In a dispute arising from the break-up of an accounting partnership, the Massachusetts Supreme Judicial Court has held that parties to a contract cannot agree to expand the grounds on which a court can vacate a commercial arbitration award beyond the bases explicitly set forth in the Massachusetts Arbitration Act (MAA). Katz, Nannis & Solomon, P.C. v. Levine, 473 Mass. 784 (2016). Thus, even where contracting parties wish to give the court more power to review (and perhaps restrain) the power of an arbitrator, the MAA forbids them from doing so, according to the SJC.
The dispute in Katz arose from alleged serious misconduct of one of the firm’s founders; as a result, the remaining partners voted him out. The ousted partner, Levine, took the matter to binding arbitration (per the partnership agreement). The arbitrator held that the vote was proper, that sufficient evidence supported a vote to eject Levine “for cause,” and awarded the partnership more than $1.7 million, plus interest.
The partnership moved to confirm the arbitration award in Superior Court and Levine moved to vacate it. The Superior Court confirmed the award, added an award of attorneys’ fees, and Levine appealed to the SJC, per its grant of a request for direct appellate review.
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