Second Circuit And New York Appellate Division Decisions Affirm Pro-Arbitration Policies

Key Points

• In Deasang Corp. v. NutraSweet Co., the Appellate Division overturned a ruling by a lower court vacating an arbitral award on the ground that the arbitral panel manifestly disregarded the law. The Appellate Division reaffirmed that “manifest disregard” is a “severely limited doctrine” that “gives extreme deference to arbitrators.”
• In General Re Life Corp. v. Lincoln National Life Insurance, the 2nd Circuit adopted an exception to the functus officio doctrine that allows an arbitral panel to clarify its own ambiguous award.
• Both decisions reaffirm the strong state and federal policies in favor of arbitration and once again make clear that arbitral awards will be given substantial deference by New York courts.