Marc J. Goldstein Arbitrator & Mediator NYC
November 23, 2009

Sanctions Assessed for Meritless “Manifest Disregard” Appeal

A recent decision of the U.S. Tenth Circuit Court of Appeals assesses sanctions in the form of an award of attorneys’ fees against counsel for a party appealing the confirmation of an arbitration award on grounds of “manifest disgregard of the law.”

While allowing that “manifest disregard” has some continuing vitality after Hall Street Assocs. v Mattel, Inc., the Court here found the arguments foir vacatur completely meritless.

The arbitration community should be encouraged at the Court’s explicit linkage of the attorney’s fee sanction issue to the very limited prospects for vacatur based on manifest disregard, and to the essential conflict between protracted post-award litigation and arbitration’s promise of efficient dispute resolution. Said the Court: “[U]njustified, protracted attempts to vacate arbitration awards destroy the ‘promise of arbitration’ and will not be tolerated….Thus, one who ‘assumes a never-say-die attitude and drags the dispute through the court system without an objectively reasonable belief that it will prevail’ does so at the risk of being sanctioned.” (DMA Int’l Inc. v. QWest Communs. Int’l, Inc., 2009 U.S. App. LEXIS 24165 at *9 (10th Cir. Nov. 5, 2009) (internal quotation marks and citations omitted).

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