October 14, 2019 - In article for Global Arbitration Review, Hagit Elul and Olivia Bensinger examined a recent decision highlighting U.S. courts’ penchant for exercising restraint when it comes to applying the doctrine of “manifest disregard of the law” as a basis for vacating an arbitral award.
According to the Oct. 14 article, an arbitrator is deemed to have acted with manifest disregard if the applicable legal principle is clearly defined and not subject to reasonable debate; and the arbitrators refused to heed that legal principle.
The authors cited cases in which the doctrine’s validity has either been called into question, or where a split between different U.S. Courts of Appeals has arisen over its continuing vitality.
They noted, however, that in a recent decision – Weiss v Sallie Mae – the Second Circuit chose to use the doctrine as an opportunity to remand an arbitral award to the arbitrator for clarification, rather than to vacate the award.
“The Second Circuit’s decision not to rush into vacatur on the basis of manifest disregard of the law confirms that the general approach of U.S. courts is to use the doctrine only sparingly,” they wrote. “The Second Circuit’s decision in Weiss evidences the continued deference granted by U.S. courts to arbitrators, and confirms that vacatur on the basis of manifest disregard of the law will rarely be granted.”