“Manifest Disregard of the Law” is Alive and Well and Vacating Arbitrations in Fourth Circuit
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The Federal Arbitration Act sets forth only four bases for vacating arbitration awards. See 9 U.S.C. § 10 (a). After SCOTUS’s 2008 decision in Hall Street, at least half of the circuit courts have concluded that those four bases are exclusive, de-legitimizing the creative bases that judges had developed over the years. However, a recent Fourth Circuit opinion vacated an arbitration award for ”manifest disregard of the law,” a judicially-created basis for vacating arbitration awards that is not contained in Section 10 of the FAA.
In Dewan v. Walia, 2013 WL 5781207 (4th Cir. Oct. 28, 2013), there was an arbitration between a company and its former employee. Each side made claims against the other. Critically, however, the employee had executed a Release Agreement in exchange for $7,000 just three months before the arbitration, which allegedly released all his employment claims. After the hearing, the Arbitrator concluded that the Release Agreement was enforceable, but still awarded damages to the employee. The district court confirmed the arbitrator’s award.
Read original articleTags: Arbitration, Arbitration Award, Arbitration Awards
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