One of the most fertile grounds for challenging arbitration awards in court has been the failure of arbitrators to conscientiously disclose relationships with individuals or companies involved in cases to which they were assigned. Judicial challenges to awards based on disclosure failures are almost always avoidable. By following a few simple procedures, arbitrators can ensure that this does not happen to them.
Arbitrators must recognize that the duty to disclose any known direct or indirect financial or personal interest in the outcome of the arbitration rests first and foremost with them. The arbitrator’s duty to disclose is also a continuing obligation throughout every stage of the arbitration process. Because of the arbitrator’s extensive decision-making authority, and because of the limited judicial review of awards, the type of information to be disclosed is extensive. For example, Canon II.A.(2) of the Code of Ethics for Arbitrators in Commercial Disputes states in part, “…prospective arbitrators should disclose any such relationships which they personally have with any party or its lawyer, with any co-arbitrator, or with any individual whom they have been told will be a witness. They should also disclose any such relationships involving their families or household members or their current employers, partners, or professional or business associates that can be ascertained by reasonable efforts.”