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http://ssrn.com/abstract=2084936
 
 

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'Final' Awards Reconceptualized: A Proposal to Resolve the Hall Street Circuit Split


Matthew J Brown


Institute of International Banking Law & Practice; George Mason University School of Law

June 15, 2012

Pepperdine Dispute Resolution Law Journal, Vol. 13, 2013

Abstract:     
This article discusses the current circuit split over the continued validity of manifest disregard of the law (“manifest disregard”) as a nonstatutory ground for vacatur of arbitration awards under the Federal Arbitration Act (“FAA”). Today, as commercial parties decide whether to include arbitration agreements in their business contracts, they weigh the risks of proceeding to arbitration versus litigation to resolve their disputes. This topic is especially pertinent in light of the current economic climate.

Dicta from the U.S. Supreme Court’s decision in Hall Street Associates, L.L.C. v. Mattel, Inc. called into question the continued validity of nonstatutory grounds for vacatur. The circuit courts have severely split on the question of one ground in particular: manifest disregard. Although seemingly ripe for review, the Supreme Court has appeared reluctant to resolve the issue, even side-stepping the Second Circuit’s opinion in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. and ruling on other grounds.

Rather than opining on which side of the split should prevail, this article posits first that manifest disregard should never have been a valid ground for vacatur under the FAA. Next, the article takes a historical perspective that shows the FAA does not allow courts to look at the merits of an arbitration award. Instead, courts should look only to the award itself, determining its enforceability exclusive of the merits of the arbitrator’s or tribunal’s decision. Inquiry into the merits of the decision violates the FAA and damages arbitration’s finality and efficiency, two of the most important benefits of the arbitration bargain. Excluding the merits from judicial review conforms to FAA requirements and retains these two critical benefits. In other words, this article proposes a resolution to the circuit split that maintains the integrity of both the FAA and the arbitration process without excluding concerns surrounding a full abandonment of judicial review.

Number of Pages in PDF File: 39

Keywords: Hall Street, Manifest Disregard, Federal Arbitration Act

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Date posted: June 16, 2012 ; Last revised: September 26, 2012

Suggested Citation

Brown, Matthew J, 'Final' Awards Reconceptualized: A Proposal to Resolve the Hall Street Circuit Split (June 15, 2012). Pepperdine Dispute Resolution Law Journal, Vol. 13, 2013. Available at SSRN: http://ssrn.com/abstract=2084936 or http://dx.doi.org/10.2139/ssrn.2084936

Contact Information

Matthew J Brown (Contact Author)
Institute of International Banking Law & Practice ( email )
20405 Ryecroft Ct.
Gaithersburg, MD 20886
United States
HOME PAGE: http://www.iiblp.org
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
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