## Facts

- Arun Walia, a Canadian national working in the United States on an employment visa, worked as an accountant for Kiran M. Dewan and Dewan’s accounting firm under an employment agreement containing noncompetition/nonsolicitation provisions and a broad arbitration clause.
- After Walia’s termination, the parties executed a 2009 Release Agreement under Maryland law in exchange for $7,000, in which Walia released Dewan and the firm from “any and all” employment-related claims; the Release also included a binding arbitration clause.
- Dewan initiated AAA arbitration alleging Walia breached the noncompete and nonsolicitation provisions.
- Walia asserted counterclaims for underpayment, profit-sharing breaches, and alleged violations tied to the work-visa program.
- After a multi-day hearing, the arbitrator found the Release valid and enforceable but construed it as barring Walia only from bringing claims “in court,” not from asserting them in arbitration; the arbitrator awarded Walia substantial monetary relief on the counterclaims and rejected Dewan’s claims.
- The District of Maryland confirmed the award and denied Dewan’s motion to vacate, applying the Maryland Uniform Arbitration Act; Dewan appealed.

## Issues

1. Whether the Federal Arbitration Act (FAA) or the Maryland Uniform Arbitration Act governed judicial review of the arbitration award.
2. Whether “manifest disregard of the law” remained an available basis to vacate an award under the FAA after *Hall Street Associates, LLC v. Mattel, Inc.*
3. Whether the arbitrator manifestly disregarded Maryland law by enforcing an unambiguous release for court litigation but not for arbitration.

## Decision

- The Fourth Circuit held the FAA governed because the agreements evidenced transactions involving foreign commerce arising from employment of a foreign national working in the United States.
- The court held manifest disregard remained a viable, narrow basis for vacatur in the circuit, either as an independent ground or as a gloss on the FAA’s statutory vacatur provisions.
- The court vacated the arbitration award and reversed the district court’s confirmation because the arbitrator manifestly disregarded Maryland contract law by rewriting the Release to permit arbitration counterclaims despite unambiguous “any and all” release language.
- The case was remanded for further proceedings consistent with the opinion.

## Legal Principles

- The FAA applies to arbitration agreements in contracts evidencing transactions involving commerce, including foreign commerce, displacing contrary reliance on state arbitration vacatur standards.
- In the Fourth Circuit, manifest disregard may justify vacatur only where (1) the controlling legal principle is clearly defined and not reasonably debatable and (2) the arbitrator knowingly refuses to apply it, going beyond mere legal error.
- Under Maryland contract law, unambiguous release language must be enforced as written; an adjudicator may not rewrite a clear release to preserve claims that the parties waived.
- An arbitrator exceeds permissible interpretive discretion when the award rests on a distinction (e.g., court vs. arbitration) that lacks textual support in an unambiguous contract and conflicts with clearly established governing law.

## Conclusion

The Fourth Circuit applied the FAA due to foreign-commerce elements of the employment relationship, reaffirmed that manifest disregard remains a narrow vacatur theory in the circuit, and vacated the award because the arbitrator enforced a clear release selectively in a manner that contradicted Maryland law and the contract’s plain terms.


Dewan v. Walia, 544 F. App’x 240 (4th Cir. 2013)