March 16, 2017 Articles

Did the Seventh Circuit Expand the Grounds for Vacating an Arbitration Award?

By Charles E. Harris II and Joseph M. Snapper

A court has an extremely circumscribed role in an action to vacate an arbitration award. Indeed, the U.S. Supreme Court has declared that even if a court is convinced that an arbitrator committed a grave error in applying the terms of a contract, it should not vacate the resulting award if the arbitrator even arguably applied the contract provisions. In Bankers Life & Casualty Insurance Co. v. CBRE, Inc., 830 F.3d 729 (7th Cir. 2016), a divided Seventh Circuit held that an arbitration award did not satisfy this deferential standard, and some have concluded that the court expanded the grounds for vacating an award. While the court somewhat uncharacteristically commented on the merits of the petitioner’s breach of contract claim, rather than simply deciding whether the arbitrators applied the contract terms, the court did purport to vacate the award based on one of the limited grounds for doing so—i.e., that the arbitrators exceeded their authority.

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