The National Arbitration Forum Blog

The Supreme Court has issued its much-anticipated decision in the case of Hall Street Associates, L.L.C. v. Mattel, Inc. (No. 06-989). The Court held that the statutory grounds for vacating or modifying an arbitration award under the Federal Arbitration Act (FAA) are exclusive. Accordingly, the parties could not obtain heightened judicial review under the FAA by drafting an arbitration agreement that supplemented the FAA grounds for award vacatur/modification.

The Court's holding does not sound the death knell for heightened judicial review under the FAA, because parties to an arbitration agreement can still guard against legal error by agreeing that the arbitrator must follow the law or adopting rules (e.g., the National Arbitration Forum Code of Procedure) that require the arbitrator to follow the law. That way, if the arbitrator disregards of misapplies the law, the award is subject to vacatur on the statutory basis that the arbitrator exceeded their powers.

No less authority than Judge Posner has recognized the distinction between (1) obtaining heightened judicial review within the statutory framework of the FAA and (2) attempting to obtain heightened judicial review by supplementing the statutory provisions for vacatur with contractual provisions for vacatur. See Edstrom Industries, Inc. v. Companion Life Insurance Co., 516 F.3d 546, 550 (7th Cir. 2008) ("The question in our case is different [from the question in Mattel]. It is whether the arbitrator can be directed to apply specific substantive norms and held to the application.").

Past posts on the Mattel case.