Finality over Choice:Hall Street Associates, L.L.C. v.Mattel, Inc.(U.S. Supreme Court)

Abstract

In Hall Street Associates, L.L.C. v. Mattel, Inc., the U.S. Supreme Court held that, under the Federal Arbitration Act, parties to an arbitration agreement may not contract for broader judicial review of arbitral awards than the grounds provided for in the FAA itself. The Supreme Court’s decision resolved a disagreement on this point among lower courts in the United States. The Court’s decision will have no effect on international arbitration agreements in which the parties did not seek to expand judicial review. But it seems highly unlikely that courts will enforce provisions of arbitration agreements that do call for broader review by courts. The decision in Hall Street sought to resolve a tension between two competing values in arbitration law: the desire for quick and final decisions versus the goal of enforcing the contractual choices of parties. In Hall Street, finality won out over party autonomy. In the course of reaching its decision, the Supreme Court discussed, but left untouched, “manifest disregard of the law,” an important common law ground on which an arbitration award may be vacated. The lower federal courts that have considered the issue all agree that arbitral awards are subject to review for manifest disregard of the law, though they differ on the nature and extent of that review. While the Supreme Court rejected the notion that the existence of the “manifest disregard” doctrine opened the door for private parties to expand judicial review by contract, it did not alter pre–existing case law on the availability of review of arbitral awards for “manifest disregard”of the law.