Are Arbitrators Above the Law? The 'Manifest Disregard of the Law' Standard

Abstract

Arbitration is supposed to be final and binding, but federal and state laws, and judicial doctrines, allow courts to vacate arbitrator awards. This study contemplates the role of courts when they review awards that “manifestly disregard the law”—a term that means the arbitrator knew the law but chose to ignore it. In 2008 in Hall Street Associates v. Mattel, Inc., the U.S. Supreme Court ruled that courts cannot review awards beyond the Federal Arbitration Act’s (FAA) express terms and stated: “Maybe the term ‘manifest disregard’ [in the Court’s 1953 decision in Wilko v. Swan] was meant to name a new ground for review, but maybe it merely referred to the [FAA’s] § 10 grounds collectively, rather than adding to them.” This Article analyzes “manifest disregard” through historical and empirical methods and contends that Congress inadvertently omitted “manifest disregard” from the FAA. Unfortunately, the Court’s muddled analysis in Hall Street as to “manifest disregard” has split federal circuits. The Court should affirm this standard as it does not erode finality, and judicial review must be allowed to correct an arbitrator’s intentional flouting of the law. If “manifest disregard” is eliminated, arbitral finality will rise above the crowning principle of the American constitutional system: “No man in this country is so high that he is above the law.”