Opinion ID: 578733
Heading Depth: 2
Heading Rank: 2

Heading: Arbitrators' Failure to Abide by Terms of Arbitration Agreement

Text: 14 At the outset, it is helpful to identify the injury of which Western complains. According to Western, by not making the findings of fact and conclusions of law, the arbitrators have deprived Western of the higher level of judicial review to which it would have been entitled in the event it contested any arbitral award in court. Western also claims that it might not have executed the contract without the alteration, and that the expectation that such findings would be made influenced the manner in which it presented its case to the arbitration panel. For its part, Jefferies does not explicitly defend the agreement or argue that no breach occurred. It merely points out that the district court rejected Western's argument. 15 Western's belief that the inclusion of findings of fact and conclusions of law would entitle parties to a higher level of judicial review in the event they contest an arbitral award is erroneous. As this circuit has made clear, absent a manifest disregard for the law, courts will not heighten their otherwise deferential review of arbitral awards even where the arbitrators misapplied the law. Local Joint Executive Bd. v. Riverboat Casino, Inc., 817 F.2d 524 (9th Cir.1987). The fact that a court has access to detailed findings of fact and conclusions of law does not alter this deferential review. 16 Western does, however, have a right to arbitration according to the terms for which it contracted. The Federal Arbitration Act requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms. Volt Info. Sciences v. Leland Stanford Jr. Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 1255, 103 L.Ed.2d 488 (1989). Parties cannot be compelled to arbitrate unless they have agreed to do so. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219, 105 S.Ct. 1238, 1241, 84 L.Ed.2d 158 (1985); see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 3354, 87 L.Ed.2d 444 (1985) (parties may exclude selected issues from the scope of arbitration once they do agree to arbitrate). Presumably, had Western discovered on the first day of the hearings that the arbitrators would not make the requested findings and consequently refused to submit to arbitration, a court could not have compelled it to submit to arbitration. If a court would not hold Western to its agreement to arbitrate before the hearings took place, we do not see how the difference in timing can justify a different result today. Moreover, we note that nothing in the NASD rules forbade the arbitrators from abiding by the parties' agreement. If in fact making such findings was against NASD policy, the NASD was free at the outset to refuse to arbitrate the dispute. 17 Contrary to Jefferies' arguments, then, whether or not Western erred in thinking that the findings of fact and conclusions of law would entitle it to a higher standard of judicial review is beside the point. Jefferies has not indicated why, under simple principles of contract law, Western should be held to the terms of a contract for which it did not bargain. 18 By failing to provide Western with findings of fact and conclusions of law, the NASD panel clearly failed to arbitrate the dispute according to the terms of the arbitration agreement. In so doing, the panel exceeded its authority under 9 U.S.C. § 10(d). We recognize that we have traditionally vacated arbitration awards under this provision in cases where the arbitrators somehow alter the parties' contractual obligations, see Coast Trading Co., Inc. v. Pacific Molasses Co., 681 F.2d 1195 (9th Cir.1982), and that Jefferies has fulfilled all of its obligations to Western. However, arbitrators can also exceed their powers under 9 U.S.C. § 10(d) when they fail to meet their obligations, as specified in a given contract, to the parties. See Western Canada S.S. Co. v. Cia. De Nav. San Leonardo, 105 F.Supp. 452 (S.D.N.Y.1952) (vacating award where two arbitrators making award failed to appoint a third arbitrator as specified in the contract.) We therefore vacate the award. 2