The Mess of Manifest Disregard


What is the impact of the much commented decision of the U.S. Supreme Court Hall Street Associates v. Mattel Inc. on the doctrine of manifest disregard of the law? This judicially crafted ground for vacatur of arbitral awards empowers American courts to review awards on the merits, which is an old difference between the common law and the civil law worlds.

Hall Street was not about whether manifest disregard was good law. It was about whether parties could change the grounds for vacatur of awards. As the Court held that the American Federal Arbitration Act (FAA) should be strictly applied and thus that the parties did not have such power, Hall Street immediately raised the issue of whether it impacted the power of courts to continue to use judicially crafted exceptions to the FAA such as manifest disregard. 

A recent article by Hiro Aragaki (The Mess of Manifest Disregard, 119 Yale L.J. Online 1 (2009)) summarizes how U.S. Courts have reacted, and shows that there is a split in the making among circuits in the U.S. For some, Hall Street has indeed spelled the end of manifest disregard, while for others, manifest disregard remains, but must now be founded in one of the statutory grounds of the FAA. Aragaki offers a third interpretation.

The article, which has the great advantage of being unusually short (14 pages) by American standards, can be downloaded here.