Arbitrator's powers curbed by public policy

One of the most basic rules of arbitration is that an arbitrator's ruling won't be overturned for an error of law, even if the error creates an injustice—this is to preserve the finality of arbitration and honor the parties' agreement to allow an arbitrator broad discretion to decide the issue. A second bedrock policy is that a court of "equity" has the discretion to act or not depending on the facts, and courts of appeal generally don't overturn equitable decisions made below.

But is there a limit beyond which the court won't go to support an arbitrator's erroneous legal decision or refusal to provide equitable relief? The following court of appeal decision addresses that question.

Brown's employment and termination

TGS is a company that engages in a highly computerized form of equities trading known as statistical arbitrage. Richard Brown began working for TGS in 2005. As a condition of employment, he signed an agreement titled "Confidentiality, Noncompetition, Assignment and Notice Agreement." It contains an arbitration clause requiring the parties to engage in "Binding Dispute Resolution" of all disputes arising under or out of the employment agreement.