Seeking Correction by The Arbitrators of Mistakes in a Contractual Arbitration Award, Under California Law

The California Arbitration Act, in California Code of Civil Procedure § 1284, by its reference to § 1286.6( c) expressly allows an arbitration award to be corrected as to “matters of form”, where the award in imperfect or.

And an award may be corrected by the arbitrator where there is an apparent miscalculation of some numbers or figures or amounts in the award, or mistake in the description of persons, things, or property in the award, per Code Civil Proc. §§ 1284, 1286.6(a).

Pursuant to California Code of Civil Procedure section 1284, a party may also apply in writing to its arbitrator to request correction of the award on any of the grounds set forth in 1286.6. Code Civil Proc. § 1284.

“The arbitrators, upon written application of a party to the arbitration, may correct the award upon any of the grounds set forth in subdivisions (a) and (c) of Section 1286.6 not later than 30 days after service of a signed copy of the award on the applicant. . . .”

Code Civil Proc § 1284

Section 1286.6 provides:

“Subject to Section 1286.8, the court, unless it vacates the award pursuant to Section 1286.2, shall correct the award and confirm it as corrected if the court determines that:

(a) There was an evident miscalculation of figures or an evident mistake in the description of any person, thing or property referred to in the award; . . .

(c) The award is imperfect in a matter of form, not affecting the merits of the controversy.”

Code Civil Proc § 1286.6¹

These grounds for correction by the arbitrator are important, but quite limited.

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1 When an arbitrator acts beyond the scope of his authority, however, the court retains the power to vacate an award, but only if "the award cannot be corrected without affecting the merits of the decision upon the controversy submitted." Code Civil Proc. § 1286.2(a)(4). Delaney v. Dahl (2002) 99 Cal.App.4th 647, 655.

Application for such a correction must be made within 10 days after service of the award.

(Arbitrations conducted per rules of a non-profit association which has promulgated its own procedural rules for arbitration - such as JAMS or the American Arbitration Association - may have different or supplemental rules and deadlines governing such correction requests, which might contractually replace or supplement the statutory provisions or case law to some extent)

There is a distinction in the case law precedents between “corrections” and “amendments” to arbitration awards. Delaney v. Dahl (2002) 99 Cal.App.4th 647, 658.

Case law in Court of Appeal precedent make it clear that arbitrators do have the limited power to “amend” their award on certain limited grounds not expressly stated in Code Civil Proc. § 1284, and perhaps even outside the 10 day statutory limitation period.

“[I]t would be irrational to discard all the time and money spent by the parties where an arbitration award is inadvertently incomplete in one respect and where the oversight can be corrected without substantial prejudice to the legitimate interests of a party. To deny arbitrators the authority to complete their task under such circumstances elevates form over substance.”

“We conclude California's contractual arbitration law permits arbitrators to issue an amended award to resolve an issue omitted from the original award through the mistake, inadvertence, or excusable neglect of the arbitrator if the amendment is made before judicial confirmation of the original award, is not inconsistent with other findings on the merits of the controversy, and does not cause demonstrable prejudice to the legitimate interests of any party.” (Emphasis added)

A.M. Classic Construction, Inc. v. Tri-Build Development Co. (1999) 70 Cal. App. 4th 1470, 1478.

“[H]owever, arbitrators do possess the power to amend their awards, if certain requirements are met. There is a dispute in the case law as to whether a party may seek an amendment of an arbitration award after the expiration of the 10-day period in which to seek a correction of the award. This division has held that the 10-day period controls (Century City Medical Plaza v. Sperling, Isaacs & Eisenberg (2001) 86 Cal.App.4th 865, 881 & fn. 25 [103 Cal. Rptr. 2d 605]), while Division Three of the Fourth Appellate District has held that an arbitration award may be amended at any time until the trial court confirms the award (Delaney v. Dahl (2002) 99 Cal.App.4th 647, 650, 659 [121 Cal. Rptr. 2d 663] (Delaney)). . . . . “ (Emphasis added)

Law Offices of David S. Karton v. Segreto (2009) 176 Cal. App. 4th 1, 3-6 .

"Nothing in the statutory scheme either authorizes or prohibits the amendment of an [arbitration] award."

A.M. Classic Construction, Inc. v. Tri-Build Development Co. (1999) 70 Cal.App.4th 1470, 1475

Consequently, "the absence of a statutory provision authorizing amendment of an award does not deprive the arbitrator of jurisdiction to do so." Ibid. at p. 1476.

Thus, it has been held that "California's contractual arbitration law permits arbitrators to issue an “amended award” to resolve an issue omitted from the original award through the mistake, inadvertence, or excusable neglect of the arbitrator if the amendment is made before judicial confirmation of the original award, is not inconsistent with other findings on the merits of the controversy, and does not cause demonstrable prejudice to the legitimate interests of any party." Ibid. at p. 1478. See also Delaney v. Dahl, supra, at p. 658.

Delaney involved addition of a party's name to the award as not having prevailed on and taking nothing by way of a cross-claim.

Although that party urged the court to impose the additional requirement that there be admissible evidence of the arbitrator's intent in making the amendment, the court refused to do so, noting that the arbitrator had explained the reason for the amendment in the amended award itself. Delaney v. Dahl , supra, 99 Cal. App. 4th at 653, 660. In Century City Medical Plaza a landlord-tenant dispute was arbitrated pursuant to a stipulation that provided the arbitrator could award interest, attorney's fees, and costs to the prevailing party if authorized by the contract or the parties' statutory rights.

The original award was in favor of the landlord, but did not award attorney's fees, interest, or costs. A second award did provide for these items.

The trial court confirmed the original award and vacated the second award.

What was required, the Court of Appeal said, was for the trial court to hold an evidentiary hearing and to confirm the second award if the evidence established that the arbitrator's failure to include an award of attorney's fees, costs, and interest in the original award was due to an inadvertent omission and that certain other conditions had been met. Century City Medical Plaza v. Sperling, Isaacs & Eisenberg (2001) 86 Cal. App. 4th 865, 881-883.

By logical extension from these holdings, an arbitrator therefore may possibly also have the power to amend his or her award where “an issue [was included in] the original award through the mistake, inadvertence, or excusable neglect”.

“[I]t would be irrational to discard all the time and money spent by the parties where an arbitration award is inadvertently incomplete in one respect and where the oversight can be corrected without substantial prejudice to the legitimate interests of a party.”

State and Federal arbitration statutes also allow the California Superior Court or the United States District Courts, whichever has jurisdiction, - and depending on the law applicable to the arbitration, as spelled out in the contract between the parties or otherwise - to correct or modify arbitration awards on certain limited but slightly broader grounds, or to vacate the Arbitration Award in whole or in part, or order a rehearing before the arbitrators or a new arbitrator.

The law governing these types of proceedings is rather complicated, State Law and Federal Law differ to some degree, and the time periods for bringing such Court proceedings is VERY short.

These matters are beyond the scope of this article, and such topics will be discussed generally in a future article.

If you are party to an arbitration where there are potentially significant monetary or other issues at stake, particularly where the other party is represented by legal counsel, it is VERY important that you at least consult with a competent and experienced Arbitration Attorney as early in the case as possible.

Although arbitration can seem more informal and less legally complicated than a court trial, do not be deceived or lulled into complacency by this seeming informality as the procedural issues at least can be quite complex, and the deadlines VERY short, so your rights and remedies could be lost if you are not well informed or represented by competent legal counsel.

N.B. The contents of this Article do not constitute legal advice or create an attorney-client relationship, and you may not rely on it without seeking legal advice regarding your particular situation from a competent Arbitration lawyer or ADR attorney in California.
Please also note that factual situations vary, and that statutes and case law are frequently changing and evolving, and these materials may be or become outdated or incorrect.
For further information on this topic and how the current law may apply to your particular property and issues, Contact Us via email, phone (415)788-1881 or visit our website at www.wolfflaw.com for other contract information.
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