Fear of Freedom* – Vol. 17 No. 4

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Author: Alan Scott Rau**

Published: December 2008

Dispute Resolution and Litigation

Description: “Very bad pictures may be divided into two principal classes—those which are weakly and passively bad, and which are to be pitied and passed by and those which are energetically or actively bad, and which demand severe reprobation, as willful transgressions of the laws of all good art.”


So the illicit character of contractual provisions purporting to “expand judicial review” of arbitral awards is firmly established. As every reader of this journal certainly knows by now, the Supreme Court, in a highly anticipated decision, has held that the FAA’s “statutory grounds for prompt vacatur and modification” may not be “supplemented by contract.”

The tale of this protracted (and alas not atypical) litigation is almost comical in the telling. But it is important, I think, to trace the history—if only to allow us to appreciate the sort of thing to which the plaintiff found itself exposed. Litigation over a lease had led to a federal court judgment to the effect that since the tenant had given a valid notice of termination, its obligation to pay rent had ceased. However, there remained a further question—whether the tenant was obligated to indemnify the lessor for the removal and disposal of hazardous waste on the premises. (The lease relieved the tenant of any such liability where the presence of the waste had not been “caused directly or indirectly by the acts of the tenant,” provided that the tenant had “been in compliance with applicable environmental laws.”)4 Mediation failed to resolve this dispute, but at the…

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*Special Section: Hall Street Associates, L.L.C. v. Mattel, Inc.
**Burg Family Professor of Law, University of Texas at Austin School of Law. I’m most grateful for the helpful comments and suggestions of Dominique Hascher, Rusty Park and Jan Paulsson, who were kind enough to read an earlier draft of this piece.