The decision in Al-Haddad Commodities Corp. v. Toepfer Int’l Asia Pte., Ltd., 2007 U.S. Dist. LEXIS 29405 (E.D. Va. April 19, 2007), confirmed the international arbitration award before it, but it is most interesting for its statement of the standards for review of an award under the Federal Arbitration Act. The threshold point for the Court was the relationship between the FAA and the New York Convention: ‛The provisions of 9 U.S.C. §§ 1-16 of the FAA apply to proceedings brought under the Convention so long as the statute does not conflict with the Convention or the implementing legislation at 9 U.S.C. §§ 201 et seq.“ The standards for review of this award were implicitly found to fall in this category. These standards are not limited to international arbitrations but apply across the board under the FAA.

The standards for review of awards under the FAA, as articulated by District Judge Robert G. Doumar:

[1] ‛The ‘process and extent of federal judicial review of an arbitration award are substantially circumscribed.’ Patten v. Signator Ins. Agency, Inc., 441 F.3d 230, 234 (4th Cir. 2006). Section 10 of the FAA lists the grounds that may form the basis for vacatur of an arbitration award. These include proof that an award was procured by fraud, corruption, or undue means, or resulted from an arbitrator's evident partiality or corruption, or ‘[w]here the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent to and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.’ Id. § 10(a)(1)-(3). In addition to the statutory grounds set forth in § 10, common law permits courts to vacate the award of an arbitrator that evidences a ‘manifest disregard’ of the law. Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 259, 107 S.Ct. 2332, 2355, 96 L. Ed. 2d 185 (1987); Patten, 441 F.3d at 235; accord Duferco Int'l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383, 388 (2d Cir. 2003).“

[2] ‛A court ‘may vacate an arbitration award when a request for postponement is arbitrarily denied or when the denial leads to the inability of the party to present ‛pertinent and material evidence.“’ Investor Relations Servs., Inc. v. Michele Audio Corp. of Am., No. 1:04CV0565, 2006 WL 2571028, at *3 (July 19, 2006) (quoting Naing Int'l Enters., Ltd. v. Ellsworth Assocs., Inc., 961 F. Supp. 1, 2-3 (D.D.C. 1997) and citing Fairchild & Co. v. Richmond, Fredericksburg & Potomac R.R., 516 F. Supp. 1305, 1313 (D.D.C. 1981)). An arbitral panel should be granted a degree of discretion, however, as long as it had a ‘reasonable basis’ for refusing to postpone. Investor Relations Servs., 2006 WL 2571028, at *3 (quoting Naing, 961 F. Supp. at 3 and Fairchild, 516 F. Supp. at 1313-14)).“ Held, no grounds for vacatur on the facts — no arbitrariness.

[3] ‛A federal court may vacate an arbitrator's award only if the arbitrator's refusal to hear pertinent and material evidence deprives a person of a ‘fundamentally fair hearing.’ UMWA v. Marrowbone Dev. Co., 232 F.3d 383, 385, 388 (4th Cir. 2000); see also Hoteles Condado Beach, La Concha & Convention Ctr. v. Union De Tronquistas Local 901, 763 F.2d 34, 40 (1st Cir. 1985) (‘A federal court may vacate an arbitrator's award only if the arbitrator's refusal to hear pertinent and material evidence prejudices the rights of the parties to the arbitration proceedings.’) (citing 9 U.S.C. § 10(c)).“ Held, no grounds for vacatur where the objected to behavior resulted in the inclusion, rather than the exclusion, of evidence, ‛and, as such, is plainly not a ‘refus[al] to hear evidence’ under § 10(a)(3).“ In addition, ‛[t]he Court refuses to question the Panel's imposition of time limitations on the parties, which were applied equitably to both sides....“

[4] ‛A party seeking to vacate an arbitration award based upon a ‘manifest disregard’ of the law ‘shoulders a heavy burden.’ Remmey v. PaineWebber, Inc., 32 F.3d 143, 149 (4th Cir. 1994). An arbitrator's legal determination ‘‛may only be overturned where it is in manifest disregard of the law,“ and an arbitrator's interpretation of a contract must be upheld so long as it ‘draws its essence from the agreement.“’ Patten, 441 F.3d at 235 (quoting Upshur Coals Corp. v. United Mine Workers, Dist. 31, 933 F.2d 225, 229 (4th Cir. 1991)). In this Circuit, a manifest disregard of the law is established ‘only where the ‛arbitrator[] understand[s] and correctly state[s] the law, but proceed[s] to disregard the same.“’ Patten, 441 F.3d at 235 (citing Upshur, 933 F.2d at 229). Moreover, an arbitration award does not fail to draw its essence from the contract ‘merely because a court concludes that an arbitrator has ‛misread the contract.“’ Id. (internal quotation marks omitted). An arbitration award fails to draw its essence from the contract ‘only when the result is not ‛rationally inferable from the contract.“’ Id. (quoting Apex Plumbing Supply, Inc. v. U.S. Supply Co., 142 F.3d 188, 193 n.5 (4th Cir. 1998)).“

In confirming the award despite its brevity, the District Court quoted the Second Circuit’s advice to arbitrators in Halligan v. Piper Jaffray, Inc., 148 F.3d 197 (2d Cir. 1998): ‛We merely observe that where a reviewing court is inclined to find that arbitrators manifestly disregarded the law or the evidence and that an explanation, if given, would have strained credulity, the absence of explanation may reinforce the reviewing court's confidence that the arbitrators engaged in manifest disregard.“