A federal court confirmed an arbitration award, denying a motion to vacate where the movant failed to cite any basis for vacatur under section 10 of the Federal Arbitration Act (FAA). Instead, the movant sought vacatur of the award on two grounds – manifest disregard of the law and public policy – both of which it acknowledged are not listed within section 10. The respondent argued that following the Supreme Court’s decision in Hall Street, neither ground, independent of any provision under section 10, is an adequate basis for vacatur under the FAA.
The Court agreed, but also noted that the First Circuit has not “squarely determined whether [its] manifest disregard case law can be reconciled with Hall Street.” However, the Court looked to the First Circuit’s dicta, which stated that Hall Street compels the conclusion that the manifest disregard standard survives only as a judicial gloss on § 10. With regard to the movant’s public policy argument, the Court noted that although there has been no discussion following Hall Street by the First Circuit about whether a violation of public policy survives as a basis for vacatur under the FAA, to the extent that it survives, it, too, would only do so as a judicial gloss on section 10.
The Court also rejected the movant’s arguments raised only in its reply brief that the arbitrator exceeded his powers, citing section 10(a)(1)–(4) as a plausible basis for vacatur. The Court reasoned that any perceived errors made by the arbitrator in his contractual interpretations did not amount to a decision “unfounded in reason and fact” or “based on reasoning so palpably faulty that no judge, or group of judges, ever could conceivably have made such a ruling.” As such, the Court denied the motion for vacatur and confirmed the award.
Sanwan v. Lindsay, No. 16-12469-RWZ (USDC D. Mass. May 5, 2017).
This post written by Gail Jankowski.
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