Nafta Traders, Inc. v. Quinn

Summary

The Supreme Court of Texas held that the Texas General Arbitration Act permits parties to agree to limit an arbitrator's authority and thereby allow judicial review of an arbitration award for reversible error. It further held that the Federal Arbitration Act does not preempt enforcement of such an agreement because enforcing the parties' contract does not frustrate the FAA's principal purpose of enforcing arbitration agreements according to their terms. The court reversed the court of appeals' judgment and remanded for further proceedings.

Holdings

1. The Texas General Arbitration Act does not prohibit an agreement that limits an arbitrator's authority to that of a judge and thereby permits judicial review of an arbitration award for reversible error.
2. The Federal Arbitration Act does not preempt enforcement of an agreement for expanded judicial review of an arbitration award that is enforceable under the Texas General Arbitration Act.
3. Agreed review for reversible error is not automatically full judicial review; the reviewing court must have a sufficient record, preserved complaints, and must apply the same review standard used in a judicial proceeding involving the same subject matter.

Questions Presented

1. Whether the Texas General Arbitration Act permits parties to agree that an arbitrator lacks authority to commit reversible error of state or federal law, thereby allowing judicial review for such error.
2. Whether the Federal Arbitration Act preempts enforcement of a Texas-law agreement providing for expanded judicial review of an arbitration award.
3. What procedural prerequisites and scope govern judicial review of an arbitration award when the parties have agreed to review for reversible error.

Disposition

reversed_and_remanded