LD 1218, Page 83 - 121th Legislature, FIRST REGULAR Session

review - because they do not entangle the courts in reviewing

the merits of challenged arbitration awards. Instead, appellate

arbitral review mechanisms merely add a second level to the

contractual arbitration procedure that permits parties

disappointed with the initial arbitral result to secure a degree

of protection from the occasional "wrong" arbitration decision.

See Stephen L. Hayford and Ralph Peeples, Commercial Arbitration

in Evolution: An Assessment and Call for Dialogue, 10 Ohio St.

J. on Disp. Res. 405-06 (1995). This approach would not present

the FAA preemption, "creating jurisdiction," and line-drawing

problems identified with the expanded judicial review through an

opt-in provision. It is also consistent with the Supreme Court's

contractual view of commercial arbitration in that it preserves

the parties' agreement to resolve the merits of the controversy

between them through arbitration, without resort to the courts.

When parties agree that the decision of an arbitrator will be

"final and binding," it is implicit that it is the arbitrator's

interpretation of the contract and the law that they seek, and

not the legal opinion of a court. In addition, an internal,

arbitral appeal mechanism is more likely to keep arbitration

decisions out of the courts and maintain the overall goals of

speed, lower cost, and greater efficiency.

An internal appellate review within the arbitration system is
already established by some arbitration organizations. See,
e.g., CPR Arbitration Appeal Procedure; Jams Comprehensive
Arbitration Rules and Procedures, R. 23, Optional Appeal
Procedure. In addition, there are numerous examples of parties
creating such internal appeals mechanisms. The Drafting
Committee concluded that because the authority to contract for
such a review mechanism is inherent and such provisions can
differ significantly depending upon the needs of the parties,
there was no need to include a specific provision within the
statute.

C. Comment on the Possible Codification of the "Manifest
Disregard of the Law" and the "Public Policy" Grounds For
Vacatur

1. The Drafting Committee also considered the advisability
of adding two new subsections to Section 23(a) sanctioning
vacatur of awards that result from a "manifest disregard of
the law" or for an award that violates "public policy."
Neither of these two standards is presently codified in the
FAA or in any of the state arbitration acts. However, all of
the federal circuit courts of appeals have embraced one or
both of these standards in commercial arbitration cases. See
Stephen L. Hayford, Law in Disarray: Judicial Standards for
Vacatur of Commercial
Arbitration Awards, 30 Ga. L. Rev. 734 (1996).

2. "Manifest disregard of the law" is the seminal
nonstatutory ground for vacatur of commercial arbitration
awards. The relevant case law from the federal circuit courts
of appeals

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