Annals of Arbitration: Supreme Court Zaps Vacatur

Six of the nine Justices sided today with the Ninth Circuit -- over, among others, the Fifth.  Wow!  Sweet sassie molassie.  Hall Street Assocs., L.L.C. v. Mattell, Inc., No. 06-989 (U.S. Mar. 25, 2008).

The issue concerned arbitration.  As Justice Souter framed the matter:

The question here is whether statutory grounds for prompt vacatur and modification [under the federal Arbitration Act] may be supplemented by contract.  We hold that the statutory grounds are exclusive.

The decision means that parties may not require courts to conduct a more searching review of arbitration awards than the Arbitration Act allows.

Blawgletter wants to know what, in practical terms, the ruling signifies for the future of arbitration generally.  We think it will encourage more serious attention to the arbitral process itself.  If you worry that an arbitrator might go off the reservation, for example, make sure your contract provides for review by a panel of colleagues.  JAMS, for instance, offers an Optional Appeal Procedure.

We've commented before about how repeat offenders may try to strangle legitimate claims by making them uneconomic in an arbitral forum.  Hall Street ought to wake up companies and individuals who think the standard for arbitration is perfection. 

About time, we say.

But that's just us.

Comments

[D. Todd Smith]

Looks like we have some pretty similar thoughts about how this case may affect things going forward. I am aware of one or two other arbitration outfits with appeal procedures. Seems to me that's the direction things take now.