Arbitration awards are supposed to be final. Courts generally cannot overturn them simply because an arbitrator misinterpreted a contract, misunderstood the law, or reached a result a judge considers incorrect.
But what happens when an arbitration award enforces a contractual provision that violates an established public policy?
That question sits at the center of Sala v. Premier Imaging Holdings, LLC, 240 Conn. App. 793, 2026 WL 2220267 (Conn. App. Ct. Aug. 4, 2026), in which the Connecticut Appellate Court affirmed the vacatur of an arbitration award enforcing a physician's noncompetition agreement.
The decision offers an important reminder that arbitration's finality is not necessarily absolute. More importantly, it raises a question that deserves attention from arbitrators and litigators alike: Does the public-policy exception recognized under Connecticut law also apply to arbitration awards governed by the Federal Arbitration Act (FAA)?
The answer is more complicated than it might initially appear.
The Dispute: A Noncompete Agreement, an Arbitration, and a Two-Sentence Award
Dr. Joseph Sala was a radiologist and part owner of a Connecticut radiology practice. In 2022, the practice entered into a substantial business transaction involving Premier Imaging Holdings, LLC. Sala received approximately $2.3 million in cash, additional equity, and an ownership interest in a new entity.
As part of the transaction, Sala signed an agreement containing a restrictive covenant that generally prohibited him from competing for two years after his membership ended, within a territory extending at least 25 miles from specified medical facilities.
When Sala announced plans to leave and join another radiology practice, Premier initiated arbitration through the American Arbitration Association, seeking a declaration that the noncompete was enforceable.
The arbitrator agreed. In a two-sentence award, she declared the noncompetition provisions valid and binding and determined that Sala's proposed employment before the two-year restriction expired would breach the agreement.
There was, however, a significant problem.
Connecticut General Statutes § 20-14p expressly restricts physician noncompetition agreements. For agreements entered into after July 1, 2016, the statute generally prohibits restrictions exceeding one year or extending more than 15 miles from the physician's primary practice location. It also requires that restrictions protect a legitimate business interest and otherwise comply with law and public policy.
Sala repeatedly raised the statute during arbitration. Nevertheless, the award upheld the substantially broader contractual restriction.
Sala sought vacatur. The trial court granted his application, and the Connecticut Appellate Court affirmed.
The Public-Policy Exception: Two Questions, Not a Second Arbitration
Connecticut law generally affords substantial deference to arbitration awards. However, its courts recognize a narrow common-law exception when an award violates an explicit, well-defined, and dominant public policy.
The appellate court applied a two-part analysis:
Does the arbitration award implicate an explicit, well-defined, and dominant public policy established through statutes, regulations, administrative decisions, or judicial precedent?
If so, does the contract, as interpreted and enforced through the arbitration award, actually violate that policy?
The distinction matters. A court is not authorized to vacate an award merely because it disagrees with the arbitrator's reasoning or regards the outcome as unfair.
There must be an identifiable public policy, and enforcement of the award must conflict with it.
In Sala, the first question was straightforward. Connecticut's legislature had expressly established limits on physician noncompete agreements. These were not vague expressions of legislative preference. They were measurable legal restrictions.
The second question was equally direct. The arbitrator upheld a two-year restriction covering a geographic territory of at least 25 miles. Both exceeded the statutory limits.
Although Connecticut strongly favors freedom of contract, the appellate court concluded that this principle could not justify enforcing an agreement contrary to the legislature's expressed public policy.
The award was vacated.
Importantly, the court did not merely conclude that the arbitrator had made an error of law. It concluded that judicial enforcement of the award itself would violate public policy.
That distinction is central to the decision.
But What About the Federal Arbitration Act?
Here is where the decision becomes particularly interesting.
The FAA establishes a limited framework for vacating arbitration awards. Section 10(a) identifies four grounds involving:
Corruption, fraud, or undue means;
Evident partiality or corruption by arbitrators;
Specified arbitrator misconduct prejudicing a party's rights; and
Arbitrators exceeding their powers or so imperfectly executing them that no mutual, final, and definite award was made.
Conspicuously absent is a general provision authorizing vacatur because an award violates public policy.
In Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008), the United States Supreme Court held that §§ 10 and 11 provide the exclusive statutory grounds for expedited vacatur and modification under the FAA.
That creates a potential difficulty for a party seeking to overturn an award on the same theory successfully advanced in Sala.
Connecticut recognizes an independent common-law public-policy exception. The FAA contains no corresponding express exception, and Hall Street significantly restricts attempts to supplement its statutory grounds for judicial review.
Thus, the fact that an award violates a clearly articulated state public policy does not automatically establish an independent basis for vacatur under FAA § 10.
The distinction is particularly important because Sala analyzed the matter under Connecticut arbitration law. The appellate opinion did not resolve whether the FAA governed the arbitration or whether federal law would permit the same result.
It would therefore be a mistake to read Sala as establishing a federal public-policy exception to the FAA.
Didn't the Supreme Court Already Recognize a Public-Policy Exception?
Yes—but the context matters.
In W.R. Grace & Co. v. Local Union 759, 461 U.S. 757 (1983), and United Paperworkers International Union v. Misco, Inc., 484 U.S. 29 (1987), the Supreme Court recognized that courts may refuse to enforce arbitration awards that conflict with explicit, well-defined, and dominant public policies.
The Court revisited that principle in Eastern Associated Coal Corp. v. United Mine Workers of America, 531 U.S. 57 (2000).
Those decisions, however, arose in the context of labor arbitration involving collective bargaining agreements. Their public-policy analysis does not automatically establish an additional ground for vacating commercial arbitration awards under FAA § 10.
This is an important distinction that can be overlooked when courts or litigants invoke the familiar language concerning explicit, well-defined, and dominant public policy.
The underlying principle—that courts should not enforce agreements contrary to established law—may be similar. But the legal authority governing judicial review is not necessarily the same.
Can an Illegal Award Still Be Challenged Under the FAA?
Potentially. But the challenge must fit within an available legal basis for relief.
For example, FAA § 10(a)(4) permits vacatur when arbitrators exceed their powers. A party might argue that an award enforcing a statutorily prohibited agreement falls outside the authority conferred on the arbitrator.
That argument faces a considerable obstacle: exceeding arbitral authority is not the same as incorrectly interpreting or applying the law.
An arbitrator generally does not exceed the authority conferred by the arbitration agreement merely by making a legal mistake—even a serious one—while resolving a dispute properly submitted for decision.
The doctrine of manifest disregard of the law presents another potential argument. However, its continued availability and precise status under the FAA following Hall Street vary among federal circuits. In jurisdictions recognizing the doctrine, the required showing is exceptionally demanding.
In Sala, the trial court independently concluded that the arbitrator had manifestly disregarded Connecticut law. The appellate court expressly declined to reach that alternative ground because the public-policy violation was sufficient to affirm vacatur.
That leaves an important unresolved question: whether the award could have been vacated under the FAA on a theory other than Connecticut's independent public-policy exception.
The answer would depend on the governing arbitration law, the applicable federal precedent, and the precise nature of the claimed statutory violation.
Which Arbitration Law Governs May Determine the Outcome
An arbitration conducted in the United States does not necessarily produce an award reviewed exclusively under the FAA.
The applicable judicial-review framework can depend on several considerations, including the transaction's connection to interstate commerce, the parties' contractual choices, relevant state arbitration law, and federal preemption principles.
Under some circumstances, state arbitration procedures may govern even when the underlying transaction involves interstate commerce. Under others, the FAA's restrictions on judicial review will control.
That makes the threshold question of governing law critical.
In Sala, Connecticut's common-law public-policy doctrine supplied an independent basis for vacatur. Under the FAA, a party could not simply assume the availability of that same independent ground.
The distinction affects both the arguments available to a dissatisfied party and the risks associated with an award.
Practical Lessons for Arbitrators and Litigators
Although Sala involved a physician's noncompetition agreement, its implications extend beyond employment disputes.
Consider an arbitrator asked to enforce a contract provision arguably prohibited by a consumer protection statute, a licensing requirement, or another law reflecting an established public policy.
Several practical lessons emerge:
Identify potentially controlling statutes early. A provision expressly declared unenforceable by law warrants particular attention, even when sophisticated parties negotiated it.
Distinguish an error of law from an unenforceable award. These are not always equivalent, and the distinction can determine the outcome of judicial review.
Understand the governing vacatur framework. An argument recognized under state arbitration law may not be independently available under the FAA.
Preserve statutory objections. Sala repeatedly raised the governing statute before the arbitrator, creating a record that became relevant to the subsequent challenges.
Consider whether a reasoned award would help. The arbitrator's two-sentence ruling left no explanation for how the statutory restrictions were addressed. A reasoned award cannot cure an unlawful result, but it can demonstrate that significant legal issues were considered and explain the arbitrator's analysis.
The last point deserves emphasis. Arbitrators are not ordinarily required to issue detailed legal opinions. Nevertheless, when a party identifies a statute that appears directly inconsistent with the requested relief, unexplained enforcement of the challenged contractual provision creates an obvious concern.
Finality Has Limits—but Those Limits Depend on the Law
Sala illustrates the tension between two important legal principles.
The first is arbitration finality: parties who agree to arbitrate generally accept an arbitrator's decision, including the possibility of legal error.
The second is the principle that courts should not lend their enforcement power to contractual obligations that violate established public policy.
Connecticut resolved that tension by recognizing a narrow public-policy exception to arbitration finality.
Under the FAA, however, the analysis is less straightforward. Hall Street requires attention to the statutory grounds for vacatur, and public policy alone may not supply an independent route around those limitations.
For arbitrators, the lesson is to give serious attention to statutes that expressly prohibit the relief being requested. For litigators, it is to understand the governing arbitration law before assuming that an apparent statutory violation will justify vacatur.
An arbitration award may be final, but whether it is enforceable—and on what grounds it can be challenged—depends on more than the arbitrator's decision. It also depends on the law governing judicial review.