Manifest Disregard and Other Standards of Review
As mentioned in prior posts, SILC has a particular soft spot for international arbitration. Not only is the procedure fascinating, it is increasingly becoming the primary way to resolve international disputes. As part of our interest in the area, we frequently publish articles on the topic, and the journal Lima Arbitration recently published an article from the office on a topic of general interest to the international arbitration community–extra-statutory standards of review.
As described in the article, extra-statutory standards of review are all of those grounds for review of an arbitration award that fall outside the terms of the applicable statute. In the United States, these grounds of review appear almost exclusively in the interpretation of chapter one of the Federal Arbitration Act, which applies largely in cases of domestic arbitration. The extra-statutory standards of review focus largely on “manifest disregard of the law,” a phrase deriving from an opinion of the Supreme Court in the 1950′s and growing to mean that a court can vacate an arbitral award when the arbitrator knew of the applicable law and chose not to apply it. Different circuits have approached extra-statutory standard of review in many ways, using terms such as “arbitrary and capricious,” “completely irrational,” and “fundamentally irrational.” But after the Supreme Court’s in Hall Street Assoc. v. Mattel in 2008, many courts have started questioning extra-statutory standards of review. Our article reviews the history of these standards of review, looks at the current state of the law, and puts forward an approach for courts to look at challenges to arbitration awards.