• June 16, 2020

It is possible that one of the dimmest prospects for appeal in civil litigation is the appeal of an arbitration award. As painful as this is for many arbitration losers, the reason should be obvious: the whole point of arbitration is to stay out of court and, all the more, to limit any possibility of appeal dramatically.

The latest loser to learn this hard lesson is Aurora Distributed Solar (“Aurora”) who tried, without success, to get out from under an arbitration award against it for over $30 million.

Aurora entered into an agreement with another company, Biosar, on a $90 million solar-power generator project, which, in turn, entered into an agreement with Faith Technologies, Inc. (“Faith”) to do work on the project (“the Agreements”).

The Agreements had arbitration clauses. Problems in the project resulted in two separate arbitrations (Aurora/Biosar, Biosar/Faith) and the three stipulated and agreed to combine the disputes into one single proceeding (“the Stipulation”). The Stipulation also provided that the parties agreed to arbitration.

Where things went very badly for Aurora was that the scope of the arbitration clause in its Agreement with Biosar was narrower than the arbitration cause in the Stipulation.

It appears that Aurora did not pick up on this until after it got hammered in the arbitration.

Too late.

To avoid waiver under the [governing arbitration] rules, Aurora had to assert the arbitrator’s lack of authority over the abandonment claim, which it did not do until after the arbitration concluded. Thus, by entering into the stipulation, Aurora waived the no-waiver clause.

Faith Technologies, Inc. et al. v. Aurora Distributed Solar, LLC Minn. Ct. App., A19-1639

There is not much here in terms of a practice pointer except that the decision underscores the critical point of the finality of arbitrations in almost all circumstances.