In the recent decision of Carl Zeiss Vision, Inc. v. REFAC Holdings, Inc., C.A. No. 11513-VCS (Del. Ch. Aug. 24, 2017), Vice Chancellor Slights denied a motion to vacate an arbitration award.  Noting that the “standard of judicial review with respect to such applications is among ‘the narrowest . . . in all of American jurisprudence'”, the Court found unconvincing defendants’ argument that the arbitration panel “eviscerate[d] the essential term” of the agreement sua sponte and then “permit[ted] the agreement to remain in effect after gutting that term.”  The Court was not inclined to permit a “do over” of the arbitration.

In declining defendants’ motion to vacate the award, the Court noted that the Federal Arbitration Act (“FAA”) “require(s) reviewing courts to give practically the highest degree of deference, short of ‘untouchable,’ recognized in the law to an arbitrator’s award. Indeed, to overturn an award, the court must be satisfied that ‘there [is] absolutely no support at all in the record justifying the arbitrator’s determinations.'”

Key Takeaway

This decision reinforces the notion that overturning an arbitration award is a “near[] vertical climb”.  Although arbitration has the benefits of confidentiality and potentially limited discovery and speed, the downfall for the losing party is the difficulty in overturning an award.

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