"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well."

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Saturday, September 6, 2008

Hall Street Associates v. Mattel

Hall Street Associates v. Mattel www.supremecourtus.gov/opinions/07pdf/06-989.pdf is the latest judgement by the US Supreme Court on:
1. Validity of arbitration agreements that extend the scope of challenge of arbitral awards in courts, and
2. Whether the grounds for setting aside arbitral awards would include any unenumerated ground.
Also see, the following articles available at ssrn on the judgement

Jonathan A. Marcantel, The Crumbled Difference between Legal and Illegal Arbitration Awards: Hall Street Associates and the Waning Public Policy Exception
The abstract:
As a matter of general contract law, illegal contracts are unenforceable in court pursuant to the public policy exception. In addition, illegal arbitration awards are generally unenforceable on the same basis. Everything has now changed. Earlier this year, the United States Supreme Court decided Hall Street Associates, Inc. v. Mattel, Inc., 128 S. Ct. 1396 (2008). In Hall, parties entered into a commerical lease that included an arbitration provision. In addition to other provisions, the arbitration provision permitted a reviewing court to vacate the decision of the arbitrator on grounds not included within the Federal Arbitration Act ("the FAA"). Applying a strict, plain meaning analysis, the Court held the review provisions of the FAA were exclusive, ruling the language of the Statute "unequivocally tells courts to grant confirmation in all cases, except when" the FAA explicitly provides a method for vacatur. Thus, the Court held vacatur is only permitted on the basis of procedural irregularities such as fraud, corruption, bias, and exceeding contractual powers. While the holding in Hall did not specifically mention the public policy exception, the Court's reasoning invariably questions its continued existence in the context of arbitation awards under the FAA, as the FAA does not include a "void against public policy" standard. Furthermore, because the public policy exception is a creature of the common law, the FAA's provisions are in derogation of it. This Article argues the Hall opinion has displaced the public policy exception in the context of enforcing arbitration awards and that displacement offends traditional notions of Lockean social contract theory. This Article further argues the courts should adopt the public policy exception as an inherent power of the courts deriving from the social contract.

David E. Kessler, Why Arbitrate? The Questionable Quest for Efficiency in Hallstreet Street Associates, LLC v. Mattel, Inc.

The Federal Arbitration Act ( FAA ) makes arbitration agreements between private parties legally enforceable. The policy favoring arbitration underlying the FAA has been justified as serving two ends: it protects freedom of contract, and it creates an efficient alternative dispute resolution system. Previous decisions by the Court have indicated a belief that, when those two goals come into conflict, the result that preserves freedom of contract should prevail. In Hallstreet Associates, L.L.C. v. Mattel, Inc., however, a recent case involving the Federal Arbitration Act, the Court's decision preserved perceived efficiency at the expense of freedom of contract. The Court held that the parties could not contract to expand judicial review beyond the grounds provided in the FAA §§ 9-11 because such contracting would undermine the speedy resolution of disputes in arbitration. This Comment argues that the Court's decision may not actually produce the most efficient outcomes. Instead, the decision may force parties to seek other, likely less efficient, ways of securing review of arbitration decisions.

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