Affirming a federal district court's confirmation of an arbitration award in an antique auction dispute, the Seventh Circuit Court of Appeals held that an arbitrator did not manifestly disregard the law by deciding not to issue a formal ruling over a discovery dispute.

In Halim v. Great Gatsby's Auction Gallery, Inc., No. 07-1615, 2008 WL 383284 (7th Cir. Feb. 14, 2008), Halim bought various antiques from Gatsby, an antique collector. Halim participated in the auction via telephone and did not see or inspect any items before bidding on them.

Later, Halim sued Gatsby in state court for breach of warranty, misrepresentation, novation, and recission. The case was ultimately removed to federal court, and the court compelled arbitration of the claims.

During a contentious arbitration, Halim requested copies of Gatsby's invoices from other purchases made at Gatsby's auction to prove Gatsby's auction was not "without reserve," as he claimed Gatsby had advertised it. The arbitrator declined to rule formally on the discovery request and instead admonished the parties for failing to cooperate with each other's discovery requests. At the final hearing, the arbitrator orally rejected Halim's claims finding they lacked merit, but did not issue an opinion containing findings of fact and conclusions of law.

Halim moved to vacate the award arguing the arbitrator "manifestly disregarded the law" by failing to rule formally on the discovery request and not issuing an opinion containing findings of fact and conclusions of law. Gatsby moved to confirm the award and sent Halim a letter notifying him that Gatsby would move for Rule 11 sanctions if Halim did not withdraw his frivolous motion to vacate. The district court confirmed the award and sanctioned Halim for bringing forth a frivolous motion. Halim appealed.

The Seventh Circuit held that the district court properly confirmed the award. The Court found that the arbitrator did not manifestly disregard the law by not ruling formally on a discovery request. Instead, the Court found the arbitrator's admonition to cooperate with discovery "as an attempt by the arbitrator to give the parties what they had contracted for: a cost-effective and efficient resolution of their dispute."

Additionally, the Court rejected Halim's claim that the arbitrator disregarded the law by failing to issue an award containing findings of fact and conclusions of law. The Court concluded that the arbitrator did explain his reasons for rejecting Halim's claims, but that "they were not the findings of fact or conclusions of law he desired." Finally, the Court declined to review the Rule 11 sanctions due to unrelated procedural technicalities.