The Manifest Disregard of the Law is No Longer Grounds to Vacate an Arbitration Award
In recent article in “Reverse and Render,” Byron Henry writes that The United States Court of Appleals for the Fifth Circuit recently held that the United States Supreme Court’s decision in Hall Street Assocites v. Mattel “restricts the grounds for vacatur” of an arbitration award and, thus, “manifest disregard for the law is no longer an indepdendent ground for vacating arbitration awards under the FAA.” Consequently, the only bases for setting aside an arbitration award are (1) fraud or corruption in obtaining the award; (2) evident partiality by the arbitrator; (3) misconduct or misbehavior by the arbitrator; and (4) where the arbitrator exceeded its power. See 9 U.S.C. sec. 10(a).
The article goes on to say that in reaching its conclusion, the Fifth Circuit disagreed with decisions from the Sixth, Second, and Ninth Circuits holding that “manifest disregard” survived the Supreme Court’s decision in Hall. The Fifth Circuit noted the Supreme Court’s “repeated statements [in Hall] that: ‘We hold that the statutory grounds are exclusive.’ “ As a result, the Fifth Circuit held that “manifest disregard of the law as an independent, nonstatutory ground for setting aside an award, must be abandoned and rejected.” The Court also expressly overruled any precedent to the contrary.
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