In Wachovia Securities v. Brand, the Fourth Circuit held that arbitrators do not act in manifest disregard of the law by failing to adhere to state procedural laws where state substantive laws govern the underlying dispute. The Fourth Circuit reasoned that the national policy favoring arbitration, at least in part, favors the expedited nature of arbitration proceedings. Accordingly, where an arbitration agreement mandates that state substantive law governs the underlying dispute, the arbitrator may elect not to adhere to the law’s procedural provisions, unless ignoring those provisions unduly prejudices the parties. In drawing its conclusion, the Fourth Circuit assessed manifest disregard of the law as a grounds for vacating arbitral awards, concluding that the legitimacy of the doctrine remained unclear in United States arbitration law. While immaterial to the disposition of the case, the Fourth Circuit’s indecision provided ambiguous guidance to the lower courts, which must continue to grapple with inconsistent precedent when determining whether and how to apply the manifest disregard doctrine. The resulting intra-jurisdictional variability frustrates the Supreme Court’s efforts to federalize U.S. arbitration law.
Garrett Lent, "Prepare for Trouble, and Make it Double": The Fourth Circuit Continues Downward Iteration of Duplicitous Test for Manifest Disregard, 6 Y.B. Arb. & Mediation 337 (2014).