Alleged Errors in Applying Law Insufficient Basis for Challenging Arbitral Decision

On August 22, 2019, Justice Cohen of the New York County Commercial Division issued a decision in TCR Sports Broadcasting Holding, LLP v. WN Partner LLC, 2019 NY Slip Op. 52186(U), refusing to vacate an arbitral decision based on alleged errors in applying the law, explaining:

Finally, the Orioles' argument that the RSDC exceeded its powers by failing to correctly apply Maryland law in assessing the parties' respective positions under the contract is meritless. The inquiry under section 10(a)(iv) of the FAA is whether the arbitrators had the authority under the parties' agreement to consider an issue, not whether they correctly decided the issue. As Judge Marks observed, FAA § 10(a)(4) imposes a heavy burden. It is not enough to show that the arbitrator committed an error—or even a serious error. So the sole question for us is whether the arbitrator (even arguably) interpreted the parties' contract, not whether he got its meaning right or wrong. In this case, the RSDC obviously had the authority to consider the interpretation of relevant language in the agreement and the application of the facts to that language.

Although couched as a challenge to exceeding arbitral powers, the Orioles' argument in fact attempts to show that the RSDC acted with manifest disregard for the law. As noted above, the manifest disregard standard does not permit review of the panel's interpretation of the parties' agreement even if that interpretation was erroneous. The Orioles' arguments with respect to the RSDC's misapplication of Maryland law do not come close to the required showing that the RSDC exceeded its powers or showed manifest disregard for the law.

(Internal quotations and citations omitted) (emphasis added).

Commercial litigation involves more than courts. Disputes often are--by agreement--decided by private arbitrators. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a dispute that is subject to an arbitration agreement.