Cert Denied - Circuits Remain Split on Viability of Manifest Disregard

April 24, 1014

The United States Supreme Court, on April 7th, denied certorari in Dewan v. Walia, 2013 U.S. App. LEXIS 21970; 2013 WL 5781207 (4th Cir. Oct. 28, 2013; see our discussion of manifest disregard and the split among the circuits here), in which the Fourth Circuit remanded with instructions that the district court vacate an arbitral award for manifest disregard of the law. According to the court, “a manifest disregard of the law is established . . . where the arbitrator understands and correctly states the law, but proceeds to disregard the same,” [citation omitted]  Here, the appellate court found that the arbitrator had been aware of - and found valid and enforceable - a release executed by an employee but had manifestly disregarded the release in making his award.

In December 2013, the plaintiff filed a petition for certiorari with the U.S. Supreme Court, on the question “[w]hether and when the Federal Arbitration Act permits a court to vacate an arbitral award as the product of “manifest disregard of the law.” Despite an apparent split among US circuit courts on the continued viability of the manifest disregard doctrine as a grounds for vacating arbitral awards, the Supreme Court has denied cert.

A  group of prominent arbitration practitioners and academics had submitted an amicus curiae brief in support of certiorari, arguing, inter alia, that upholding manifest disregard as an independent basis for setting aside arbitral awards may deter arbitration users from selecting the US as an arbitral forum.

- Bette Shifman