Clifford Chance
In Arbitration, Less is Definitely More: Seventh Circuit Reinstates Arbitration Award Observing that Silence is Just Silence
10 October 2011
Finding that an arbitration panel's "failure" to address in its written decision one or more of the central issues in dispute is not a reason to vacate an award — or, as Chief Judge Easterbrook put it, "silence is just silence" — the Seventh Circuit in Affymax, Inc. v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., No. 11-2070 (7th Cir. Oct. 3, 2011), overturned a district court decision vacating in part an arbitration award based on what the District Court concluded was a manifest disregard of the law. The Seventh Circuit concluded that the district court erred in rejecting the arbitration award based on a finding that the arbitrator manifestly disregarded the law in concluding that the parties jointly owned one patent family and that one party solely owned another patent family without analyzing inventorship separately from ownership.
In holding that "manifest disregard of the law" is not a basis for vacating an arbitration award, the Seventh Circuit deepened an existing split among circuits that have attempted to apply the Supreme Court's ruling in Hall Street Assoc., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008). Courts have disagreed on whether Hall recognized or rejected "manifest disregard of the law" as a ground for vacating an arbitral award. It appears that final resolution of this question will only occur when the Supreme Court agrees to revisit the issue.
