ADVENTURE MOTORSPORTS REINSURANCE, LTD v. INTERSTATE NATIONAL DEALER SERVICES, INC. (Two Cases)

Two motorsports dealerships and a related reinsurance company owned by Ryan Hardwick sold vehicle service contracts through Interstate National Dealer Services (INDS), which administered the contracts and was supposed to pass along claims reserve money. When Hardwick's companies discovered INDS was deducting fees before passing along the reserves, the parties went to arbitration, and an arbitrator ruled in favor of the dealer and reinsurer, awarding over $400,000. A trial court confirmed that award, but the Court of Appeals of Georgia reversed, saying the arbitrator had manifestly disregarded the law by rejecting the contract's pricing terms. The Supreme Court of Georgia disagreed, finding no concrete evidence the arbitrator knowingly ignored the correct law rather than simply interpreting the contracts. The court reversed the Court of Appeals on that point and sent the case back for consideration of INDS's separate argument that the arbitrator exceeded his authority, and also revived a related dispute over a delayed-payment penalty that had been dismissed as moot.

An arbitrator's manifest disregard of the law requires concrete evidence that the arbitrator knowingly and intentionally ignored law he knew to be correct, not merely an imperfect or debatable interpretation of a contract; because no such evidence existed here, the award should not have been vacated on that ground.

The ruling reinforces that Georgia courts must give arbitration awards strong deference and cannot overturn them merely because a judge would have interpreted a contract differently, which matters for any business that resolves disputes through arbitration clauses.

Vacated and remanded in S21G0008; reversed and remanded in S21G0015

1. The court explained that Georgia's Arbitration Code (O.C.G.A. Chapter 9-9) sharply limits when a court can vacate an arbitration award, listing five exclusive grounds, because the law favors letting arbitration finally resolve disputes without added litigation.
2. Under one of those grounds, manifest disregard of the law (O.C.G.A. § 9-9-13(b)(5)), the court explained a party must show the arbitrator was aware of the correct law and deliberately chose to ignore it, not merely that the arbitrator made a legal mistake or misapplied the law to the facts.
3. Applying that standard, the court found the arbitrator never said the correct law should be ignored; instead he interpreted the contracts (including a pricing document called the Rate Card) in context and concluded INDS could not unilaterally deduct undisclosed fees before passing reserves to the reinsurer.
4. Because the arbitrator's interpretation drew its essence from the contracts and case management orders that expressly let him fashion an equitable remedy, any imperfection in his reasoning was at most a legal mistake, which does not amount to concrete evidence of deliberate disregard of the law.
5. Since the Court of Appeals had never reached INDS's separate argument that the arbitrator overstepped his authority under a different statutory ground (O.C.G.A. § 9-9-13(b)(3)), the Supreme Court of Georgia sent that issue back for decision, which also meant the related delayed-payment penalty dispute was not necessarily moot and needed reconsideration.

• arbitration award
• manifest disregard of the law
• vehicle service contracts
• reinsurance dispute
• Court of Appeals reversal