Disregarding Manifest Disregard—Yet Again
I’ve earlier written about the manifest disregard ground for seeking to overturn an arbitration award. There’s been a new development. So, let’s have a look.
A seemingly promising basis for attack
There was a time some parties disappointed by an arbitration result had a favorite loophole to challenge the outcome in court. They’d argue that the arbitrator—or the entire panel—had manifestly disregarded the law. For an aggrieved party, this approach had obvious appeal. In some cases this seemed like just the ticket to disputing the actual merits of the decision.
But there was a catch. The Federal Arbitration Act (FAA)—and most state arbitration laws—offer only a very narrow path to overturning an award. The statutory grounds include some serious misconduct: corruption, fraud, evident partiality, and the like. It also includes exceeding the arbitrator’s authority. Notably absent from the list? Manifest disregard of the law. See 9 U.S.C. § 10(a)(1)–(4).
Hall Street Throws Up a Roadblock
One might assume that manifest disregard was already buried after the Supreme Court’s ruling in Hall Street Assocs. L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008). There, the Court firmly declared that the FAA allows courts to vacate arbitration awards only under the specific grounds listed in §§ 9–11. In the wake of Hall Street, many courts dismissed manifest disregard as an independent basis for reversal. See, e.g., Medicine Shoppe Int’l, Inc. v. Turner Investments, Inc., 614 F.3d 485, 489 (8th Cir. 2010).
Some Courts Entertain It—But Good Luck Winning
Even in circuits where manifest disregard is still theoretically considered, the standard is nearly impossible to meet. Take the Fourth Circuit, for example. A party invoking manifest disregard must prove two key points: (1) The disputed legal principle was clearly defined and not subject to reasonable debate, and (2) the arbitrator refused to apply that legal principle.
The Fourth Circuit summed it up bluntly in Warfield v. ICON Advisors, Inc., 26 F.4th 666 (4th Cir. 2022): “[I]n this case, as in almost all manifest disregard cases, the sky-high standard of judicial review is the beginning and the end of our analysis.”
Translation: this argument rarely, if ever, works.
The Fifth Circuit: Not Happening, No Matter How You Frame It
Still, creative litigants persist—sometimes by engrafting manifest disregard onto the grounds for overturning an award under the FAA. Case in point: United States Trinity Energy Services, LLC v. Southeast Directional Drilling LLC, 2025 WL 1218096 (5th Cir. Apr. 28, 2025).
There, the appellant took a more subtle approach. It argued that “the arbitration panel exceeded its authority and acted in manifest disregard of the law" by failing to harmonize subcontract provisions as required under Texas law. This, they said, violated 9 U.S.C. § 10(a)(4).
The Fifth Circuit didn’t buy it. First, it reiterated that manifest disregard is not a recognized ground for vacating an arbitration award under the FAA. Then, it warned that allowing this argument under § 10(a)(4) would create tension with Hall Street and force courts into a more aggressive review than Congress intended.
Finally, it shut the door with this sharp observation: “Adopting [appellant’s] reading essentially would rewrite the question a judge must ask from ‘whether the arbitrators construed the contract at all’ to ‘whether they construed it correctly.’”
The Bottom Line
With this decision, the Fifth Circuit makes it clear that manifest disregard is not a viable ground for vacating an arbitration award. Dressing it up under § 10(a)(4) won’t help. No matter how you spin it, courts in the Fifth Circuit are not in the business of second-guessing arbitration panels.
If you are uncomfortable with that, you can write in an arbitral appeal to your arbitration clause. (See my book, Arbitrating Patent Disputes, pp. 137 - 139 for more about that.) But most folks don’t do that because they value the speed and finality of arbitration.