Enforcing an Arbitration Award in Texas

What an award is, and is not

When the arbitrator signs the award, the dispute is decided. What you hold is a private adjudication that the other side is contractually bound to honor. Most parties honor it. When one does not, you need the power of the state behind the award, and that requires a court order confirming it and a judgment entered on it. Confirmation is normally short and mechanical. It becomes a fight only when the loser raises one of the narrow vacatur grounds, which have their own article: whether an arbitration award can be appealed or vacated.

The two statutes

Texas Arbitration Act. Section 171.087 of the Civil Practice and Remedies Code is one sentence: unless grounds are offered for vacating, modifying or correcting the award under § 171.088 or § 171.091, the court, on application of a party, shall confirm it. Section 171.092 then requires the court to enter a judgment or decree conforming to the order, enforceable in the same manner as any other judgment, and allows the court to award the costs of the application and later proceedings.

Federal Arbitration Act. Under 9 U.S.C. § 9, if the parties agreed that a judgment may be entered on the award, any party may apply to the court within one year after the award is made, and the court must grant the order unless the award is vacated, modified or corrected under §§ 10 and 11. Section 13 requires the applicant to file the agreement, the award and the related papers with the clerk, and provides that the judgment has the same force and effect as a judgment in an ordinary action. Most provider rules and most clauses include the consent-to-judgment language § 9 contemplates.

The acts can overlap. A Texas state court can confirm an award under either, and an FAA-governed award is routinely confirmed in state court under the Texas procedures. A federal court needs its own basis for jurisdiction, usually diversity of citizenship, because the FAA alone does not supply one.

Where to file

If a lawsuit involving the dispute is already pending, for example because the court compelled arbitration and stayed the case, § 171.024 requires the application to be filed in that court. Otherwise § 171.096 applies: the initial application is filed in the county where an adverse party resides or has a place of business, or in the Texas Business Court; if the arbitration agreement fixed the hearing in a Texas county, in that county; and if a hearing was held, in the county where it was held. For an award from a Dallas hearing against a Dallas business, that means Dallas County district court or the Business Court.

The procedure

1. Wait out, or shorten, the vacatur window. The loser has 90 days after delivery of the award to apply to vacate under § 171.088(b), or three months under 9 U.S.C. § 12. You may file to confirm before the window closes; doing so usually prompts the loser to raise its grounds at once, which puts everything before the court in one proceeding.
2. File the application. It is a motion, not a new lawsuit in the ordinary sense: § 171.093 directs the court to hear it in the manner and with the notice required for a motion in a pending civil action. Attach the arbitration agreement and the award. For an initial application where no case is pending, § 171.094 requires the clerk to issue process and serve each adverse party as a defendant would be served.
3. The hearing. If no vacatur or modification ground is properly raised, the court confirms. If one is raised, the court decides it on the statutory standards; under § 171.088(c), when the application to vacate is denied and no modification motion is pending, the court confirms.
4. Judgment. The court signs a judgment conforming to the award, including any interest, fees and costs the award granted, and may add the costs of the confirmation proceeding under § 171.092(b).

After the judgment

From here the award is a Texas judgment and collection follows the ordinary tools: an abstract of judgment recorded in the counties where the debtor owns real property, writs of execution and garnishment, post-judgment discovery into the debtor's assets, and a turnover order where assets are hard to reach. Those tools, and their sequence, are covered in how to collect a judgment against a business in Texas. Judgment interest accrues under the Texas Finance Code once the judgment is signed, separate from any interest the award itself granted.

If the debtor's assets sit in another state, the Texas judgment can be domesticated there under that state's version of the Uniform Enforcement of Foreign Judgments Act. If the award debtor is outside the United States, the award may be enforceable abroad under the New York Convention through the FAA's second chapter, a process with its own rules and timetable.

Example

Suppose a Dallas staffing company wins an AAA award of $420,000 plus attorney's fees against a Fort Worth client that stopped paying under a services agreement. The award is delivered on March 1. The client does not pay and does not move to vacate. On June 2, after the 90-day window closes, the staffing company files an application to confirm in Dallas County district court, where the hearing was held, attaching the agreement and the award and serving the client. The client appears and argues the arbitrator misread the termination clause. The court explains that is not a ground under § 171.088 and signs a judgment for the award amount, fees, interest and the costs of the application. The staffing company records an abstract of judgment in Tarrant County and serves post-judgment interrogatories the same week.

Mistakes that slow confirmation

• Filing in the wrong court when a related case is still pending, which § 171.024 forbids.
• Letting the FAA's one-year period in § 9 pass on an award governed by federal law, then relying on the FAA to confirm.
• Treating confirmation as automatic and skipping service, so the judgment is open to attack later.
• Not asking the arbitrator to correct an evident miscalculation within the 20 days § 171.054 allows, then discovering the error at confirmation.
• Negotiating payment for months on a handshake while the debtor moves assets; a confirmed judgment and an abstract cost little and preserve priority.

When the loser fights

Opposition to confirmation is really an application to vacate, and it is subject to the same 90-day and three-month limits. A loser who missed those dates cannot raise the grounds defensively. A loser who met them puts the process, not the merits, before the court. Either way the court's order confirming or refusing confirmation is appealable under § 171.098 and 9 U.S.C. § 16, so a determined debtor can add an appeal of the confirmation order to the timeline. Supersedeas rules then govern whether the judgment can be enforced while the appeal is pending.

Tina Wysk represents award creditors and award debtors in confirmation and vacatur proceedings in Dallas state and federal courts and in the collection that follows. See the business arbitration and mediation practice page.