitrator “knew of a governing legal principle” that was “well defined, explicit, and clearly applicable to the case” and “yet refused to apply it or ignored it altogether … .* * *

“An award is irrational if there is no proof whatever to justify the award” … . Where, however, “an arbitrator offer[s] even a barely colorable justification for the outcome reached, the arbitration award must be upheld” … .

Here, the arbitrator issued a thoughtful, well-reasoned opinion and award in which he considered the terms of the CBA [collective bargaining agreement], the evidence adduced at the hearing, and prior arbitration awards, and we thus conclude that “[i]t cannot be said that the arbitrator’s procedural resolution of the issue concerning compliance with the contractual requirement that the demand for arbitration be made within a specified time . . . was irrational” … . Matter of Buffalo Teachers’ Fedn. (Board of Educ. of Buffalo City Sch. Dist.), 2024 NY Slip Op 02429, Fourth Dept 5-3-24

Practice Point: Read this decision to understand how limited the court’s role is when reviewing an arbitration award.