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Policeman’s Benevolent Association, Local 292 v. Borough of North Haledon

158 N.J. 392, 730 A.2d 320 (1999)

ARBITRATION; CONFIRMATION—Under common law, an arbitration award may be confirmed even if more than three months have passed for statutory confirmation, but actions to vacate or modify an award must be commenced within the three month period.

Pursuant to a clause in an agreement, a policeman’s benevolent association filed a grievance and the matter proceeded to arbitration. The arbitrator entered an award in favor of the association against a municipality. The association waited beyond the expiration of the three-month limit for confirmation of arbitration awards pursuant to N.J.S. 2A:24-7 (the Arbitration Act). Instead, a month after the expiration of the confirmation period, it instituted a plenary action for confirmation in the Chancery Division. Two months later, the municipality filed an answer and counterclaim, seeking to vacate the award and asserting numerous affirmative defenses. The association claimed that the municipality’s counterclaim was time-barred as beyond the three-month limit set forth in the summary confirmation section of the Arbitration Act. The Chancery Division agreed with the association and confirmed the award, but the Appellate division held that the failure of either party to institute a timely summary action prevented both the confirmation and the vacation of the award.

This further appeal to the New Jersey Supreme Court resulted in a ruling that, in the absence of a specific agreement to the contrary, a party may institute a common-law plenary action to confirm an arbitration award after the expiration of the three-month limit in the Arbitration Act. In reaching this conclusion, the Supreme Court found that nothing in the Act’s provisions or history purported to repeal common-law arbitration and that judicial review of arbitration awards is limited to fraud, corruption or undue means. Essentially, “arbitration should be an alternative to, not the first step in, a judicial proceeding.” Under the Act, either party to an arbitration proceeding may move to confirm an award within three months of the date of its delivery. Once confirmed, the award is as conclusive as a court judgment. A party may seek to vacate or modify an award, either in response to an action to confirm, or as an independent action. In either case, the action must be instituted within three months of the award’s delivery. If an action to confirm is not so instituted, the party seeking to confirm, usually the prevailing party, may not avail itself of a summary action. For the party seeking to vacate or modify an arbitration award, the failure to act results in the loss of both the right to institute a summary action to vacate and the right to assert a counterclaim in a plenary confirmation action. The Court further held that if the parties had intended to limit themselves to a summary action, they could have agreed, expressly or impliedly, that the Act was to provide the sole method of enforcing an award. Nothing in their agreement and nothing in the PERC rules, precluded the parties from using common-law procedures. Although there is a distinction between “interest arbitration” and “grievance arbitration” in the PERC rules, that difference was not operative here. Apparently, had the dispute been subject to “interest arbitration,” which is essentially a creature of statute, the arbitrators would have been required to apply specific uniform criteria and adhere to strict deadlines.

The Court was also concerned about the sound policy considerations that support the continuing availability of common-law confirmation because depriving the parties of common-law confirmation would consign them to a legal limbo if the three-month limit were an absolute bar to confirmation. In the Court’s mind, such a result would not be fair, efficient or reasonable. In addition, depriving the prevailing party of the right to common-law confirmation would redound to the benefit of the losing party. On the other hand, strict enforcement of the three-month limit for a summary action to vacate serves to support arbitration as an alternative to litigation, not an invitation to it. An action to vacate challenges the underlying validity of the award and disrupts arbitration as a speedy and effective method of resolving disputes. In conclusion, the Court held that the prevailing party retains the common-law right to seek confirmation in a plenary proceeding within the six-year statute of limitations applicable to contracts and although the losing party may not institute an action to vacate an award after the expiration of three months, it may file an answer asserting affirmative defenses.


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