Originally from International Arbitration Court Decisions - 3rd Edition

USA JUDGMENT OF THE APPELLATE COURT OF ILLINOIS, THIRD DISTRICT, RENDERED IN 2004 IN CASE NO. 3–03–0563

Subject Matter:
Gross error of law and manifest disregard of law as grounds to set aside arbitral awards in the United States.

Finding:
Even though the parties had filed cross-motions for summary judgment and agreed that they had been given an opportunity to provide to the arbitrator all relevant information, the award was vacated on grounds that the arbitrator’s failure to hold an evidentiary hearing to resolve significant disputed issues of fact constituted a gross error of law.

Parties:
Claimant: Professional Realty and Development Corporation (USA)
Respondent: Sloan Electric (USA)

Place of Court Proceedings:
Illinois, United States

Applicable Law:
U.S. Arbitration Law

Summary
A general contractor, Professional Realty & Development Corporation (PRDC), subcontracted with Sloan to perform “design build” electrical work at a housing project in Illinois, United States. PRDC notified Sloan that PRDC intended to terminate the subcontract on the grounds that Sloan had failed to provide an acceptable electrical system design plan, and had proposed to install poor quality fixtures. A few days later, PRDC served Sloan with a notice of termination.

In the ensuing arbitration, PRDC argued that Sloan breached contractual warranties and sought damages in the amount of $258,195, the alleged costs of repairing and completing Sloan’s work as provided under the contractual provision concerning termination for cause. Sloan argued that it had not been afforded its contractual rights to cure defects, and that the termination therefore was for convenience, not cause.