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Case Comments on Hall street associates v. Mattel Inc.
Hall Street Associates V. Mattel
This case decides the scope of judiacial review in an arbitration process.
Hall Street Associates was a company which rented a property to Mattel Inc. on lease basis. Mattel required this property for the purpose of using it as manufacturing site. There was an agreement between the Hall Street Associates and Mattel that, if Mattel or any of its lessees causes any damage to the building and fails to follow the environmental laws of Oregon while using the premises it would be liable to indemnify Hall. In 1998 the water in the well of the premises was found to be contaminated with a high quantity of TCE (Trichloroethylene), which was a residue of the manufacturing process discharged because of a predecessor lessee. In the year 2001 there was notice of intent issues by Mattel for terminating the lease. There was a suit filed against this notice of Mattel by hall and also Mattel was obligated to indemnify Hall Street Associates for the cleaning cost of the well. The case went to the district court and Mattel won the case on the right to terminate the lease and with the consent of the court there was an agreement between the parties for the claim of indemnity through arbitration.
An arbitration agreement was signed by the parties with the approval of court along with some provisions and during the process it was decided that Mattel is not obliged to indemnify Hall. This decision was contested in the court by hall for legal error made by arbitrator in terms of calculating the laws and another arbitration session was held and finally according to Oregon act Mattel was held liable to indemnify Hall for the cleaning up cost as per the environmental laws within the scope of lease provision.
There was another suit files by both the parties for the ninth circuit and the court agreed with Mattel citing the case of “Kyocera Corporation V. Prudential Bache Trade Services, Inc, 342 F. 3rd 987, 1000 (2003), and held that holding terms of judicial review in arbitration is unenforceable.” District court then vacated the award under section 10 of FAA. “The Supreme court of U.S. then granted certiorari to decide the vacatur and modification provided by section 10 and 11of FAA re exclusive.” The proceedings went in Supreme Court and the case moved further and” revolved around a number of contradictory interpretations in lower federal courts regarding the judicial review of arbitration award under FAA.”
It was a 6-3 decision and the Supreme Court of U.S. said that {"the parties to a contract cannot expand the limited scope of judicial review of arbitration even when the circumstances are extraordinary."
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