PRESENT: Hassell, C.J., Lacy, Keenan, Koontz, Lemons, and Agee,
JJ., and Stephenson, S.J.
BBF, INC., F/K/A BALCKE-DÜRR, INC.
OPINION BY
v. Record No. 061317 SENIOR JUSTICE ROSCOE B. STEPHENSON, JR.
June 8, 2007
ALSTOM POWER, INC.
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Melvin R. Hughes, Jr., Judge
In this appeal, we decide whether the trial court erred in
refusing to vacate an arbitration award.
I
Alstom Power, Inc. (Alstom U.S.), filed in the Circuit
Court of the City of Richmond a motion seeking confirmation of
an arbitration award. BBF, Inc., F/K/A Balcke-Dürr, Inc. (BBF),
filed a response in opposition to Alstom U.S.'s motion and moved
for vacation of the award. Following a hearing, the trial court
denied BBF's motion, confirmed the arbitration award, and
entered judgment for Alstom U.S. against BBF in the amount of
$2,738,178, plus interest.
We awarded BBF this appeal.
II
Alstom U.S., a Delaware corporation with its principal
place of business in Midlothian, Virginia, is engaged in the
design, engineering, and commissioning of combined-cycle, gas-
fired, power-generating plants. Alstom U.S. contracted with
American National Power (ANP), an electric utility, to design
and build two power plants located outside the Commonwealth.
Alstom U.S. contracted with BBF to provide both plants with
air-cooled condensers. An air-cooled condenser is a piece of
equipment used to condense steam from steam turbine exhaust by
cooling it with air. Alstom U.S. designed and built the plants,
and BBF supplied and installed the condensers. The purchase
orders for the condensers contained a liquidated damages
formula, subject to a cap of 20% of the purchase amount, if the
condensers failed to achieve guaranteed performance. The
parties agreed that all disputes related to the two projects
would be determined by arbitration and that the arbitration
would be governed by the laws of Virginia.
At the time Alstom U.S. contracted with BBF and unbeknownst
to BBF, Alstom U.S. also had contracted with its subsidiary,
Alstom Power (Switzerland) Ltd. (Alstom Switzerland). Under the
terms of that contract, Alstom Switzerland agreed to reimburse
Alstom U.S. for losses it might sustain arising out of the
performance of the condensers. When the two power plants were
completed, ANP assessed liquidated damages against Alstom U.S.
for deficiencies in plant performance relating to the
condensers.
Other disputes also arose between Alstom U.S. and BBF, and,
in accordance with their agreement, all the disputes were
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arbitrated. Following a hearing, the arbitrators determined
that BBF owed Alstom U.S. liquidated damages in the amount of
$2,244,900 for performance deficiencies at one plant and
$2,312,000 for performance deficiencies at the other plant, for
a total of $4,556,900. After adjusting for other claims made by
the parties, the net award to Alstom U.S. was $2,738,178.
III
BBF contends that the arbitrators exceeded their powers by
awarding liquidated damages to Alstom U.S. BBF asserts that
Alstom U.S. suffered no damages because Alstom Switzerland had
assumed the risk and responsibility for all condenser failures
and that Virginia law prohibits an award of liquidated damages
to a party who has suffered no actual damages. BBF claims that
the arbitrators' award was not a mere application of law, but
was a violation of "clear public policy."
Alstom U.S. counters with the assertion that, "[a]s a
matter of Virginia law, an alleged violation of public policy
cannot be a basis for vacating an arbitration award where, as
here, the arbitrator has acted within the scope of the authority
granted by the arbitration agreement."
IV
The trial court, in denying BBF's motion to vacate and in
confirming the arbitration award, concluded that the arbitrators
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did not act outside the scope of their authority, even though
they may have misapplied Virginia law regarding damages.
A circuit court's review of an arbitration award is
"limited to the specific statutory criteria contained in
Virginia's Uniform Arbitration Act [(the Act)]." SIGNAL Corp.
v. Keane Federal Systems, Inc., 265 Va. 38, 45, 574 S.E.2d 253,
256 (2003). Code § 8.01-581.010 of the Act provides the
exclusive grounds to set aside an arbitration award, Lackman v.
Long & Foster Real Estate, 266 Va. 20, 26, 580 S.E.2d 818, 822
(2003), and it reads, in pertinent part, as follows:
Upon application of a party, the court shall
vacate an award where:
1. The award was procured by corruption, fraud or
other undue means;
2. There was evident partiality by an arbitrator
appointed as a neutral, corruption in any of the
arbitrators, or misconduct prejudicing the rights of
any party;
3. The arbitrators exceeded their powers;
4. The arbitrators refused to postpone the
hearing upon sufficient cause being shown therefor or
refused to hear evidence material to the controversy
or otherwise so conducted the hearing . . . in such a
way as to substantially prejudice the rights of a
party; or
5. There was no arbitration agreement . . . .
The fact that the relief was such that it could
not or would not be granted by a court of law or
equity is not grounds for vacating or refusing to
confirm the award.
4
In determining whether the arbitrators exceeded their
authority pursuant to Code § 8.01-581.010(3), the issue we
decide is not whether the award is legally correct. We decide
only whether the arbitrators had the power to decide the
parties' contract claims. SIGNAL Corp., 265 Va. at 45, 574
S.E.2d at 257. Indeed, we have made clear that arbitrators
"derive their authority solely from the parties' contractual
agreement to arbitrate disputes arising under the contract."
Trustees v. Taylor & Parrish, Inc., 249 Va. 144, 153, 452 S.E.2d
847, 852 (1995).
We have consistently rejected efforts to vacate an
arbitration award on grounds not specified in Code § 8.01-
581.010. For example, in SIGNAL Corp., we refused to adopt a
"manifest disregard of the law" standard "because to do so would
require that this Court add words to Code § 8.01-581.010, which
enumerates the bases on which a court shall vacate an
arbitration award." Id. at 46, 574 S.E.2d at 257. In
construing a statute, we must apply its plain meaning, and "we
are not free to add [to] language, nor to ignore language,
contained in statutes." Id.
In Lackman, we stated that the only relevant inquiry under
Code § 8.01-581.010(3) is "whether the issues resolved were
within the scope of authority granted the arbitrators in the
agreement to arbitrate." 266 Va. at 25, 580 S.E.2d at 821-22.
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We also rejected an attempt to invoke the trial court's equity
powers to enjoin enforcement of an arbitration award based upon
equitable defenses of fraud, estoppel, and unclean hands. In
doing so, we explained that the predecessor statute, former Code
§ 8.01-580, "specifically stated that the section 'shall not be
construed to take away the power of courts of equity over
awards.' " Id. at 26, 580 S.E.2d at 822. Continuing, we said
that "[t]he General Assembly eliminated this provision when it
enacted Code § 8.01-581.010 in 1986. Elimination of the
provision terminated the ability of a court to invoke its equity
powers when reviewing an arbitration award." Id.
V
In the present case, the parties, by their contract,
empowered the arbitrators to award liquidated damages and to
resolve all disputes. Clearly, therefore, the arbitrators did
not exceed their powers in awarding liquidated damages.
Additionally, as the General Assembly clearly stated in Code
§ 8.01-581.010: "The fact that the relief was such that it
could not or would not be granted by a court of law or equity is
not grounds for vacating or refusing to confirm the award."
For the reasons stated, we hold that BBF's claim that the
award of liquidated damages violated public policy does not
state a ground for vacating an arbitration award contained in
Code § 8.01-581.010. Therefore, the trial court did not err in
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refusing to vacate the arbitration award. Accordingly, we will
affirm the trial court's judgment.
Affirmed.
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