The Myth of the ’Manifest Disregard of the Law’ Doctrine: Is this Challenge to the Finality of Arbitral Awards Confined to U.S. Domestic Arbitrations or Should International Ar

Abstract

The Doctrine of ?manifest disregard of the law? arose out of dictum in a U.S. Supreme Court decision dating back to the 1950s, which mysteriously seems to have developed into a possible challenge to arbitral awards. Many international arbitration practitioners are aware of the Doctrine, but many seem to have difficulties in fully assessing the scope of its application and its possible impact on international arbitration. This article considers whether the Doctrine is, in fact, a myth, which, as far as it exists at all, affects only domestic arbitrations within the U.S. or whether international arbitration practitioners should be concerned about its potential to be used to resist recognition and enforcement of an international arbitral award. In considering the Doctrine, the article first examines the meaning of ?manifest disregard of the law? and the extent of its usage within the sphere of U.S. domestic arbitrations. It then explores whether the Doctrine can be applied to international arbitral awards, where the place of arbitration was within the U.S. and then, those where the place of arbitration was elsewhere. It also analyses the interrelation between the Doctrine and the New York Convention, in particular, the public policy exception to recognition and enforcement. In its conclusion, the article suggests that, to a certain extent, the Doctrine is a myth, in that it is so rarely successfully invoked, even in the domestic arena, and also that it is not compatible with the grounds for resisting recognition and enforcement under the New York Convention. However, given that it appears to be often used, despite its low chances of success and, given that U.S. Courts have extended its reach to international arbitration awards rendered within the U.S., it is not something that international arbitration practitioners can ignore completely and practitioners should be aware of this when considering the U.S. as the place of arbitration.