Lloyd's Maritime and Commercial Law Quarterly
“MANIFEST DISREGARD OF LAW” AND THE UNITED STATES ARBITRATION ACT
The “Stav Viking” Arbitration
Jack Berg
Vice-President — Continental Grain Company, Vice-President — Society of Maritime Arbitrators.
INTRODUCTION
The United States Arbitration Act1 establishes, by statute, arbitration as an alternative to litigation. The impelling considerations that led to its enactment were the advantages of a speedier, more economical and effective enforcement of rights than can be had by extended litigation.
The Courts have held that the Act has created a new body of substantive law and is intended to apply in as wide an area as is within the constitutional reach of Congress; that federal law is to prevail on all matters arising under the statute. This result is mandated by the strong federal policy in favour of arbitration embodied in the statute and in numerous decisions.2 The purpose of the Act was deliberately to alter the existing judicial atmosphere and the Courts have recognised the obligation to shake off the traditional judicial hostility to arbitration.
Where the parties have agreed to arbitrate, and where such arbitration is final, the role of the Court is limited to ascertaining if a specific ground exists in the Act for vacating the award.3
If the Court finds that a ground exists, it will set aside the award because it was the intent of Congress that both parties receive a fair hearing. Section 10 of the Act was not designed to dilute the advantage of a speedy and effective resolution of the dispute by arbitration or to alter the reluctance with which Courts view efforts to re-examine arbitration awards. Thus the Courts’ role in confirming or vacating awards is limited so as not to frustrate the purpose of arbitration.4 The Act contains no provision for judicial determination of legal issues such as is found in English law.5 Under that system
1 9 U.S.C. s. 1 et seq.
2 United Steelworkers of America v. American Mfg. Co., 363 U.S. 564, 597 (1960).
3 9 U.S.C. s. 10 which reads as follows:
In either of the following cases the United States Court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration:
a. Where the award was procured by corruption, fraud, or undue means.
b. Where there was evident partiality or corruption in the arbitrators, or either of them.
c. Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehaviour by which the rights of any party have been prejudiced.
d. Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
e. Where an award is vacated and the time within which the agreement required the award to be made has not expired the Court may, in its discretion, direct a rehearing by the arbitrators.
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