Goldman Sachs began serving as the sole clearing broker for the
hedge fund Bayou Fund in 1999 and later served in that capacity for
three additional related funds. The funds, says the
Second Circuit, was "a massive Ponzi scheme". In
2008 the bankruptcy court authorized claims to proceed against
An agreement between Bayou Funds and Goldman required disputes
to be arbitrated before the Financial Industry Regulatory Authority
(FINRA). On appeal to the District Court from the arbitral
award, and in the Second Circuit, Goldman argued that the
arbitration panel rendered its award in manifest disregard of the
law. The cases are split on whether manifest disregard
remains a viable ground to seek to overturn an arbitral
award. Says the Second Circuit here:
Although the Supreme Court's decision in Hall Street
Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576, 585 (2008),
created some uncertainty regarding the continued viability of the
manifest disregard doctrine, we have concluded that "manifest
disregard remains a valid ground for vacating arbitration
Having said that, the Court of Appeals went on to say:
Our review under the manifest disregard standard, however,
"is 'highly deferential' to the arbitrators, and
relief on such a claim is therefore 'rare.'"
[citations omitted] We cannot "vacate an arbitral award merely
because [we are] convinced that the arbitration panel made the
wrong call on the law." Wallace v. Buttar, 378 F.3d 182, 190
(2d Cir. 2004). Indeed, an arbitral award must "be enforced,
despite a court's disagreement with it on the merits, if there
is a barely colorable justification for the outcome reached."
Id. (internal quotation marks omitted).
In applying the manifest disregard standard, we consider
"first, 'whether the governing law alleged to have been
ignored by the arbitrators was well defined, explicit, and clearly
applicable,' and, second, whether the arbitrator knew about
'the existence of a clearly governing legal principle but
decided to ignore it or pay no attention to it.'"
Applying this standard, the Court of Appeals affirmed the
District Court's rejection of any challenge.
The Court also addressed the Committee's argument
concerning which law, federal or state, provided the rule of
decision for pre-judgment interest. Since the claim was
asserted under federal law, the federal rate applied.
Coming just three days after the TTP parties accepted Japan's entry bid, and less than a month since Japanese Prime Minister Shinzo Abe's announcement that Japan would apply to join the talks, the move clears the way for new trade proposals that carry significant consequences for the U.S. automotive sector.
On Tuesday, January 2, 2013 President Obama signed into law the FY 2013 National Defense Authorization Act (the "FY 2013 NDAA"), a large legislative package that includes the Iran Freedom and Counter-Proliferation Act of 2012 (the "IFCPA") -- the fourth major legislative expansion of US sanctions against Iran in just the past two years.