Arbitration & Mediation

11th Circuit Rules "Manifest Disregard" and "Public Policy" are Not Grounds to Vacate Arbitration Award

By Christopher B. Hopkins, Esq.

The Eleventh Circuit recently addressed the question of what standards apply when a court considers a motion to vacate or modify an arbitration award. Consistent with the 2009 Hall Street decision from the U.S. Supreme Court, the panel held that there are only four narrow grounds to review an adverse arbitration award. In doing so, arguments that the award was (1) due to manifest disregard of the law and (2) violation of public policy were discarded as grounds for an appeal.

The facts in Patricia Frazier v. CitiFinancial Corp. LLC are lengthy and confusing but it will suffice, for our purposes, to acknowledge that the suit arose over the validity and application of a loan. The loan paperwork contained an arbitration clause. The debtor lost and appealed.

The Court held that a trial court must confirm an arbitrator's award unless it is vacated, modified or corrected in accordance with 9 USC 10 or 11. Section 10 sets out the "four narrow circumstances" for vacatur: (1) corruption/fraud, (2) partiality/corruption, (3) arbitrator misconduct, and (4) arbitrators exceeded their powers or imperfectly executed them.

Full post as published by Florida Arbitration Law on May 10, 2010 (boomark / email).