Whether an arbitrator exceeded his authority; Beck v Park W Galleries, Inc; Arbitrator’s alleged errors of law; The Financial Crimes Enforcement Network (FinCEN) regulations issued by the U.S. Department of Treasury; Marijuana-related business (MRB) addendum

Concluding that the arbitrator did not exceed his authority and finding no error of law was “discernible from the face of the” award, the court affirmed the trial court’s ruling confirming the award. Defendant “was the victim of an advance-fee scam. The money it lost came out of its account with” plaintiff-bank, resulting in an account deficit. Plaintiff “invoked the mediation and arbitration provisions of the agreement governing the account. The arbitrator ruled in” plaintiff’s favor. Defendant argued on appeal that the arbitrator exceeded his authority by not enforcing provisions of the MRB addendum to the agreement governing the account. The court found that defendant misconstrued “the arbitrator’s authority. According to the agreement, the parties were to mediate any dispute that ‘arises in any way out of the relationship between the parties subject to the Agreement or this Addendum,’ with the arbitrator resolving disputes that could not be successfully mediated. This dispute arose out of defendant’s negative account balance, which was inarguably a function of ‘the relationship between the parties subject to the Agreement or this Addendum.’” As the parties were not able to resolve the dispute in mediation, “by the plain language of the contract, the arbitrator had the authority to adjudicate” it. In addition, defendant argued that the arbitrator improperly disregarded FinCEN regulations “that required plaintiff to apply enhanced due diligence, and that the MRB addendum required plaintiff to apply enhanced due diligence as well and to refuse to process the transactions at issue.” The court again disagreed, determining the “addendum language merely acknowledges the existence of regulatory obligations that plaintiff faces that explain the need for various restrictions it is imposing on the services it would provide defendant. It does not impose a duty on plaintiff to refuse to process international checks or wire transfers exceeding $100,000. Absent any authority requiring plaintiff to bear liability for defendant’s decision to accept fraudulent checks and initiate international wire transfers, the arbitrator neither exceeded his authority nor committed a facially discernible legal error.”