Much Ado About Nothing: The Future of Manifest Disregard after Hall Street

Abstract

Section 10 of the Federal Arbitration Act contains a list of bases for vacating an arbitrational award. The lower courts have long stated but seldom held that these bases are non-exclusive. In narrow circumstances, courts have found that an award may be vacated on non-statutory grounds such as manifest disregard of the law. In Hall Street, the Court created doubt as to whether nonstatutory standards are still applicable when it stated that the grounds for vacatur are “exclusive” to those stated in the FAA. Some courts have interpreted this language as eliminating all non-statutory grounds for vacatur; other courts have interpreted it as merely limiting the use of non-statutory grounds.

This article argues that the FAA standards are not exclusive and that while the standard of manifest disregard of the law survives, it should be replaced with the standard of manifest disregard of the agreement. Under the doctrine of manifest disregard of the agreement, an arbitrator’s award is vacated only if it fails to “draw its essence” from the construction of the contract. By contrast, under manifest disregard of the law, vacatur is based on an arbitrator’s acknowledgment and disregard of external law.

Keywords: Arbitration, Review, Judicial Review, Manifest Disregard, Hall Street