May 26, 2021 Practice Points

Will Georgia’s “Manifest Disregard” Standard Be Narrowed Further?

Although several decisions have narrowed the meaning of “manifest disregard” and how it should be applied, there is still concern that the standard is being applied too broadly.

By Scott Zucker

Under O.C.G.A §9-9-13 of the Georgia Arbitration Act (Section 9-13), an award may be vacated under five specific grounds:

  1. corruption, fraud, or misconduct in procuring the award;
  2. partiality of an arbitrator appointed as a neutral;
  3. an overstepping by the arbitrators of their authority or such imperfect execution of it that a final and definite award upon the subject matter submitted was not made;
  4. a failure to follow the procedure of this part, unless the party applying to vacate the award continued with the arbitration with notice of this failure and without objection; or
  5. the arbitrator's manifest disregard of the law.

Although the “manifest disregard” standard is an independent ground for overturning an arbitration award, the Georgia courts have interpreted it narrowly requiring “clear evidence that the arbitrator intended to purposefully disregard the law.” America’s Home Place, Inc. v. Cassidy, 301 Ga. App. 233, 687 S.E. 2d 254 (Ga. App. 2009); see also, Airtab, Inc. v. Limbach Co., LLC, 295 Ga. App. 720, 673 S.E. 2d 69 (Ga. App. 2009).

Recently, in Adventure Motorsports Reinsurance, Ltd. v. Interstate National Dealer Services, Inc. 356 Ga. App. 236, 846 S.E. 2d 115 (Ga. App. 2020), the Georgia Court of Appeals applied this standard in holding that the lower court erred in confirming an arbitration award. In its decision, the court explained that “by explicitly rejecting the contractual language (of the parties’ agreement), the arbitrator manifestly disregarded the law.” Id at 240. In this particular case, the court found that the arbitrator explicitly rejected a pricing provision (identified as the “Rate Card”) in the parties’ agreement. The court stated in part that “[t]he arbitrator’s explicit rejection of the Rate Card as the contracted-for pricing ignores the express contractual language requiring the [appellee] to “utilize the pricing structures” provided by [appellant]…” Id

The case is currently being appealed. At issue is whether the court of appeals erred in its decision to utilize “manifest disregard of the law” as an appropriate basis for reversing the trial court’s confirmation of the award. Although several decisions have narrowed the meaning of “manifest disregard” and how it should be applied, there is still concern that the standard is being applied too broadly. Should the Georgia Supreme Court restrict the “manifest disregard” even further, putting it in line with the grounds for vacatur seen in the Federal Arbitration Act? Time will tell. 

Scott Zucker is a shareholder at Weissmann Zucker Euster Morochnik & Garber P.C. in Atlanta, Georgia.


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