Originally published on August 28, 2002
By Richard A. Johnston and Dimitri P. Racklin with contributions from summer associate Reena Vaidya
Even if an arbitrator exhibits a manifest disregard for the law in rendering an award, that award may survive a court appeal. A recent case in Georgia, Progressive Data Systems, Inc. v. Jefferson Randolph Corp., demonstrates that judicial deference to an arbitration award may allow an arbitration award to stand, even where the arbitrator clearly ignores relevant law.
Progressive Data Systems, Inc. involved a buyer of computer equipment and software which sued the seller for fraud. The seller counterclaimed for unpaid fees. The arbitrator awarded the seller $81,540, plus attorney fees and administrative fees and expenses. On appeal, the Georgia Court of Appeals reversed the award, finding that the arbitrator manifestly disregarded the law by awarding damages for future license fees which he knew to be an unenforceable penalty. The Georgia
