and (5) that the rights granted to the parties by Congress would not be vindicated. See, e.g., Gilmer, 500 U.S. at 26-34, 111 S. Ct. at 1652-57; Mitsubishi, 473 U.S. at 624-26, 105 S. Ct. at 3353-54.
The Court has repeatedly dismissed these arguments as resting "on suspicion of arbitration as a method of weakening the protections afforded in the substantive law" that has "fallen far out of step with our current strong endorsement of the federal statutes favoring this method of resolving disputes." Rodriguez, 490 U.S. at 481, 109 S. Ct. at 1920. Inasmuch as arbitral bias is concerned, the court has noted that enforcement of the arbitral award can be refused by a district judge if bias is demonstrated, 9 U.S.C. § 10(b), and that a competent arbitration association should be willing and able "to retain competent, conscientious and impartial arbitrators." Mitsubishi, 473 U.S. at 627, 105 S. Ct. at 3354. Concerns regarding the possibility of a contract of adhesion were similarly rejected because not all agreements to arbitrate statutory claims are contracts of adhesion and because courts can refuse to enforce those arbitration agreements that "resulted from the sort of . . . overwhelming economic power that would provide grounds for the revocation of any contract." id.; 9 U.S.C. § 2. Unfairness due to limited discovery has also been dismissed by the Court because, "though the procedures might not be as extensive as in the federal courts, by agreeing to arbitrate, a party trades the procedures and opportunity for review of the courtroom for the simplicity, informality and expedition of arbitration." Gilmer, 500 U.S. at 31-32, 111 S. Ct. at 1655 (citation omitted).
Most importantly, in response to the arguments by plaintiffs that compelling arbitration of statutory claims thwarts the broad remedial purposes of those claims and denies to the claimants a right given to them by Congress, the Court has stated on numerous occasions that "by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum." Mitsubishi, 473 U.S. at 628, 105 S. Ct. at 3354; accord McMahon, 482 U.S. at 229-30, 107 S. Ct. at 2339; Gilmer, 500 U.S. at 26, 111 S. Ct. at 1652. Moreover, according to the Court, "so long as the prospective litigant may vindicate his or her statutory cause of action in the arbitral forum, the statute will continue to serve its remedial as well as deterrent function," Mitsubishi, 473 U.S. at 637, 105 S. Ct. at 3359; accord Gilmer, 500 U.S. at 28, 111 S. Ct. at 1653. Finally, the Court has indicated that though "there is no reason to assume at the outset that arbitrators will not follow the law," judicial review of an arbitral award "is sufficient to ensure that arbitrators comply with the requirements of the statute." McMahon, 482 U.S. at 232, 107 S. Ct. at 2340. Having reviewed the law regarding the arbitrability of statutory claims, the court turns now to the review conducted by judges after arbitral decisions have been rendered.
II. Judicial Review of Arbitral Awards
A. Review Under Present Law
Judicial review of arbitral awards is extremely limited. Sections 10 and 11 of the FAA itself provide certain narrow grounds for vacating an arbitral award. Under § 10, an award may be vacated if: (1) it was procured by corruption or fraud, (2) there was bias on the part of the arbitrators, (3) the arbitrators were guilty of misconduct for failing to postpone the hearing on good cause shown or for refusing to hear evidence pertinent to the claim, or (4) the arbitrators exceeded their powers. 9 U.S.C. § 10. Under § 11, a court may modify or correct an award where: (1) there was an evident material miscalculation of figures, (2) the arbitrators have awarded on a matter which was not submitted to them, or (3) the award is imperfect in a manner or form not affecting the merits of the controversy. 9 U.S.C. § 11. See also Carte Blanche (Singapore) v, Carte Blanche (Int.), 888 F.2d 260, 264-65 (2d Cir. 1989) (discussing §§ 10-11 of the FAA).
There is also a judicially-created doctrine, introduced by the Supreme Court in the case of Wilko v. Swan, 346 U.S. 427, 436-37, 74 S. Ct. 182, 187-88, 98 L. Ed.168 (1953), overruled on other grounds, Rodriguez de Quijas v. Shearson/American Express, 490 U.S. 477, 109 S. Ct. 1917, 104 L. Ed. 2d 526 (1989), which permits a court to vacate an arbitral award. According to the Court, an arbitral award does not need to be enforced if it can be shown that the arbitrators "manifestly disregarded the law" in reaching their decision. Id.; First Options of Chicago v. Kaplan, 514 U.S. 938, 1995 U.S. LEXIS 3463, *9, 115 S. Ct. 1920, 1923, 131 L. Ed. 2d 985 (1995).
The Court has been somewhat ambiguous in defining the contours of the manifest disregard doctrine, and the several Courts of Appeal have adopted various formulations.
The Second Circuit's most complete formulation appears in the case of Merrill Lynch, Pierce, Fenner & Smith v. Bobker, 808 F.2d 930, 933 (1986). In Bobker, the plaintiff was an investor who had instituted an arbitration proceeding against a brokerage firm, alleging that the firm had failed to execute a "short sale" of securities as he had requested, and that this failure resulted in his losing $ 23,000. Defendant argued that it had no obligation to execute this sale and that if it had done so, it would have been in violation of § 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-4 promulgated thereunder. After plaintiff was awarded $ 12,500 by an arbitral panel, defendant appealed, arguing that the arbitrators had manifestly disregarded the law by misconstruing the statute. In affirming the award, the Second Circuit stated the following:
Although the bounds of [the manifest disregard of the law doctrine] have never been defined, it clearly means more than error or misunderstanding with respect to the law. The error must have been obvious and capable of being readily and instantly perceived by the average person qualified to serve as an arbitrator. Moreover, the term "disregard" implies that the arbitrator appreciates the existence of a clearly governing legal principle but decides to ignore or pay no attention to it. To adopt a less strict standard of judicial review would be to undermine our well established deference to arbitration as a favored method of settling disputes when agreed to by the parties. Judicial inquiry under the "manifest disregard" standard is therefore extremely limited. The governing law alleged to have been ignored by the arbitrators must be well defined, explicit, and clearly applicable. We are not at liberty to set aside an arbitration panel's award because of an arguable difference regarding the meaning or applicability of laws urged upon it.