In this non-employment case the Supreme Court ruled 6-3 that grounds set forth in the Federal Arbitration Act for judicial vacatur of arbitration awards are exclusive and the parties cannot by contract add to those grounds. ?The FAA permits a court to vacate an arbitration award only under very narrow circumstances.?? In their arbitration agreement the parties agreed the court could vacate the arbitrator?s award if the findings of fact were not supported by substantial evidence or the arbitrator?s conclusions of law were erroneous.?? The arbitration loser convinced the district court to overturn the arbitrator?s award on the basis of legal error.? ?The Ninth Circuit reinstated the arbitrator?s original decision, holding that the FAA grounds were exclusive. The Supreme Court majority agreed, rejecting as dicta a 1953 Supreme Court decision suggesting an arbitrator?s manifest disregard of the law was a ground for vacatur.? ?Justice Souter?s majority opinion left open the possibility for a different standard of enforcement of arbitration awards under state law.?? Stevens, Breyer and Kennedy dissented. ?Hall Street Assoc. LLC v. Mattel Inc,?128 S. Ct. 1396 (2008).
Arbitration Agreements Cannot Add to FAA Grounds for Judicial Vacatur
Jan 1, 2008