January 19, 2012 Articles

Texas General Arbitration Act Allows for Expanded Judicial Review

By Gabrielle Jackson

Arbitration is a creature of contract except when the parties are seeking to expand the scope of review allowable under specific sections of the Federal Arbitration Act (FAA). In Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 578 (2008), the U.S. Supreme Court held that the grounds for vacating or modifying an arbitration award as enumerated in sections 10 and 11 of the FAA are exclusive and cannot be supplemented by agreement of the parties. Hall Street did not, however, address the issue of whether the FAA automatically precludes enforcement of an agreement for expanded judicial review permissible under a state arbitration statute when arbitrators exceed the scope of their delegated authority.

This was the issue faced by the Texas Supreme Court in Nafta Traders, Inc. v. Quinn (majority; concurring), 339 S.W.3d 84 (Tex. 2011). The court held that the Texas General Arbitration Act (TAA) allows parties to contract for expanded judicial review when an arbitrator exceeds the authority delegated by the parties and the FAA does not preempt enforcement of such an arbitration agreement.

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