Just when you thought you could validly add a clause to your client's arbitration agreement providing that the losing party may take an appeal from the award to the district court having jurisdiction over the parties, think again. What was the law of the Ninth Circuit since December 1997, when a three-judge panel of the Ninth Circuit Court of Appeals decided LaPine Technology Corporation v. Kyocera Corporation ("LaPine I"), has just been reversed by the Ninth Circuit Court of Appeals sitting en banc. In its decision, on a rehearing of what the court refers to as "LaPine II", the court overruled LaPine I, affirming the district court's 1995 conclusion and holding that a "federal court may only review an arbitral decision on the grounds set forth in the Federal Arbitration Act." In analyzing Kyocera, this article discusses (i) why the rehearing en banc was improvidently granted with respect to the issue of whether parties can include an appeal clause in their pre-dispute arbitration agreement; (ii) why the en banc court in rehearing that issue asked the wrong question; and (iii) having found the appeal provision to be illegal, on what principal ground the court should have severed the appeal provision from the rest of the arbitration clause.
Eric van Ginkel,
"Expanded" Judicial Review Revisited: Kyocera Overturns LaPine,
4 Pepp. Disp. Resol. L.J.
Available at: http://digitalcommons.pepperdine.edu/drlj/vol4/iss1/2