• Hassett's Objections: But We Don't Want all or Nothing
  • May 7, 2007 | Author: Lewis E. Hassett
  • Law Firm: Morris, Manning & Martin, LLP - Atlanta Office
  • One of the reasons some businesses are hostile to arbitration clauses is the deference accorded to the arbitrators' decision under the Federal Arbitration Act ("FAA"). Under that Act, the decision of an arbitration panel may be vacated or modified only in limited circumstances. 9 U.S.C. ยงยง 10, 11. Generally, a court may vacate or modify an arbitration award only when (a) the award was procured by fraud or corruption, (b) an arbitrator was evidently partial or corrupt, (c) the arbitrators were guilty of misconduct in rejecting a continuance or evidence, (d) the arbitrators exceeded their powers, or (e) the arbitrators "manifestly disregarded the law." "Manifest disregard of law" means more than just a legal error. Rather, it refers to error which was obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator. The test implies that an arbitrator appreciates the existence of clearly governing legal principles but decides to ignore or pay no attention to them. Carte Blanche Pte. Ltd v. Carte Blanche Int'l, Ltd, 888 F.2d 260 (2d Cir. 1989). Similarly, an award will not be vacated or modified because of an insufficiency of the evidence. Flexible Mtg. Sys. Pty. Ltd v. Super Prods. Corp., 86 F.3d 96 (7th Cir. 1996).