Minnesota Decisions Serve As A Reminder That Courts Should Rarely Interfere With Arbitration Decisions

In two decisions issued this week, the Minnesota Court of Appeals refused invitations to overrule arbitrators’ decisions. In Netter v. Raisch, the court emphatically rejected the proposition that an arbitrator exceeds his powers if he wrongly interprets the law. As the court held,

“While we do not necessarily see any error in the arbitrator’s interpretation of the declaration or application of the law, we note that, even if we accepted Raisch’s argument that the arbitrator erred in these respects, the arbitrator would not have exceeded his powers. In other words, misapplication of the law is not a basis to vacate an arbitrator’s award and an appellate court ‘will not overturn an award merely because [it] may disagree with the arbitrators’ decision on the merits.’”

In Bennett and Koch Construction, LLC v. Jones, the trial court vacated an arbitrator’s decision that refused to award attorneys’ fees, determining that the arbitrator exceeded his powers in failing to follow a contractual provision that entitled the prevailing party to recover fees. The Court of Appeals reversed, holding that the lower court erred in overriding the arbitrator’s decision:

“The issue of attorney fees for the prevailing party was subject to arbitration because it was
included in the contract. Therefore, the arbitrator’s attorney-fees decision was also not subject to de novo review by either the district court or our court and must be reinstated.”