United States

It is sometimes said - most often, it seems, by international arbitration practitioners resident outside the United States - that the ‘manifest disregard of law' doctrine gives courts in the United States broad scope to vacate arbitral awards rendered in the United States. In fact, the doctrine has very rarely been used as a basis to vacate arbitral awards of any kind, and no appellate court has ever applied the doctrine to vacate an international award.

However, the May 2017 decision by the New York Supreme Court (the first instance court in New York state) in Daesang Corp v Nutrasweet Co,¹ vacating and ‘remanding' an award in an arbitration administered by the International Court of Arbitration of the International Chamber of Commerce (ICC), is likely to generate renewed concern about the scope of the manifest disregard doctrine. Daesang is the first decision to vacate an international arbitration award rendered in New York on the basis of the doctrine.

This article discusses the manifest disregard doctrine and the Daesang decision. It is our view that the Daesang decision departs from generally accepted manifest disregard standards in significant ways and is unlikely to survive appeal.

Grounds for vacating arbitral awards rendered in the United States

The Federal Arbitration Act

The New York Convention (the Convention) specifies, in article V, the grounds under which a court may refuse recognition and enforcement of a Convention award rendered in another state party, but is silent on the grounds for setting aside an award in the courts of the country where it is made. Thus, the grounds for vacating a Convention award must be supplied by the domestic law of the country where the award was made. In the United States, the relevant domestic law is section 10 of the Federal Arbitration Act (FAA) or state arbitration law.

The FAA grounds for setting aside an award apply in both state and federal courts as long as the underlying agreement evidences a transaction involving interstate commerce, an easily satisfied test, or if the award is considered a ‘non-domestic' Convention award.² Although a party may bring an action to enforce or vacate an international arbitration award in either state or federal court, state court actions relating to Convention awards may be removed to federal court by the defendant (and usually are).³ At a practical level, this means that for international arbitrations seated in the United States, a motion to vacate the award will virtually always be governed by FAA section 10, rather than state arbitration law,⁴ and will usually be decided in federal court.

The FAA mandates that an arbitral award rendered in the United States ‘must' be ‘confirmed'⁵ - the US process by which an award is reduced to a court judgment - unless it is vacated pursuant to one of the following grounds set forth in section 10(a):⁶

1. where the award was procured by corruption, fraud, or undue means;
2. where there was evident partiality or corruption in the arbitrators, or either of them;
3. 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; or
4. 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.

Evolution of the manifest disregard standard

In addition to the statutory grounds in the FAA, many US courts continue to recognise ‘manifest disregard of law' as a ground to vacate an award rendered in the United States.

The doctrine of manifest disregard has its genesis in a phrase in the 1953 US Supreme Court decision Wilko v Swan.⁷ In dictum, the court stated:

Power to vacate an award is limited. . . . In unrestricted submission, such as the present margin agreements envisage, the interpretations of the law by the arbitrators in contrast to manifest disregard are not subject, in the federal courts, to judicial review for error in interpretation.⁸

Although the US Supreme Court expressly overruled Wilko in 1987,⁹ the concept of ‘manifest disregard' survived. For several decades following Wilko, US courts widely recognised some form of the manifest disregard doctrine as a judicially created ground for vacating arbitration awards subject to the FAA.¹⁰

Given the Supreme Court's lack of guidance in Wilko, the various US jurisdictions adopted slightly different approaches to the doctrine. Some federal circuits considered manifest disregard to be an independent ground for setting aside an award, in addition to the FAA grounds.¹¹ Others considered manifest disregard as a collective reference to the section 10(a) grounds.¹² Still others considered manifest disregard to merely allude to FAA sections 10(a)(3) and 10(a)(4), allowing vacatur where arbitrators have committed misconduct or exceeded their authority.¹³

In its 2008 decision Hall Street Associates v Mattel,¹⁴ which held that parties cannot contractually agree to expand the FAA grounds for vacating an award, the US Supreme Court stated that the FAA provides the ‘exclusive' grounds for judicial review of an arbitration award. Hall Street argued that the existence of the judicially created manifest disregard doctrine, while not squarely at issue in the case, demonstrated that Wilko sanctioned ‘expandable judicial review authority'.¹⁵ Rejecting Hall Street's argument, Justice Souter wrote, for the Court:¹⁶

Hall Street sees this supposed addition to §10 [of the FAA] as the camel's nose: if judges can add grounds to vacate (or modify), so can contracting parties.
     But this is too much for Wilko to bear. Quite apart from its leap from a supposed judicial expansion by interpretation to a private expansion by contract, Hall Street overlooks the fact that the statement it relies on expressly rejects just what Hall Street asks for here, general review for an arbitrator's legal errors. Then there is the vagueness of Wilko's phrasing. Maybe the term ‘manifest disregard' was meant to name a new ground for review, but maybe it merely referred to the §10 grounds collectively, rather than adding to them. See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 656 (1985) (STEVENS, J., dissenting) (‘Arbitration awards are only reviewable for manifest disregard of the law, 9 U. S. C. §§10, 207'); I/S Stavborg v. National Metal Converters, Inc., 500 F. 2d 424, 431 (CA2 1974). Or, as some courts have thought, ‘manifest disregard' may have been shorthand for §10(a)(3) or §10(a)(4), the subsections authorizing vacatur when the arbitrators were ‘guilty of misconduct' or ‘exceeded their powers.' See, e.g., Kyocera, supra, at 997. We, when speaking as a Court, have merely taken the Wilko language as we found it, without embellishment, see First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 942 (1995), and now that its meaning is implicated, we see no reason to accord it the significance that Hall Street urges.

Thus, although it did not explicitly rule on the issue, the Hall Street decision cast considerable doubt on the continued viability of the judicially created manifest disregard doctrine.

Post-Hall Street, the Fifth, Seventh, Eighth and Eleventh Circuits have held that manifest disregard is no longer a permissible challenge to an arbitration award.¹⁷ The Second, Fourth, Sixth, Ninth and Federal Circuits continue to recognise manifest disregard, but as a ‘judicial gloss' on or ‘shorthand' for the grounds set forth in section 10 of the FAA, rather than an independent ground for vacatur.¹⁸ The issue remains undecided in the First, Third, Tenth and DC Circuits.¹⁹

A common thread among all circuits, however, is that the doctrine is to be applied very sparingly, functioning as a ‘safety valve' reserved for only the most egregious circumstances. Manifest disregard clearly does not permit a US court to set aside an award based on a mere error or misinterpretation of law. Rather, the doctrine applies only in the rare instances where a party can show that (i) the arbitrator knew of a governing legal principle but ignored or refused to apply it, (ii) ‘the law that was allegedly ignored was clear, and in fact explicitly applicable to the matter before the arbitrators,' and (iii) ‘the law was in fact improperly applied, leading to an erroneous outcome.'²⁰

Thus, the doctrine is unavailable if the law is ambiguous, or if an arbitrator ignored evidence or misconstrued a contract, or if proper application of the law would have led to the same result. Moreover, courts generally will assume that an arbitrator was unaware of the governing law unless there is evidence that the parties brought it to the arbitrator's attention.²¹

A 2012 empirical study by the New York City Bar Association Committee on International Commercial Disputes found that not a single international or non-domestic award rendered in the United States had been vacated on the ground of manifest disregard at the federal appeals court level.²² Even at the first instance district court level, the study revealed only two such cases, in federal courts in Pennsylvania.²³ For purely domestic arbitration awards, only 39 out of 475 manifest disregard challenges succeeded at first instance, and only 13 of those challenges (less than 3 per cent) survived appeal.²⁴

Daesang Corp v Nutrasweet Co

In May 2017, the New York Supreme Court issued the first New York court decision that we are aware of applying the manifest disregard doctrine to vacate and ‘remand' to the deciding tribunal portions of an international arbitration award. However, the application of the doctrine by the court appears to deviate from the generally accepted standard in significant ways.

The dispute

The dispute between Daesang Corporation (Daesang) and the Nutrasweet Company and certain affiliates (NSC) arose out of the 2003 sale of Daesang's aspartame business to NSC.²⁵ The parties entered into three agreements: an asset purchase agreement (APA), a processing agreement that governed Daesang's production and sale of aspartame to NSC using the purchased assets (the processing agreement) and a joint defence agreement (JDA).²⁶ The agreements were governed by New York law.²⁷

The total purchase price for the transaction was approximately US$80 million, to be paid by NSC to Daesang in instalments.²⁸ NSC failed to pay US$9.25 million due in June 2006; Daesang exercised its right to accelerate payment of the remaining purchase price of US$55 million; and in March 2007, NSC exercised its right to rescind the entire transaction under the JDA, which allowed for rescission where, inter alia, a complaint was filed against NSC by a customer that purchased over 1 million pounds of aspartame annually, alleging that the sale of Daesang's business to NSC was in violation of antitrust laws.²⁹

In June 2008, Daesang commenced an ICC arbitration pursuant to an arbitration clause contained in the APA.

The arbitration and awards

Daesang brought claims against NSC for failure to pay the purchase price in accordance with the APA, along with claims for breach of the processing agreement, most notably for NSC's termination of the agreement without cause.

NSC defended Daesang's claims and brought counterclaims based on NSC's alleged right to contractual rescission of the transaction pursuant to the JDA, due to the filing of the class action and equitable rescission pursuant to Daesang's fraudulent inducement of the contract, based on false representations made in the APA, particularly the representation that Daesang had ‘complied in all material respect with all applicable laws ... in connection with the operation of the business.' NSC alleged that an affidavit filed in the class action litigation showed that this representation was false.³⁰ NSC also brought counterclaims for Daesang's breaches of the APA and processing agreement related to Daesang's continuing production of aspartame, disputing the quality and quantity of aspartame that Daesang had produced for NSC.³¹

A nine-day hearing was held in July 2011.³² At the close of the hearing, the tribunal requested that the parties submit an outline of their respective claims and defences, and a list of issues to be determined. The final oral argument was held in October 2011.³³ In December 2012, the tribunal rendered a partial final award that dismissed all of NSC's defences and counterclaims and reserved decision on damages to be awarded to Daesang and allocation of costs to a future award.³⁴

First, the tribunal held that the class action complaint did not trigger NSC's right to rescission of the entire transaction, since the action was not brought by a customer that purchased over 1 million pounds of aspartame annually.³⁵

Second, the tribunal held that NSC did not have a claim for equitable rescission based on fraudulent inducement because the representations upon which its claim were based were contained only in the APA itself.

The tribunal cited numerous cases holding that New York law ‘does not permit a claim of fraud in the inducement to be based solely on the express representations contained in the parties' agreements.'³⁶ It distinguished the primary case relied upon by NSC: Merrill Lynch & Co v Allegheny Energy, Inc, 500 F.3d 171 (2d Cir. 2007). In that case, the Second Circuit Court of Appeals allowed the defendant to bring a fraudulent inducement claim where misrepresentations were made in the contract. However, as interpreted by the tribunal, the Second Circuit ‘found that Allegheny's fraud claim was based on misrepresentations regarding the financial statements delivered to Allegheny before the parties entered into their contract' and not simply the representations contained in the contract.³⁷

Finally, the tribunal dismissed NSC's claim for damages for breach of the APA and processing agreement because:

[NSC has] not asserted any alleged breaches of the APA and the Processing Agreement as a claim independent of its claims for rescission of these agreements. Rather, in its pre-hearing submissions, at oral argument, and in its post-hearing submissions, Respondents stated that these alleged contractual breaches constitute a basis for rescissionary damages in the context of their claims of fraud and rescission.³⁸

The tribunal cited four documents in support of its conclusion: NSC's pre-hearing reply memorial, the oral argument transcript in which NSC's counsel responded to tribunal questions, NSC's post-hearing summary of claims, defences and evidence, and a demonstrative exhibit setting forth NSC's claims for damages titled ‘Summary of NutraSweets Counterclaim Damages Based on JDA and Equitable Rescission Alternatives' (Exhibit NS-230).³⁹

After receiving the partial final award, the matter was stayed at the parties' request until September 2014, as the parties pursued settlement negotiations. When the stay was lifted, the tribunal requested submissions on the appropriate remedy for NSC's breaches, and the quantum of damages.⁴⁰

In its submission, NSC also requested for a reconsideration of certain liability decisions in the final partial award. The tribunal's final award, issued in June 2016, noted that ‘[n]either the ICC Rules nor the procedures adopted by the Tribunal in this case provide for reargument or reconsideration of the issues previously resolved in the Partial Award.'⁴¹ Nonetheless, the tribunal did address - and reject - NSC's arguments in its final award.⁴²

Regarding its contractual claims, NSC pointed to the terms of reference and its pre-hearing memorial and post-hearing summary to argue that it did maintain claims for breach of contract independent of its claims for rescission. The tribunal responded in the final award with quotes from the final oral argument in which counsel for NSC stated, ‘For some of the same claims Nutrasweet also seeks damages under section 4 in the context of its rescission claim[.] Nutrasweet is also seeking, for lack of a better term, rescissionary damages or out-of-pocket damages…'.The tribunal also pointed out that Exhibit NS-230 only included two groups of damages: those for equitable rescission and those for contractual rescission.

The tribunal held that ‘[t]o the extent Respondents sought to assert a damages claim for breach of contract at an earlier stage in this arbitration, by the time of oral argument following the evidentiary hearing Respondents chose to pursue a strategy of seeking only rescission and only damages relating to rescission…. This meant waiving any independent breach of contract claim.'⁴³

The final award then addressed the quantum of damages for NSC's breaches of the APA and processing agreement, awarding Daesang US$100,766,258.⁴⁴

The New York Court decision

Daesang moved to confirm the awards in the New York Supreme Court in New York County. As with all arbitration-related cases, the case was assigned to the Honourable Charles E Ramos. Daesang's decision to bring the case in state court is unusual; as noted above international arbitration enforcement actions can be brought in federal court pursuant to section 203 of the FAA or, if brought in state court, can be removed by the respondent to federal court pursuant to section 205. In any case, New York courts apply the federal standard for claims of manifest disregard if the case is governed by the FAA.⁴⁵

NSC cross-moved to vacate the final award based on, inter alia, the tribunal's manifest disregard of the law with regard to their holdings that (i) the class action was not a rescissionary event under the JDA and (ii) Daesang's alleged breach of a misrepresentation in the APA could not be the basis of a claim for fraudulent inducement.

NSC further cross-moved to vacate the tribunal's finding that NSC had no claims for damages for breach of contract that were independent from their claims for rescission. While NSC did not explicitly refer to any cases, statute or doctrine in its argument on this point, it argued that the finding should be vacated because it ‘reflects such imperfect execution of the arbitrators' duties that a mutual final and definite award on the subject matter was not made and, thus, the award should be vacated'.⁴⁶ This language tracks the grounds for vacatur under section 10(a)(4) of the FAA.⁴⁷

In its decision dated 15 May 2017, the Court first held that the FAA governed the motion for vacatur, but cited the Second Circuit for the proposition that ‘a court may vacate an arbitration award "if it was rendered in manifest disregard of the law".'⁴⁸ The Court next held that manifest disregard occurred only where ‘the arbitrators knew of a governing legal principle yet refused to apply it or ignored it altogether,' and whether the governing law ignored was ‘well defined, explicit, and clearly applicable to the case'.⁴⁹ It further cited the New York Court of Appeals for the proposition that ‘an arbitration award must be upheld when the arbitrator "offers even a barely colorable justification for the outcome reached".'⁵⁰ The Court proceeded to dismiss the claim of manifest disregard as to the tribunal's decision that the class action complaint was not a rescissionary event under the JDA, although the Court stated in dicta ‘it would have ruled otherwise' if the question had been before it rather than the tribunal.⁵¹

As to the question of equitable rescission, however, the Court had a very different view. Noting that ‘deference to arbitrators is not without its limits,' it found that in holding that a claim for fraudulent inducement could not be based upon representations made in a contract, the tribunal ‘chose to disregard the well-established principle that a fraud claim can be based on a breach of contractual warranties where the misrepresentations are of present facts (in contrast to future performance) and cause the actual losses claimed'.⁵²

There are two problematic aspects of this conclusion.

First, the Court's finding that the tribunal ‘chose to disregard' the principle is without support in the text of the awards. Rather, the tribunal makes clear that it reviewed the authorities submitted by the parties, and concluded that New York law does not allow fraud in the inducement to be based solely on the express representations contained in the parties' agreements.

The Court cites three cases on this point, two of which, Wyle Inc v ITT Corp, 130 A.D.3d 438 (1st Dept. 2015) and MBIA v Credit Suisse Securities (USA) LLC, 33 Misc3d 1208[A], (Sup.Ct. N.Y. Co. 2011), were never submitted to the tribunal by the parties (Wyle in particular having been decided after the partial award was rendered).⁵³

Second, it is hard to understand the Court's conclusion that its reading of the law is ‘well-established'. Other than the cases described above, the Court cites to only one other authority, GoSmile, Inc v Levine, 81 A.D.3d 77 (1st Dept. 2010). In GoSmile, the New York state appellate court reversed a decision by Justice Ramos finding, as the tribunal did in its first partial award, that the plaintiff's fraudulent inducement claim was duplicative of its breach of contract claim.⁵⁴ Moreover, GoSmile includes a vigorous dissent, which agreed with Justice Ramos's decision, and expressed the hope that the case would not be ‘cited in the future for the proposition that a breach of a written warranty also, without any additional facts, gives rise to an independent tort cause of action'.⁵⁵

Given this context, it is difficult to see how the principle articulated by the Court is ‘well-established', or that such a principle was ‘disregarded' by the tribunal. The fact the tribunal incorrectly applied the law, as the Court recognised earlier in its opinion, is not sufficient grounds for vacatur based on a manifest disregard of the law.

With respect to the tribunal's holding that NSC did not have any independent breach of contract claims, the Court stated that it ‘reaches the same conclusion' as on the issue of equitable rescission. The Court's meaning here is not entirely clear; it does not explicitly state that it considers the tribunal's holding to be in manifest disregard of the law, nor did NSC even ask it to do so. However, the only authority the Court cites, Wien & Malkin LLP v Helmsley-Spear, Inc, 6 N.Y.3d 471 (2006), exclusively addresses manifest disregard of the law.

To the degree that the Court applied the manifest disregard doctrine to the tribunal's determination regarding NSC's breach of contract claims, the Court does not even state a legal principle that was allegedly disregarded. Rather, the Court reviews the procedural record and concludes that the tribunal's ruling was factually incorrect.⁵⁶

On 14 June 2017, Daesang filed a notice of appeal to the Appellate Division, First Department of the New York Supreme Court. If there is no settlement, the New York appellate court will have an opportunity to clarify application of the manifest disregard standard in New York.

Conclusion

Whatever the current status and parameters of the manifest disregard doctrine, US courts have consistently held that the doctrine is reserved for exceptional cases in which arbitrators have acted in an egregious manner resulting in fundamental unfairness. In this, the US courts act in a manner consistent with courts in many jurisdictions that decline to enforce such awards on grounds of public policy or mandatory law.⁵⁷ The Daesang court may have been the first New York court to apply the manifest disregard doctrine to an international arbitration award, but it is very unlikely to have the last word on the subject.

Notes

1. See Daesang v. NutraSweet, No. 655019/2016, 2017 NY Slip Op 31023(U) (Sup. Ct., NY County May 16, 2012) (Ramos, J.) (the Decision). The Decision, and the submissions and exhibits filed by the Parties are available on the New York State Unified Court System's online portal for the Supreme Court: https://iapps.courts.state.ny.us/webcivil/FCASMain, through a search for the docket number (655019/2016) or party names. All future references to court pleadings in this document designate pleadings submitted in that case.
2. 9 U.S.C. § 202; Bergesen v. Joseph Muller Corp., 710 F.2d 928, 932 (2d Cir. 1983) (indicating that non-domestic awards are those subject to the Convention not because they were made abroad, but because they involve some significant foreign elements).
3. FAA, 9 U.S.C. § 205.
4. Moreover, the FAA pre-empts state arbitration law to the extent it would undermine the goals and policies of the FAA. Volt Inf. Sciences v. Stanford Univ., 489 U.S. 468, 477 (1989).
5. FAA, 9 U.S.C. § 9.
6. FAA, 9 U.S.C. § 10(a).
7. Wilko v. Swan, 346 U.S. 427 (1953).
8. Id. at 437-38.
9. Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 221 (1987).
10. The ‘Manifest Disregard of Law' Doctrine and International Arbitration in New York, Report by the NYC Bar Association Committee on International Commercial Disputes, at 12 (August 2012) (NYC Bar Report).
11. See, e.g., McCarthy v. Citigroup Global Markets, Inc., 463 F. 3d 87, 91 (1st Cir. 2006); Hoeft v. MVL Group, Inc., 343 F. 3d 57, 64 (2d Cir. 2003); Prestige Ford v. Ford Dealer Computer Servs., Inc.,324 F. 3d 391, 395-96 (5th Cir. 2003); Scott v. Prudential Securities, Inc., 141 F. 3d 1007, 1017 (11th Cir. 1998); Lessin v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 481 F.3d 813, 816 (D.C. Cir. 2007).
12. See, e.g., I/S Stavborg v. National Metal Converters, Inc., 500 F. 2d 424, 431 (CA2 1974); see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 656 (1985) (Stevens, J., dissenting) (‘Arbitration awards are only reviewable for manifest disregard of the law, 9 U. S. C. §§ 10').
13. Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 997 (9th Cir. 2003).
14. Hall St. Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (2008).
15. Id. at 584.
16. Id. at 585.
17. Citigroup Global Mkts. Inc. v. Bacon, 562 F.3d 349, 357 (5th Cir. 2009) (‘[manifest disregard], as a term of legal art, is no longer useful in actions to vacate arbitration awards. . . . Thus from this point forward, arbitration awards under the FAA may be vacated only for reasons provided in § 10.'); Affymax, Inc.v. Ortho-McNeil-Janssen Pharms., Inc., 660 F.3d 281, 285 (7th Cir. 2011) (‘Except to the extent [that an award directs the parties to violate the legal rights of third persons who did not consent to the arbitration], "manifest disregard of the law" is not a ground on which a court may reject an arbitrator's award under the Federal Arbitration Act.'); Crawford Group, Inc. v. Holekamp, 543 F.3d 971, 976 (8th Cir. 2008) (‘An arbitral award may be vacated only for the reasons enumerated in the FAA.'); Air Line Pilots Ass'n Int'l v. Trans States Airlines, LLC, 638 F.3d 572, 578 (8th Cir. 2011) (‘the Supreme Court's decision in Hall Street. . . eliminated judicially created vacatur standards under the FAA, including manifest disregard for the law'); Frazier v. Citifinancial Corp., LLC, 604 F.3d 1313, 1324 (11th Cir. 2010) (‘We hold that our judicially-created bases for vacatur are no longer valid in light of Hall Street.').
18. Stolt-Nielsen SA v. AnimalFeeds Int'l Corp., 548 F.3d 85, 93 (2d Cir. 2008), rev'd on other grounds, 559 U.S. 662, 130 S. Ct. 1758 (2010) (‘"manifest disregard," reconceptualised as a judicial gloss on the specific grounds for vacatur enumerated in section 10 of the FAA, remains a valid ground for vacating arbitration awards'); Wachovia Sec., LLC v. Brand, 671 F.3d 472, 483 (4th Cir. 2012) (‘manifest disregard continues to exist either as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. §10'); Coffee Beanery, Ltd. v. WW, LLC, 300 Fed. Appx. 415, 419 (6th Cir. 2008) (‘In light of the Supreme Court's hesitation to reject the "manifest disregard" doctrine in all circumstances, we believe it would be imprudent to cease employing such a universally recognized principle.'); Comedy Club, Inc. v. Improv west Assocs., 553 F.3d 1277, 1290 (9th Cir. 2009) (‘we conclude that, after Hall Street Associates, manifest disregard of the law remains a valid ground for vactur because it is a part of §10(a)(4)'); Bayer Cropscience AG v. Dow Agrosciences LLC, No. 2016-1530, 2016-1623 (Fed. Cir. March 1, 2017) (endorsing the Fourth Circuit's view that ‘the manifest-disregard ground exists either as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10').
19. Ortiz-Espinosa v. BBVA Sec. of P.R., Inc., 852 F.3d 36, 46 (1st Cir. 2017) (‘We need not and do not decide now whether manifest disregard remains as an available basis for vacatur. However, if it does survive, we agree with the courts that have held that Hall Street compels the conclusion that it does so only as a judicial gloss on § 10.'); Goldman v. Citigroup Global Mkts., Inc., 834 F.3d 242, 256 (3d Cir. 2016) (‘we need not inquire into the continuing validity of manifest disregard as a basis for vacatur'); Abbot v. Law Office of Patrick J. Mulligan, 440 Fed, Appx. 612, 620 (10th Cir. 2011) (‘in the absence of firm guidance from the Supreme Court, we decline to decide whether the manifest disregard standard should be entirely jettisioned.'); Affinity Fin. Corp. v. AARP Fin., Inc., 468 Fed. Appx. 4, 5 (D.C. Cir. 2012) (‘Assuming without deciding that the "manifest disregard of the law" standard still exists…').
20. Duferco Int'l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 390 (2d Cir. 2003). While there are some variations in the elements of manifest disregard standard in different U.S. jurisdictions, the nuances are not important for present purposes.
21. See, e.g., Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir. 2004).
22. NYC Bar Report, at 11.
23. NYC Bar Report, at 11-12.
24. NYC Bar Report, at 12.
25. Final award, para. 1.
26. Id., para. 82.
27. Id.
28. Id. para. 86.
29. Id., paras. 90, 100.
30. Id., para. 14
31. See terms of reference, paras. 29-30.
32. See final award, para. 39.
33. Id.
34. See id., 52.
35. See partial final award, paras. 95-96.
36. Id. paras. 104-112, citing, inter alia, MBIA Insurance Corp. v. Credit Suisse Securities (USA) LLC, 2011 N.Y. Misc. LEXIS 2548, *28 (Sup.Ct. N.Y. Co. 2011), Ritchie Capital Management, LLC v. Coventry First LLC, 2007 U.S. Dist. LEXIS 51081, *19 (S.D.N.Y. 2007); Koch Industries, Inc. v. Hoechst, 727 F. Supp. 2d 199 (S.D.N.Y. 2010); Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 389 (1987).
37. Id., para. 108.
38. See partial final award, para. 114.
39. Id., para 114.
40. See final award, para. 3.
41. Id., para. 121.
42. Id., paras. 128-133.
43. Id., para. 133.
44. See final award, paras. 138-196.
45. See Wien & Malkin, LLP v. Helmsley Spear, Inc., 12 A.D.3d 65, 783 N.Y.S.2d 339 (App. Div. 1st Dept. 2004), rev'd on other grounds, 6 N.Y.3d 471, 480-486 (2006), cert. dismissed, 548 U.S. 940 (2006).
46. See, e.g., Nutrasweet Memo in Support of its Cross-Motion to Vacate, dated Oct. 31, 2016 at p. 23.
47. See 9 U.S.C. § 10(a)(4).
48. See Decision at 8, quoting Schwartz v. Merrill Lynch & Co., 665 F3d 444, 451 (2d Cir 2011).
49. See Decision at 8-9.
50. Id. at 9, quoting Wien & Malkin LLP v. Helmsley-Spear, Inc., 6 NY3d 471, 479-80 (2006).
51. Id., at 11.
52. Id., at 12.
53. See, Respondents' Reply Memorandum in Further Support of Motion to Vacate Arbitration Award, dated Nov. 16, 2016, at p. 9, n. 7,
54. GoSmile v. Levine, 81 A.D.3d 77, 78 (App. Div. 1st Dept. 2010).
55. Id. at 83-84 (Nardelli, J., dissenting).
56. See Decision at 14-16.
57. To pick one very recent example, the Brazilian Superior Court of Justice (STJ) denied enforcement to a foreign arbitral award on the ground that the arbitrators improperly applied a Brazilian statute when assessing damages, resulting in substantial prejudice to the respondent. Contested Foreign Award No. 9,412-US. Reporting Justice Felix Fischer (April 19, 2017). In England section 68 of the English Arbitration Act 1996, which may not be waived by parties, permits annulment of an award if there is a ‘serious irregularity affecting the tribunal, the proceedings or the award' causing ‘substantial injustice to the applicant'. In France, an arbitral award may be set aside where the award would result in a ‘flagrant, real and concrete' violation of French rules of international public policy. See Civ. 1, June 4, 2008, SNF v. Cytec Industries BV, No. 06-15.320. In Switzerland, an arbitral tribunal's application of law may violate public policy if it is manifestly incompatible with fundamental principles of law. See decision of the Swiss Federal Tribunal No. 4A_558/2011 (Matuzalem v. FIFA) dated 27 March 2012 (published in the Swiss Federal Tribunal's record of decisions under no. ATF 132 III 389). Although Singapore has expressly rejected the U.S. doctrine of manifest disregard, section 24 of its International Arbitration Act allows courts, in addition to the annulment grounds set out in the Model Law, to set aside an award if there is a breach of the rules of ‘natural justice' that prejudiced the rights of any party. Sui Southern Gas Co Ltd v. Habibullah Coastal Power Co (Pte) Ltd [2010] 3 SLR 1.