Dead? Alive? Matter of Opinion?

Hall Street and its progeny may have killed “manifest disregard” but the Second Circuit could have just resuscitated it; well, if you consider zombies as resuscitated beings. In Stolt-Nielsen SA v. Animalfeeds Int’l Corp., the Second Circuit held a court may still review whether an arbitrator manifestly disregarded the law, within Section 10 of the FAA. So is manifest disregard still a standard to be followed by the courts? It appears that if you view it as the Second Circuit did, that is, if you see it contained within Section 10, it is still a ground for reviewing an arbitration award. The Hall Street opinion did keep the terminology of “manifest disregard” alive as long as it is viewed as a term within the scope of Section 10.

There is still one major issue that continues to lie cold: whether a court would still not be able to find an arbitrator manifestly disregarded the law if the arbitrator ruled against the parties contemplations but within the realms of Section 10. As Glen Wilkerson noted before in this blog, parties that negotiated their own terms for arbitration may find their expectations thrown out the window if those terms deviated from Section 10. Hall Street’s holding that Section 10 constitutes the exclusive grounds for reviewing an arbitrator’s award would ensure any deviation from the FAA would be barred.

So is manifest disregard a mere shell of itself, merely a turn of phrase if you will, or will it continue to live on? We may have to see another case reach the Court in order to fully answer this question, but in the meantime, I happen to think manifest disregard walks around at night feeding off parties’ contemplations and turning them into what courts decide is within Section 10.

For more information, please check out these links:

http://www.indisputably.org/?p=199

http://www.karlbayer.com/blog/?p=134

http://www.supremecourtus.gov/opinions/07pdf/06-989.pdf