There, the Court decided that because the parties to the contract for heavy machinery specifically barred consequential damages in the contract, the arbitrator was bound by the limitation, and the arbitrator could not ignore it unless the provision was unconscionable. The dissent discussed extensively the fact that there was no opportunity for either side to determine if the consequential damages clause was unconscionable based on testimony or evidence. The court ruled based on the law alone. The dissenting judge wrote that until the court decided the unconscionability issue of the consequential damage clause, the case was not ready to be arbitrated. 8 Were Granite Worsted Mills decided today, the Court of Appeals outcome would have likely been very different.
Courts are now rather reluctant to intrude upon the arbitrator s province.
The loan was subordinated to other debt, and the subordination was addressed in a settlement agreement between the corporation, its remaining shareholders, and the estate. The settlement agreement specified that disputes would be subject to arbitration. When the estate learned that the corporation would not be making payments, the estate demanded arbitration, pursuant to the agreement. The arbitrator awarded interest and principal to the estate on a schedule of payments, but said that part of the loan would still be subordinated, ostensibly in an effort to accommodate the other creditors. The corporation moved to vacate the award, arguing that the arbitrator exceeded his powers because none of the creditors with higher status than the estate had consented to the arbitrator s schedule of payments.