Hall Street One Year Later: The Manifest Disregard Debate Continues - ARIA Vol. 19 No. 1 2008
J.P. Duffy - Litigation associate, DLA Piper LLP (US), New York offices, recently returned from a secondment to DLA Piper Middle East LLP’s Dubai office. The author has participated in international arbitrations conducted under the ICC, ICDR, ICSID and UNCITRAL Rules in the U.S., Europe, Asia, Africa and Latin America.
Originally from American Review of International Arbitration - ARIA
In the spring of 2008, the U.S. Supreme Court held in Hall Street Associates, LLC v. Mattel, Inc. (“Hall Street”) that the grounds stated in §§ 10 and 11 of the Federal Arbitration Act (“FAA”) for vacating or modifying arbitral awards are exclusive and cannot be contractually altered or expanded. While that decision had the immediate effect of invalidating those portions of any agreements that provided for expanded judicial review of arbitral awards, it also sparked a debate about the continued viability of the manifest disregard basis for vacating or opposing confirmation of arbitral awards. One year after Hall Street was decided, that debate continues as federal circuit courts have ostensibly reached conflicting decisions on the issue.
It is arguable, however, whether there is any real philosophical dispute between the circuits that have addressed the issue, or whether the differences are really just a matter of semantics. Determining whether there is any legitimate discrepancy between the circuits’ positions is relevant to international arbitration practitioners, because some circuits continue to permit manifest disregard challenges to international arbitral awards subject to Chapters 2 or 3 of the FAA, which incorporate the New York and Panama Conventions respectively.
This article considers the impact that the Hall Street manifest disregard debate has on the enforcement of international arbitral awards in the United States. This article first examines the place that manifest disregard occupies within the U.S. regime for enforcing arbitral awards subject to the FAA. It next gives a brief background on Hall Street and addresses how that decision has called manifest disregard into question as a continued basis for challenging arbitral awards.
This article then proceeds to consider the apparent split between circuits on the continued viability of manifest disregard in the wake of Hall Street. It subsequently examines how jurisdictions other than the U.S. treat manifest disregard scenarios during confirmation proceedings involving international awards.