Texas Supreme Court Clarifies Post-Arbitration Appeal Rights

Lee A. Collins

April 18, 2010

On March 12, the Texas Supreme Court overruled two previous court of appeal’s decisions to settle a debate over the State’s arbitration statute.

At issue in East Texas Salt Water Disposal Co. Inc. v Werline was whether a party could appeal a trial court decision to deny confirmation, vacate the award and direct a new arbitration to be conducted.

Werline won the underlying arbitration, but the company petitioned the district court to vacate, modify or correct the award while Werline counterclaimed for confirmation of the award. The trial court denied confirmation and vacated the award. However, the trial court did not stop there — it went on to make certain fact findings and ordered a new arbitration consistent with its findings. Werline then appealed. The company’s position on appeal was that the appellate courts lacked jurisdiction because the trial court had vacated the award and ordered a rehearing.The specific statute at issue was Section 171.098(a) subsections (3) and (5).

The Texas Supreme Court found that the trial court’s judgment was appealable because it fit under subsection (3). The court recognized that the right to appeal under Section 171.098(a) assures that a trial court does not exceed its authority in reviewing an arbitration award. It further noted that that purpose would be circumvented if a trial court’s order for rehearing could not be appealed immediately. This opinion will help keep trial court’s review of arbitration awards in check while protecting the parties’ right to contract when they have agreed to “final and binding” arbitration of their disputes.