Court Opinion

ID: 9659266
Source: CourtListenerOpinion
Date Created: 2023-08-23 21:36:45.765001+00
Date Added: 2024-06-11T18:14:05.674444
License: Public Domain

Levin, J.
(concurring). The essential question in these cases is whether an arbitrator’s decision on a question of law is subject to review by a court. The reasoning of the opinion of the Court is subject to the construction that the courts may properly refuse enforcement of commercial arbitration awards on the ground that there has been a material, substantial, governing error of law.
We concur in the conclusion of the Court in the instant cases that the meaning of the uninsured motorist clause should be determined by the courts, on the ground that the especial nature of the uninsured motorist clause is such that the courts, not arbitrators, should determine its meaning.
I
Arbitration is a matter of contract. In contracting for arbitration, parties generally agree to substitute an arbitrator for a judge and jury as fact-finder and decision maker on all questions, factual and legal. Whether questions of law are "primarily or even ordinarily within the province of arbitra*447tion”1 is a question of contract and not of law. It is well within the province of parties to a commercial arbitration to allow the arbitrator to decide questions of law as well as of fact, and agreements to arbitrate have generally been construed as contracts for deciding questions of law as well as of fact.2
The opinion of the Court stresses that this is statutory arbitration and that the jurisdiction of a court was invoked for confirmation and, if necessary, enforcement of the award. But most if not almost all commercial arbitration is statutory in the sense that the party who prevails may generally obtain, pursuant to the statute, confirmation and enforcement of the award by a court.3 It is not as if there is something peculiar or unique about this being statutory arbitration or that the jurisdiction of a court has been invoked.
It has not, heretofore, been thought that an arbitrator exceeds his powers by deciding a question of law contrary to the view of the court to which application is made for enforcement of the award or to the view of the appellate courts.4_
*448All would agree that arbitration must work within the framework of law. One can visualize an award which is beyond the range of the authority conferred on the arbitrator.5 The courts will or should protect against fraud, arbitrariness or other abuse.
Rules of law declared by judges are subject to change and are not so immutable that parties who knowledgeably enter into a contract which substitutes another lawgiver and factfinder should be denied enforcement of their agreement.
Any reasonably skilled lawyer will have little difficulty making a tenable argument that almost any commercial arbitration award is based on an error of law "so material or so substantial as to have governed the award, and but for which the award would have been substantially otherwise”6 and, accordingly, the arbitrator "exceeded his power”.
Judicial review of arbitration awards would radi*449cally transform arbitration. It is not simply a question of what the courts would do. The opportunity for delay and the cost of what might well become a feature of post-arbitration proceedings whenever there is sufficient money involved to fund appellate proceedings would make arbitration a less attractive alternative to litigation than it is today.
Arbitration is popular because parties have confidence that the results will be no less reasonable and predictable than the results of litigation in a court. If the courts were in all cases a superior means of resolving disputes, there would be little or no business for arbitrators. The case has not been made to substitute judicial review for the review of the marketplace which presumably eliminates those arbitrators who cannot be depended upon to perform within a predictable range.
II
The instant cases are different because the uninsured motorist clause is not an ordinary agreement. Arbitration is a universal feature of the uninsured motorist clause.7 The uninsured motor*450ist clause appears in insurance policies of millions of persons and affects the entire population of the state. The uninsured motorist clause has been given statutory recognition at times in the law of Michigan.* ******8 This is not ordinary commercial arbitration affecting only the contracting parties or persons involved in a particular trade or undertaking. A policyholder does not have the option of contracting for a different means of resolving disputes over the meaning of the clause.9
The requirement of arbitration under the uninsured motorist clause is unique in its universality and effect. The clause has substituted another means of resolution for the thousands of disputes arising under it annually. In these circumstances, it cannot be . said that the parties, either the insurer or the insured, contemplated that the construction of the language and the scope of the obligations and the rights of the parties would or could be determined differently by each of the numerous arbitrators who annually consider these cases.
*451When a system of arbitration is created affecting almost everyone in the state in much the same way as the system of Courts affects everyone in the state, absent some other method for providing order, harmony and a rule of law for that system, the courts can properly intervene to provide that order, harmony and rule in lieu of disparate judgments.
These considerations, universal coverage, adhesion (lack of consent) and the need to provide order, harmony and a rule of law, do not obtain in ordinary commercial arbitration. While it may have become customary in certain industries to enter into agreements to arbitrate, it is within the capacity of the parties to negotiate concerning any issue that arises in the course of arbitration proceedings and to themselves resolve by agreement, at least for the future, matters which have been troublesome or have been treated differently by different arbitrators. Recognizing the need for a common rule and construction of the policy language in uninsured motorist cases does not require and should not be the basis for creating a sweeping new doctrine concerning arbitration generally.
This Court need go no further in the instant cases than to recognize, as have other courts, that the uninsured motorist clause is different. While courts in other jurisdictions have reviewed an arbitrator’s construction of the uninsured motorist clause for errors of law,10 no court, as far as we have been able to determine, has suggested that *452the courts should or may review commercial arbitration awards generally for errors of law.11
Kavanagh, J., concurred with Levin, J.
Riley, J., took no part in the decision of this case.

 Ante, p 444.

 See, e.g., SCM Corp v Fisher Park Lane Co, 40 NY2d 788, 793-794; 390 NYS2d 398, 403; 358 NE2d 1024,1028-1029 (1976).

 See MCL 600.5001-600.5035; MSA 27A.5001-27A.5035.

 Pursuant to MCL 600.5021; MSA 27A.5021, this Court has promulgated court rules governing the conduct of statutory arbitration. The rules adopt certain provisions of the Uniform Arbitration Act.
GCR 1963, 769.9(1)(c), providing that a court shall vacate an arbitration award when the arbitrators "exceeded their powers”, restates verbatim § 12(a)(3) of the uniform act. We therefore look to the construction of that section of the uniform act for guidance in construing GCR 1963, 769.9(1)(c). See 2A Sands, Sutherland Statutory Construction, § 52.05, p 340; cf., e.g., In re Cress Estate, 335 Mich 551; 56 NW2d 380 (1953); In re Rackham Estate, 329 Mich 493; 45 NW2d 273 (1951); Lawrence Baking Co v Unemployment Compensation Comm, 308 Mich 198; 13 NW2d 260 (1944).
*448As unanimously construed in other states, § 12(a)(3) restates the common-law rule, see, e.g., Great American Ins Co v American Arbitration Ass’n, 436 Pa 370, 373; 260 A2d 769, 770 (1970), that a court may not disturb an arbitrator’s decision on the ground that there has been a mistake of law, see, e.g., Hirt v Hervey, 118 Ariz App 643; 578 P2d 624 (1978); Binkley v Maros, 79 Ill App 3d 105; 398 NE2d 321; 34 Ill Dec 646 (1979); City of Lawrence v Falzarano, 380 Mass 18; 402 NE2d 1017 (1980); Carolina Virginia Fashion Exhibitors, Inc v Gunter, 41 NC App 407; 255 SE2d 414 (1979). An arbitrator thus does not "exceed his powers” under GCR 1963, 769.9(1)(c) by making a mistake of law.
The same principle limits judicial review under the Federal Arbitration Act, 9 USC 1-14. See, e.g., Raytheon Co v Rheem Mfg Co, 322 F2d 173 (CA 9, 1963).
In sum, under the uniform and federal acts and the common law, a court may not set aside an arbitration award for a mistake of law.

 Cf. Allstate Ins Co v Fioravanti, 451 Pa 108, 116; 299 A2d 585, 589 (1973), where the court said that it could "hypothecate” a mistake of law which it would feel obliged to correct.

 Ante, p 443.

 The uninsured motorist clause was developed by the insurance industry in an effort to avoid the enactment of laws requiring that all drivers purchase automobile insurance, as many years later required by the no-fault automobile liability acts. See Widiss, A Guide to Uninsured Motorist Coverage, § 1.6, p 10 and fn 22 (1969).
The drafters of the clause decided that disputes concerning the meaning of the clause would be resolved by mandatory arbitration. The clause, with its obligatory arbitration, became a part of most insurance policies. Industry practice was subsequently given the imprimatur of nearly every state by statute mandating uninsured motorist coverage in all policies. See Widiss, §§ 1.2-1.11, pp 4-16; Schermer, Automobile Liability Insurance, § 33.01, p 33-1 (1981).
Most of the statutes, including Michigan’s, required that the coverage be provided unless expressly rejected in writing. The Michigan statute did not mention the arbitration provision of the endorsement and did not require, as many states do, see Widiss, Uninsured Motor*450ist Claims, in Arbitration: Commercial Disputes, Insurance, and Tort Claims, pp 215, 220-224 (Prac L Inst, 1979), the separate consent of the insured to arbitration. See MCL 500.3010; MSA 24.13010 (repealed by 1972 PA 345, effective October 1, 1973). Although Michigan’s mandatory uninsured motorist coverage statute was repealed with the advent of the no-fault automobile liability act in 1973, see 1972 PA 345 repealing MCL 500.3010; MSA 24.13010, uninsured motorist clauses with their arbitration requirement remain ubiquitous features of automobile insurance policies.

 See fn 7 supra.

 "For most insureds the uninsured motorist provisions are no more than another incomprehensible portion of a total insurance package. In this context, it is unlikely that any of the uninsured motorist coverage terms set out in the midst of a multi-paged document are known or understood either by the purchaser or by anyone else protected by the uninsured motorist coverage. In other words, claimants almost without exception are not knowledgeable participants in the process of reaching an agreement to employ arbitration in lieu of litigation.” Widiss, fn 7 supra, p 218.

 See, e.g., Abbott v California State Automobile Ass’n, 68 Cal App 3d 763; 137 Cal Rptr 580 (1977); Allen v Interinsurance Exchange of Automobile Club of Southern California, 275 Cal App 2d 636; 80 Cal Rptr 247 (1969).

 See fn 4 supra.