The Arbitration Law Forum https://loreelawfirm.com/blog/second-circuit-sets-evident-partiality-standard-for-party-appointed-arbitrators-on-industry-tripartite-arbitration-panels/ Export date: Mon Jan 25 6:47:39 2021 / +0000 GMT |
Second Circuit Sets Evident Partiality Standard for Party-Appointed Arbitrators on Industry Tripartite Arbitration Panels![]() But, particularly in industry and labor arbitration, the parties do not necessarily intend that party-appointed arbitrators on tripartite panels are neutral, that is, disinterested in the outcome, impartial and independent. Can a party vacate an award based on the “evident partiality” of a non-neutral, party-appointed arbitrator, and if so, what standard applies to such a challenge? In 2012 the Second Circuit in the landmark Scandinavian Re case left open the question “whether the FAA imposes a heightened burden of proving evident partiality in cases in which the allegedly biased arbitrator was party-appointed.” Scandinavian Re, 668 F.3d at 77 & n.21. But in June 2018 the Second Circuit, in Certain Underwriting Members of Lloyds of London v. State, Department of Financial Services, ___ F.3d ___, No. 17-1137-cv., slip op. at 2 (2d Cir. June 7, 2018), held that “a party seeking to vacate an award under Section 10(a)(2) must sustain a higher burden to prove evident partiality on the part of an arbitrator who is appointed by a party and who is expected to espouse the view or perspective of the appointing party.” Certain Underwriting Members, ___ F.3d at ___, No. 17-1137-cv., slip op. at 2 (2d Cir. June 7, 2018). The Second Circuit vacated the district court decision, which had overturned a reinsurance arbitration award on evident partiality grounds. The district court did so because a party-appointed arbitrator had not disclosed the full extent of his relationships with the party which appointed him. ![]() The district court held that the party-appointed arbitrator's “‘conduct must be considered under the same evident partiality standard as is required in all arbitrations.'” Slip op. at 12 (quoting Certain Underwriting Members v. Insurance Co. of Am., 16-cv-323(VSB), 2017 WL 5508781, at *11 (S.D.N.Y. Mar. 31, 2017)). ![]() As respects the arbitration agreement's “disinterestedness” requirement, the Second Circuit explained that requirement “would be breached if the party-appointed arbitrator had a personal or financial stake in the outcome of the arbitration.” Slip op. at 13-14 (citing and quoting Trustmark Ins. Co. v. John Hancock Life Ins. Co., 631 F.3d 869, 872-73 (7th Cir. 2011); and ARIAS-U.S. Practical Guide to Reinsurance Arbitration Procedure, ¶ 2.3 (rev. ed. 2004)). As respects prejudicial affect on the award, the Second Circuit said: “[i]n the absence of a clear showing that an undisclosed relationship (or the non-disclosure itself) influenced the arbitral proceedings or infected an otherwise-valid award, that award should not be set aside even if a reasonable person (or court) could speculate or infer bias.” Slip op. at 14. Circuit Judge Dennis G. Jacobs wrote the opinion for a three-judge panel, which included Circuit Judge Reena Andrea Raggi, and Circuit Judge Peter W. Hall. ![]() |
Post date: 2018-07-26 13:58:02 Post date GMT: 2018-07-26 17:58:02 Post modified date: 2018-08-15 13:15:31 Post modified date GMT: 2018-08-15 17:15:31 |
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