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Supreme Court considers arbitration review case

[JURIST] The US Supreme Court [official website; JURIST news archive] heard oral arguments [transcript, PDF] Wednesday in Hall Street Associates v. Mattel [Duke Law case backgrounder; merit briefs], 06-989, where the Court considered whether parties can contractually agree to vacate an arbitration award under the Federal Arbitration Act (FAA) [USC Title 9 text]. Hall Street Associates leased property to toy manufacturer Mattel [corporate website] and filed suit after Mattel failed to clean up contaminates from its on-site factory. The parties initially agreed to arbitrate the dispute, subject to judicial review of findings of fact and conclusions of law. Section 10 of the FAA restricts judicial review of arbitration decisions to limited instances such as fraud. A district court reversed an arbitral award in Mattel's favor, but the US Court of Appeal for the Ninth Circuit rejected [opinion text, PDF] the district court's holding and reinstated the initial arbitral finding for Mattel.

The American Arbitration Association [group website] filed an amicus brief [PDF text] supporting the Ninth Circuit ruling and arguing that arbitral awards should be final. Chief Justice John Roberts said during arguments Wednesday that expanded judicial review may be valid as a term of a bargained-for contract, but several other justices voiced concern that such terms may be an illegal expansion of arbitration rights. AP has more.

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