International Construction Law Review
CORRESPONDENT’S REPORT: UNITED STATES
MS PERLMAN
Arent, Fox, Kintner, Plotkin & Kahn, Washington DC
AUTHORITY OF ARBITRATORS TO AWARD TREBLE DAMAGES AND ATTORNEY FEES
Arbitration awards are generally enforceable in the United States under federal1
and state2
law. There are, however, very limited bases for challenging an arbitration award. The Federal Arbitration Act’s bases for vacating an arbitration award are fraud, arbitrator bias, and arbitrator misconduct, as well as decisions in which the arbitrators so imperfectly executed their powers that a mutual, final award on the subject-matter was not made, or in which the arbitrators exceeded their powers: 9 USC §10. State law and the Convention on the Recognition of Foreign Arbitral Awards of 10 June 1958 provide similar bases for vacation of arbitration awards.
In a construction case decided in January 2002, the Supreme Judicial Court of Massachusetts3
dealt with the question of whether arbitrators exceeded their powers when they awarded treble damages and attorney fees to a subcontractor who had not been paid by the prime contractor. Drywall Systems, Inc
v. ZVI Construction Co Inc.
4
The arbitration clause in Drywall Systems
provided that the parties must submit to arbitration “any controversy or claim arising out of or related to the contract”. This language is contained in American Institute of Architects standard form contracts and is typical of arbitration clauses used in the US both for construction and commercial arbitration. The arbitrators found that the prime contractor had, wilfully and knowingly, not paid the subcontractor. Applying a Massachusetts unfair competition statute, Chapter 93A of the Annotated Laws of Massachusetts, the arbitrators awarded treble damages and attorney fees.
1 Any US arbitration involving interstate commerce is governed by the Federal Arbitration Act, 9 USC §1–16. Arbitration awards made outside the United States are enforceable in the US as provided in the Convention on the Recognition of Foreign Arbitral Awards of 10 June 1958 as provided in 9 USC §201–208.
2 The National Conference of Commissioners on Uniform State Laws has adopted the Uniform Arbitration Act. Available at http://adr.org. Most states have adopted the Uniform Arbitration Act in whole or in part. Massachusetts, whose law is applicable to the case discussed herein, has adopted the Uniform Arbitration Act as Chapter 251 of the Annotated Laws of Massachusetts
.
3 That state’s highest court.
4 435 Mass 664 (2002), 761 NE2d 482.
[2002
The International Construction Law Review
406