The Supreme Court and arbitration law: expanded levels of review in light of Hall Street.

Author:Coe, Jack J., Jr.
Position::Proceedings of the One Hundred Fifth Annual Meeting of the American Society of International Law

This panel was convened at 11:15 a.m., Thursday, March 24, by its moderator, Hagit M. Elul of Hughes, Hubbard & Reed LLP, who introduced the panelists: Lorraine M. Brennan of JAMS International; Jack Coe of Pepperdine University; William Park of Boston University; and Alex Yanos of Freshfields Bruckhaus Derringer LLP. **

My assignment is to address grounds for review with an emphasis on the Hall Street decision (1) in which the U.S. Supreme Court held that in the context of the purposefully expedited process for confirmation established by the Federal Arbitration Act (FAA) Chapter 1, a district court is limited to the vacatur grounds found in FAA Section 10, which are thus exclusive, whether or not the parties had agreed that the award would be reviewable for errors of fact or law. (2)

The decision resolved a split among Circuits. The Ninth and Tenth Circuits had determined that the FAA did not empower courts to pursue merits review at the parties' request; (3) the First, Third, Fifth, and Sixth Circuits disagreed, (4) being influenced in part by the oft-quoted language in the Court's Volt (5) decision that the FAA's principal purpose is to ensure "enforcement of private arbitration agreements according to their terms," (6) and thereby give effect to the parties' expectations.

Especially before Hall Street, in the classroom one could use the two camps to discuss process design as it might be viewed in light of specific client preferences. Client A is adverse to arbitration because of the limited review available. For A, the ability to bargain for closer-than- usual judicial scrutiny at the ultimate award provides some front-end comfort, but may later prove inconvenient if the award was to A's liking. Whatever the post hoc wisdom of A's preference, there is perhaps superficial appeal to allowing opt-in style expanded review of awards, given that the FAA so robustly enforces arbitration agreements on the front end (including--to the surprise of some abroad--pre-dispute agreements in employment and consumer contracts).

Prospective arbitration user B, has different priorities--speed and economy--and would on balance prefer a Supreme Court rule that placed expanded review beyond reach, thus making it unnecessary to bargain with one's counterpart over the question. For B, even a bad award ends the dispute and the corresponding distraction, and perhaps obviates disclosure of the dispute's pendency to shareholders and others.

Hall Street, of course, left behind some questions. Chief among them are two: first, what has become of judge-made grounds for vacatur; and, second, what scope is there under state arbitration...

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