In a departure from recent rulings by other federal circuit courts on this issue, the U.S. Court of Appeals for the Fifth Circuit has held that manifest disregard of the law is no longer a valid basis for vacating arbitration awards under the Federal Arbitration Act (“FAA”).  See Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349, 350, 358 (5th Cir. 2009).  The Fifth Circuit interpreted the U.S. Supreme Court’s decision in Hall Street Associates, L.L.C. v. Mattel, Inc., 128 S.Ct. 1396 (2008) as limiting the grounds for vacatur of arbitral awards to only those specifically enumerated in Section 10 of the FAA, and held that because precedent in that circuit defines manifest disregard of the law as a “nonstatutory” ground for vacatur, it is no longer viable.

The Fifth Circuit’s decision noted that the Second, Sixth and Ninth Circuits have reached the opposite conclusion on this issue, but found the holdings in those cases to be inconsistent with the Supreme Court’s ruling in Hall Street.

Click here to review a copy of the Fifth Circuit’s decision.