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A district court order vacating a Texas arbitration award and ordering a new proceeding can be immediately appealed

By Don Cruse

East Texas Salt Water Disposal Co. v. Richard Leon Werline, No. 07-0135 (Tex. Mar. 12, 2010) (docket and briefs)

Divided 6-3, the Texas Supreme Court held that the Texas Arbitration Act

… allows an appeal from a trial court’s order that denies confirmation of an arbitration award and instead, vacates the award and directs that the dispute be arbitrated anew.

The relevant statutory provision, section 171.0898(a) of the Texas Arbitration Act (TAA), lists the situations when a party may appeal a district court’s order affecting arbitration. Two of those items are orders:

… (3) confirming or denying confirmation of an award; … (5) vacating an award without directing a rehearing

Today, the Texas Supreme Court concluded that the district court’s order fit within category (3) and thus supported appellate jurisdiction.

The Court rejected the company’s counterargument that the narrow framing of category (5) was meant to exclude this situation.

Justice Hecht delivered the opinion of the Court, in which Justice O’Neill, Justice Wainwright, Justice Johnson, Justice Willett, and Justice Guzman joined. In addition, Justice Willett wrote a concurring opinion going into more detail about why the company’s statutory construction should be rejected.

Chief Justice Jefferson delivered a dissenting opinion, in which Justice Medina and Justice Green joined.

The dissent argued that the order here was still just an interlocutory order and was not yet a final enough under general background principles of appellate jurisdiction:

The Court and the concurrence fear that a trial court can avoid confirmation by simply ordering rearbitration until the court likes the result, or one or both parties have given up. I share that concern. But a trial court’s rehearing order does not confer jurisdiction where the Legislature has said none exists.

The dissent would have held that the district court proceeding was not final for purposes of the statute until after the new arbitration hearing was concluded and the district court took further action.

Full post as published by Supreme Court of Texas Blog on March 12, 2010 (boomark / email).