U.S. Supreme Court finds Federal Arbitration Act states exclusive grounds for review of arbitration awards

A split U.S. Supreme Court ruled yesterday that the grounds for vacatur and modification of arbitration awards stated in the Federal Arbitration Act (FAA) at 9 U.S.C. sec. 9-11, are exclusive for parties seeking expedited review under the FAA.

The parties in Hall Street Associates, L.L.C. v. Mattel, Inc., proposed to arbitrate Hall Street’s claim for indemnification after Mattel’s right to terminate its lease was decided at a bench trial. The District Court approved and entered the parties' arbitration agreement as an order. The agreement required the court to vacate, modify, or correct any award if the arbitrator's conclusions of law were erroneous. In its ruling the Supreme Court noted that its holding decided “nothing about other possible avenues for judicial enforcement of awards.” It remanded the case for consideration of “independent issues.” The Court said that because the arbitration agreement was submitted to the District Court and adopted as an order, there was some question whether it should be treated as an exercise of the District Court's authority to manage its cases under Federal Rule of Civil Procedure 16.