Appellate Court Upholds Arbitration Award In Face Of Manifest Disregard Of Law And Public Policy Arguments

An arbitration panel entered an award in a legal malpractice matter in favor of the claimant and the attorneys and law firm moved to vacate the award. The district court denied the motion to vacate, and the Ninth Circuit affirmed. The court of appeals rejected two proffered bases for vacation: (1) that the panel's finding that the claim was not barred by a one year statute of limitation amounted to manifest disregard of law; and (2) that the alleged perjury of a witness in an underlying action justified vacature on the basis that the award violated public policy.

The Court held that even if the panel had made an error of law in its finding that the claim was not barred by the statute of limitation, the record did not reflect a factual basis for a finding that it had manifestly disregarded the law by "intentionally" disregarding the law, and that the movants had failed to carry their burden to prove manifest disregard. Without a reasoned award or a hearing transcript specifically providing a record on this issue proving manifest disregard may be a challenge.

With respect to the public policy ground for vacation, the Court found that the panel expressly considered the claim of perjury and questioned the witness concerning the allegedly perjured testimony. The Court declined to vacate the...

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