Arbitral Tribunal - Chapter 04 - AAA Yearbook on Arbitration and the Law - 27th Edition
Author(s):
Stephen K. Huber
Ben H. Sheppard Jr.
Page Count:
36 pages
Media Description:
1 PDF Download
Published:
September, 2015
Description:
Originally from AAA Yearbook on Arbitration and the Law - 27th Edition
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4.01 Disqualification of Arbitrators: Evident Partiality and
Related Grounds
Related Grounds
Kolel Beth Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable
Trust, 729 F.3d 99 (2d Cir. 2013)
The arbitrator’s conduct did not reach the threshold to warrant
vacatur when he talked to a non-party about his opinion before the
final decision, scheduled a meeting when the movant’s chosen
arbitrator was unavailable, and heard only one witness.
The parties submitted the dispute over life insurance policies to
rabbinical arbitration panel. The panel issued an award in favor of Kolel;
the trust moved for vacatur under § 10(a) for bias, corruption, and failure
to consider evidence.
A non-party overheard one of the arbitration panelists tell another
non-party that the panelist needs one week and then he will award in
favor of Kolel. The same panelist held a crucial meeting when the trust’s
chosen arbitrator was unavailable. These speculative instances, along
with no transcript of the arbitration proceedings, did not meet the high
burden for demonstrating impartiality.
The trust alleged the panelist’s interruption of the only witness. The
court, however, determined that even if these facts were true, the trust
had failed to prove that the panel violated “fundamental fairness”
because the issue was contractual interpretation. The proceeding lasted
thirty hours in total and the panel briefly explained its answer. The award
should not be vacated.
Citations and References:
a. Scandinavian Reins. Co. v. Saint Paul Fire & Marine Ins. Co.,
668 F.3d 60 (2d Cir. 2012) (two arbitrators failed to disclose
concurrent service in a similar arbitration, but were not
considered to act with “evident partiality”).
b. Flexible Mfg. Sys. Pty. Ltd. v. Super Prods. Corp., 86 F.3d 96
(7th Cir. 1996) (must show clear and convincing evidence for
bias).
c. Applied Indus. Materials Corp. v. Ovalar Makine Ticaret Ve
Sanayi, A.S., 492 F.3d 132 (2d Cir. 2007) (arbitrator is
disqualified only when a reasonable person must conclude the
arbitrator was partial).
Thomas Kinkade Co. v. White, 711 F.3d 719 (6th Cir. 2013)
1. Arbitration award vacated upon showing that arbitrator was
partial to one party.
2. In order to establish partiality, party must establish facts
indicating improper motives on the part of the arbitrator.
The Kinkade Company moved to vacate a Final Award finding in
favor of their adversaries, Nancy and David White, alleging that the
panel’s neutral arbitrator, Mark Kowalsky, engaged in evident partiality
in favor of the Whites.
In support of its argument, Kinkade showed that after closing briefs
and closing argument, Kowalsky ordered the parties to submit further
briefing on the causation element of the Whites’ claims and ordered the
Whites to submit a detailed accounting of their damages, giving them a
second chance to prove their fraud claims and their damages. When they
failed to oblige this request, Kowalsky then allowed the Whites another
chance to present evidence in support of their damages. In addition,
almost five years into the arbitration, Kowalsky notified Kinkade that its
adversary, David White, and the Whites’ advocate on the arbitration
panel had each hired Kowalsky’s firm. Kinkade objected to the
representation of David White, causing the firm to end their
representation of Mr. White, and although Kinkade requested that
Kowalsky be disqualified as arbitrator, its requests were denied. Kinkade
also brought forth evidence that Kinkade’s breach of contract claim,
although not contested, was denied. Lastly, although the Interim Award,
which could not be modified pursuant to applicable rules, did not award
the Whites’ with attorneys’ fees, the Final Award granted those fees.
In reviewing Kinkade’s motion, the Court stated that, under a clear
error standard, the challenging party must show that a reasonable person
would have to conclude that an arbitrator was partial to one party to the
arbitration, which requires a showing greater than an appearance of bias,