It was huge news when an arbitration panel ruled that Goldman Sachs (NYSE: GS) was liable for $21 million in its dispute with creditors of Bayou Group, a hedge fund client of Goldman's that fell apart in 2005; it ended up being revealed as a Ponzi Scheme. Recall the ensuing fake suicide drama of founder Samuel Israel III, who is now serving 20 years in prison.

Bowing to the idea that the prime broker should have known about the fraud, an arbitration panel ruled that Goldman owed $21 million to various Bayou creditors. Goldman tried to get a court to throw out the ruling, but was rebuffed in November by Judge Jed Rakoff.

Rakoff released his decision this week saying"arbitration is touted as a quick and cheap alternative to litigation, experience suggests that it can be slow and expensive. But it does have these 'advantages': unlike courts, arbitrators do not have to give reasons for their decisions, and their decisions are essentially unappealable," notes TheStreet.com. Goldman, "having voluntarily chosen to avail itself of this wondrous alternative to the rule of reason, must suffer the consequences."

It's likely that Goldman Sachs will take Judge Rakoff's decision to the Second Circuit Court of Appeals. So much for arbitration decisions being unappealable.

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