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A court cannot vacate an arbitration award for manifest disregard of the law when the arbitrators did not give reasoning behind their award because, without reasoning, it is impossible to tell whether the arbitrators knew the applicable law and chose to ignore it, a Georgia state court held.
In Progressive Plumbing, Inc. v. Abco Builders, Inc., No. A06A1328, 2006 WL 2742305 (Ga. App. Sept. 27, 2006), Abco subcontracted with Progressive to perform some plumbing work on a construction project. The parties submitted a dispute to arbitration, and the arbitrator entered an award of damages in Progressive’s favor.
When Progressive petitioned the court to confirm the award, Abco counterclaimed to vacate the award, arguing that the arbitrator acted in manifest disregard of the law. The superior court agreed with Abco and vacated the award.
However, the appellate court reversed. To prove manifest disregard of the law, the Court looked at “whether the governing law alleged to have been ignored by the arbitrator was well defined, explicit, and clearly applicable,” and whether “the arbitrator . . . appreciate[d] the existence of a clearly governing legal principle but decide[d] to ignore or pay no attention to it.”
In this case, the arbitrators did not issue a written reasoning for their award, and the arbitration hearing was not transcribed. Therefore, it was impossible for the Court to tell what law the arbitrators applied – must less whether they ignored the applicable law.
Therefore, noting the limited scope of its review of arbitration awards, the Court affirmed the arbitrators’ award and held that the lower court lacked authority to vacate the arbitrator’s award.
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