US: Federal Arbitration Act
The Federal Arbitration Act (FAA) was enacted in 1925 to abolish by legislation the ouster doctrine - the common law rule requiring courts to refuse to enforce arbitration agreements. Congress mandated the enforcement of arbitration agreements in §2 of the FAA: “A written provision in any […] contract […] to settle by arbitration a controversy thereafter arising out of such contract […] shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”
UK: The Arbitration Act 1996
The Arbitration Act 1996 (the 1996 Act) was prepared by an expert committee (the Departmental Advisory Committee) following extensive consultation with those involved in arbitrations. The 1996 Act was influenced by, but does not adopt, the UNCITRAL Model Law on International Commercial Arbitration (‘the Model Law’). The 1996 Act does not completely codify the law, but the principal provisions of English arbitration law are to be found in the Act.
The UK courts retain some powers that are unusual by international standards, one of which is the power of a party to appeal to the Court against an arbitral award on a point of English law (albeit this right of appeal may be, and frequently is, excluded by agreement). This controversial power, retained in the UK’s Arbitration Act notwithstanding its absence from most other national legal systems, has often been criticised. Perhaps for this reason, the trend of the English courts in recent years has been increasingly to restrict its application.
Appeals and Challenges to Arbitration Awards
US: The FAA subjects most US arbitration awards to a single standard for judicial review, notwithstanding the size of the dispute or whether it domestic or international, and (as a consequence of the pre-emption of the FAA) notwithstanding state attempts to create more flexible approaches to judicial review of arbitration.
There is no express right under the FAA to appeal an arbitral award on a point of law. Section 10 of the FAA lists only four specific grounds for vacating an arbitration award, permitting a federal district court to vacate an award if: (1) it “was procured by corruption, fraud, or undue means”; (2) “there was evident partiality or corruption in the arbitrators”; (3) the arbitrators engaged in misbehavior by refusing to consider material evidence, refusing without cause to postpone a hearing, or other acts that prejudiced one of the litigants; or (4) the arbitrators “exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. §10.
US courts had found in the past that awards could be set aside where there has been a ‘manifest disregard of the law’ (following dictum in Wilko v. Swan 346 US 427 (1953). Before the Supreme Court decision in Hall Street Associates, LLC v. Mattel, Inc., 128 S.Ct. 1396, 522 US 576 (2008), the federal courts were divided on the issue of whether the FAA permitted arbitration agreements to provide for parties to contract back into the public justice system by agreeing to certain forms of judicial review.
After Hall Street, however, parties cannot agree for judicial review of arbitration awards. In Hall Street Associates, LLC v. Mattel, Inc the Supreme Court held that the enumerated grounds for vacatur in section 10 of the FAA are “exclusive”.
However, following Hall Street, US appellate courts have been divided as to whether there remains a common law route of review based upon manifest disregard of the law. The Fifth, Seventh, Eighth and Eleventh Circuits have held that Hall Street excluded manifest disregard as a ground for challenging arbitral awards. The Second, Fourth, Sixth and Ninth Circuits have all ruled that manifest disregard survived Hall Street and such courts allow manifest disregard challenges to awards. Other circuits have remained non-committal until further guidance from the Supreme Court.
Recently, in Walia v Dewan No 13-722, 2014 WL 1343626 (US April 7 2014) the Supreme Court evaded the question, by declining to hear an appeal that expressly asked whether manifest disregard of the law remains a basis for vacating arbitral awards subject to the FAA. The Supreme Court has thus decided not to endorse any of the competing views between the federal appellate courts.
UK: Under English law, the right to appeal on a point of law is enshrined in statute. Nevertheless, the provision is not universally favoured: some say that it undermines the essential public policy of the finality and confidentiality of arbitral awards. Consequently, some arbitration agreements expressly contract out of section 69, and the LCIA rules provide that parties are taken automatically to have contracted out of section 69. The ICC Rules are to similar effect, but this was not in response to section 69.
The circumstances in which section 69 can be successfully invoked are seen by the courts as being very limited. In Geden Operations Ltd v Dry Bulk Handy Holdings Inc, M/V “Bulk Uruguay”  EWHC 885 (Comm), Popplewell J dismissed an application under section 69 on the basis that the appeal raised an issue of fact, not law, saying that “Resort to basic principles reveals this to be an attempt to appeal a finding of fact by dressing it up as an issue of law.”
Section 69 also contains a number of safeguards, including section 69(3)(c)(i), which provides that leave to appeal an award will only be granted if the error of law made by the arbitrator is “obviously wrong.” The English courts apply a stringent test for this criterion. In AMEC Group Ltd v Secretary of State for Defence  EWHC 110 (TCC), Coulson J, reviewed the earlier case law, and upheld what was called the ’major intellectual aberration’ test, requiring that the requisite error of law must be obviously wrong, “in the sense that the error in question must be transparent and/or clear”.
As can be seen, the approach of the English courts to applications for permission to appeal against ‘obvious’ errors of law is not unlike the test, in so far as it exists, for challenging a US arbitral award on the ground of ‘manifest disregard of the law’.