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Barring Flagrant Misconduct, Courts Should Let Arbitration Decisions Stand

Online Exclusive: Supreme Court Decision Narrows Courts' Ability to Overturn Arbitration Agreements.

Cardiologist Zev Lagstein developed heart disease, severe migraines and other neurological problems in 2001. Several physicians examined him and concluded the health issues permanently disabled him from practicing medicine. Following the diagnosis, Lagstein submitted a disability insurance claim to Lloyd's of London. His policy with Lloyd's was supposed to pay $15,000 per month for up to 60 months of disability.

Lagstein should remind in-house counsel to enter arbitration without any expectation of court review--in almost any situation.

"Basically, a court will not review whether an arbitrator got it right or wrong," says Russell Glazer, a Troy Gould partner. "[This] makes sense, because the whole point of arbitration is trying to build your own dispute resolution mechanism."

For example, the court said an arbitration award doesn't need to be rational in light of the facts of a case. Rationality only matters with respect to the contract that grants arbitrators their authority.

"It's not looking at the merits and saying, 'How did they ever reach this conclusion? This is shocking to the conscience,'" says Doug Scullion, a Gordon & Rees partner. "It's that the award isn't consistent with the powers enumerated in the arbitration contract."

Assistant Editor

Christopher Danzig

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