The Important and Timely Demise of Extra-Statutory Standards of Review in the United States Quinn Smith1 As Peru embarks on the application and interpretation of its new arbitration law, it is worth looking at courts have interacted with their own arbitration laws over an extended period of time. While the new Peruvian law is modern and widely acclaimed, over the course of the coming years new and different cases will test its contours and edges. As Peruvian judges, lawyers, and scholars contemplate the proper response to these challenges, it can be helpful to look at the history of a country like the United States and its arbitration law. While there are obvious differences in the systems, conceptual approaches to arbitration can be similar or can show better methods of tackling common problems. The jurisprudence of United States courts regarding extra-statutory grounds of review provides a rich field for study and reflection. For years, courts in the United States have struggled with extra-statutory standards of review of arbitral awards, creating a variety of definitions, names, and standards differing among the circuit courts of appeal2 and even within a state’s federal and state courts3. With the Supreme Court’s decision in Hall Street Associates LLC v. Mattel, Inc.4, extra-statutory standards of review came under harsher criticism. The Court decided to limit the parties’ ability to expand the statutory standards of review in the Federal Arbitration Act5 (the “FAA”), and courts have responded by reviewing their decisions on extra-statutory standards of review. The current result is a diversity of decisions in the appellate courts, some clinging to extra-statutory grounds of review and others wholly discarding them. The Supreme Court has yet to clarify this confusion, but it should embrace the demise of extra-statutory standards of review. Extra-statutory standards of Quinn Smith is a shareholder at Smith International Legal Consultants in Miami. His practice focuses on international dispute resolution and advising on cross-border transactions. He can be reached at quinn.smith@smintlaw.com. There 13 circuits in the U.S. Each circuit is a geographical area including different states and territories. Under the U.S. legal system, these courts are the final word on all federal matters within their circuit unless a Supreme Court decision states otherwise. 3 In the United States, each state has state courts with general jurisdiction. There are also federal courts with jurisdiction over issues arising under federal law and disputes between citizens of different states or a state and a foreign country. Jurisdiction in the state and federal courts can be exclusive on some matters and concurrent on others. As a result, state and federal courts can arrive at different conclusions on similar matters. 4 See Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 128 S.Ct. 1396 (2008). 5 The FAA is the federal statute governing arbitration. The Supreme Court has interpreted the FAA as superior to every state statute on arbitration where the state statute does not encourage arbitration. Due to Supreme Court precedent, the FAA is most important arbitration statute in the U.S. The FAA has three chapters. The first chapter is the default chapter and applies to all arbitrations unless the FAA states otherwise. The second chapter incorporates the New York Convention, and the third chapter incorporates the Panama Convention. 1
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