18 N.Y.2d 556 (1966)

An arbitrator’s decision, even if based on a questionable interpretation of the contract, will be upheld if the dispute falls within the scope of the arbitration agreement, and the interpretation is not completely irrational.

Summary

Burt Lumber Company had a collective bargaining agreement with Local 1205 containing a broad arbitration clause. Burt sold his business to Burt Building Materials Corp., who then discharged four employees. The union demanded arbitration, and the arbitrator ruled that the corporation had a valid labor agreement with the union and ordered reinstatement of the employees and back pay. The lower court confirmed the award, but the Appellate Division reversed. The Court of Appeals reversed the Appellate Division, holding that the arbitrator’s decision should be upheld because the contract’s termination was subject to arbitration, and disagreement with the arbitrator’s legal interpretation is not grounds to vacate the award.

Facts

tA. Raymond Burt, operating as Burt Lumber Company, had a collective bargaining agreement with Local 1205 expiring June 30, 1964.

tBefore the contract’s expiration, Burt sold his business to Burt Building Materials Corporation on June 19, 1964.

tThe corporation immediately discharged four employees.

tThe collective bargaining agreement contained a broad arbitration clause covering disputes related to the agreement’s interpretation, performance, or termination.

tThe union demanded arbitration regarding the discharged employees.

Procedural History

tThe arbitrator ruled in favor of the union, ordering the corporation to reinstate the employees and pay back salary.

tThe Special Term confirmed the arbitration award and directed its enforcement.

tThe Appellate Division reversed the Special Term’s order and vacated the award, reasoning the contract expired, providing no basis for back pay.

tThe Court of Appeals reversed the Appellate Division and reinstated the Special Term’s order.

Issue(s)

tWhether a court can vacate an arbitration award if it disagrees with the arbitrator’s interpretation of the contract, even when the arbitration clause covers the disputed issue?

Holding

tNo, because disagreement by the court on a point of law with the way the arbitrator resolves a dispute within the frame of submission is not a statutory ground upon which an award may be vacated.

Court’s Reasoning

tThe court emphasized the broad scope of the arbitration clause, which included disputes related to the