United States: Judicial Review Of Arbitration Awards Under Michigan's Uniform Arbitration Act

Last Updated: November 17 2017
Article by Phillip J. DeRosier

By: Phillip J. DeRosier1

Although Michigan's Uniform Arbitration Act, MCL 691.1681, et seq., has been in effect since 2013, many practitioners still think of MCR 3.602 when it comes to seeking judicial review of arbitration awards. In addition, the continued existence of the court rule has resulted in some confusion because it contains different deadlines for seeking to vacate, modify, or correct an arbitration award. But once it is determined that the Act applies, the timing and process for challenging an award becomes relatively straightforward.

Applicability of the MUAA

Section 3 of the Act provides that "[o]n or after July 1, 2013, this act governs an agreement to arbitrate whenever made." At the same time, the Act "does not affect an action or proceeding commenced . . . before this act takes effect." MCL 691.1713. This means that the Act governs if the claim for arbitration was filed on or after July 1, 2013. Fette v Peters Const Co, 310 Mich App 535, 541; 871 NW2d 877 (2015). The Act does not apply, however, "to an arbitration between members of a voluntary membership organization if arbitration is required and administered by the organization." MCL 691.1683(2).2 Moreover, in domestic relations cases, if there is a conflict between the Act and the Domestic Relations Arbitration Act (DRAA), MCL 600.5070, the DRAA controls. MCL 600.5070(1).

Timing to Seek Judicial Review of an Award

With one exception, the MUAA provides that if a party wants a court to vacate, modify, or correct an arbitration award, the party must file a motion within 90 days of receiving notice of the award, or of a modified or corrected award. See MCL 691.1703(2), 691.1704(1). The one exception is that a party seeking to vacate an award on the ground that it "was procured by corruption, fraud, or other undue means" must file a motion "within 90 days after the ground is known or by the exercise of reasonable care would have been known by the moving party." If there is not yet a pending civil action between the parties, "a complaint regarding the agreement to arbitrate must be filed and served as in other civil actions." MCL 691.1685(2).

So what about MCR 3.602? In contrast with the 90-day period for challenging an arbitration award contained in the MUAA, the court rule provides two different deadlines depending on whether there is already a pending civil action. If an action is pending, a motion to vacate, modify, or correct an award must be filed "within 91 days after the date of the award." MCR 3.602(J)(3), (K)(2).3 But if there is not already a pending action, a complaint must be filed much sooner, i.e., "no later than 21 days after the date of the arbitration award." MCR 3.602(J)(1), (K)(1).

The key to deciding which deadline applies is to determine whether the MUAA governs the arbitration. If so, then the court rule does not apply, and the timing and procedure for challenging the award is governed by the MUAA. This is consistent with both the text of MCR 3.602 and the staff comment. MCR 3.602(A) provides:

"Courts shall have all powers described in MCL 691.1681 et seq., or reasonably related thereto, for arbitrations governed by that statute. The remainder of this rule applies to all other forms of arbitration . . . . (Emphasis added)."

Thus, the court rule makes clear that the statutory procedures apply except in cases that are not governed by the statute (e.g., domestic relations arbitrations or arbitrations commenced before the Act took effect). The staff comment to MCR 3.602 confirms this, explaining that the rule applies "to all other forms of arbitration that are not described in the [MUAA]."

Grounds for Vacating, Modifying, or Correcting an Award

The grounds for vacating, modifying, or correcting an award are straightforward, but limited. Courts may vacate arbitration awards on grounds such as corruption, fraud, "evident partiality," or misconduct by the arbitrator. A court may also vacate an award if the arbitrator "exceeded the arbitrator's powers," if there was "no agreement to arbitrate," or if the arbitration was conducted without proper notice of its initiation. MCL 691.1703(1).

Probably the most common challenge to an arbitration award is that the arbitrator exceeded his or her powers. "[A]rbitrators can be fairly said to exceed their power whenever they act beyond the material terms of the contract from which they primarily draw their authority, or in contravention of controlling principles of law." DAIIE v Gavin, 416 Mich 407, 434; 331 NW2d 418 (1982).

In addition to asking the court to vacate an arbitration award, a party may request that the award be corrected or modified. A court may modify or correct an award if:

  1. there is a "mathematical miscalculation" or "evident mistake in a description of a person, thing, or property referred to in the award";
  2. the arbitrator made an award on a claim that wasn't submitted to the arbitrator, and the error can be corrected "without affecting the merits of the decision" on the claims that were submitted; or
  3. the award is "imperfect in a matter of form not affecting the merits of the decision on the claims submitted."

MCL 691.1704. A party may join a motion to modify or correct an award with a request to vacate the award. MCL 691.1704(3).

Appeals

Once the court has decided a party's motion to vacate, correct, or modify an award, the MUAA also provides a right to appeal. A party may appeal an order "confirming or denying confirmation of an award," "modifying or correcting an award," or "vacating an award without directing a rehearing." An appeal may also be taken from "a final judgment entered under th[e] act." MCL 691.1708.4

Conclusion

There is still a relative dearth of case law addressing the MUAA's provisions, and the precise interplay between the statute and MCR 3.602 is not always crystal clear. The key is making the initial assessment of whether the arbitration is governed by the MUAA. If so, then its provisions control.

Footnotes

1 A version of this article was previously published in the Michigan Defense Quarterly.

2 Nevertheless, "a party to such an arbitration may request a court to enter an order confirming an arbitration award and the court may confirm the award or vacate the award for a reason contained in section 23(1)(a), (b), or (d)." Id.

3 That is, unless the motion "is predicated on corruption, fraud, or other undue means, in which case "it must be filed within 21 days after the grounds are known or should have been known." MCR 3.602(J)(3). In addition, "[a] motion to vacate an award in a domestic relations case must be filed within 21 days after the date of the award." Id.

4 In contrast, MCR 3.602(N) provides only that "[a]ppeals may be taken as from orders or judgments in other civil actions."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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