Author: Hans Smit**
Published: December 2005
Review on the Merits
Following my critical comments on the decision of the Appellate Division of the First Department in Wien & Malkin LLP v. Helmsley-Spear, Inc., the Appellate Division has granted leave to appeal. It is now up to the Court of Appeals to set matters right. As my Comment demonstrated, most significant issues are ready to be judicially settled. And the New York Court of Appeals has a unique opportunity to bring order to a very muddled area of arbitration law. Regrettably, the submissions made by the parties fail, in large measure, to seize upon that opportunity and to address these problems squarely and effectively. Instead, they focus primarily on the extent to which the arbitrators could, or did in fact, disregard the relevant New York law and the relevant agreements, both questions that, upon proper analysis, are irrelevant. I therefore take the opportunity to urge the Court to focus upon the issues that are of primary importance in settling this murky area of the law.
II. ONLY DISREGARD OF MANDATORY LAW IS A GROUND FOR ATTACK ON AN ARBITRAL AWARD
The Court of Appeals is offered a unique opportunity to make clear that manifest disregard of the law is an available ground for vacatur or non-recognition of an arbitral award only when the law disregarded is of a mandatory nature. It is in a case involving mandatory law, the Federal Securities Act, that the U.S. Supreme Court, in cursory dictum, first suggested that manifest disregard of the law might be an available means of attack on an arbitral award.
*Arbitral & Judicial Decisions
**Stanley H. Fuld Professor of Law and Director, Center for International Arbitration and Litigation Law, Columbia University.