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A court cannot vacate an arbitration award for manifest disregard of the law based on an inference solely drawn from a discrepancy in the amount of the award when there is no evidence in the record that the arbitrator both knew the proper law and intentionally chose to disregard it, according to the Georgia Supreme Court.
In ABCO Builders, Inc. v. Progressive Plumbing, Inc., No. S07G0257, 2007 WL 2013602 (Ga. July 13, 2007), Progressive and ABCO participated in an arbitration hearing, resulting in an award for construction damages being entered. Progressive objected to the amount of the award, alleging that the arbitrator had calculated the amount using a formula different from the formula prescribed by law. The district court vacated the award for "manifest disregard" of the applicable law. The decision was appealed to the court of appeals, which overturned the vacatur, holding there was insufficient evidence of manifest disregard of the law.
The Court affirmed the decision of the intermediate court, finding no evidence in the record that the arbitrator had exhibited manifest disregard of the law in computing the award. The Court observed that granting vacatur for manifest disregard requires a showing that the disregard was "both evident and intentional." This, according to the Court, required a showing that the correct law was communicated to the arbitrator, and that the arbitrator intentionally chose to ignore it, despite knowing it was correct.
The Court found that the record failed to support a claim of manifest disregard of the law. Since there were no findings that demonstrated such disregard, and since there was no transcript of the hearing, the Court held there was no basis on which to make a determination as to the conclusions drawn or the reasoning employed by the arbitrator. Without such evidence in the record, the Court refused to vacate the award based on an apparent deviation in the method of award calculation from the proper legal formula, since it was equally possible that the difference in the award calculation was not intentional, but merely a product of mistake or misinterpretation.
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