Chapter Three: Nonneutral Arbitrators - CCA Guide to Best Practices in Commercial Arbitration - Fourth Edition
Editor in Chief James M. Gaitis is a long-standing member of the Texas and Montana state bars, and a former longtime member of the Oklahoma state bar, who, since 1990, has specialized in serving as an arbitrator in complex commercial and oil & gas/energy arbitrations. Mr. Gaitis is the former Director (and Principal Research and Teaching Fellow) of the International Dispute Resolution Programme at the Centre for Energy, Petroleum & Mineral Law and Policy (CEPMLP), University of Dundee, Scotland, where he designed and taught classes on international dispute resolution and advocacy in international oil & gas arbitration to LLM students and professionals. In private practice, he served variously as lead trial counsel, in-house counsel, and special counsel for a diverse array of companies, individuals, and other entities involved in the domestic and international oil & gas industries. He is listed on a broad variety of international and domestic arbitration panels, including the AAA National Energy Panel, Construction Panel, Merger & Acquisitions Panels, and Large, Complex Case Panel; the ICDR’s Panel of Arbitrators and the ICDR’s prestigious Energy Arbitrators List; the British Columbia International Commercial Arbitration Centre; and the CPR’s Oil & Gas/Energy Panel and Cross-Border Panel. He frequently serves as a chair, party-appointed arbitrator, emergency arbitrator, and list-appointed arbitrator in cases involving all aspects of the oil & gas industry, as well as in commercial cases relating to such matters as manufacturing, construction lending, engineering, asset sales, business torts, and real property. Many of his arbitrations, which have included claims in excess of $1 billion, have involved Fortune 100 and Oil & Gas Journal Top 50 companies, as well as national oil companies and international oil companies.
A Fellow of the College of Commercial Arbitrators (2004–present) and a Fellow and Chartered Arbitrator of the Chartered Institute of Arbitrators (2003–present), Mr. Gaitis is a frequently invited speaker and lecturer, has testified in district court proceedings as an expert on arbitrator disclosures and ethics, and is the author of numerous articles relating to arbitration law, several of which have been cited repeatedly to the United States Supreme Court, various federal district courts and federal courts of appeal, and various other courts, such as the Supreme Courts of Texas and Puerto Rico. In 2006, 2010, and 2013, he respectively served first as an Editor and then repeatedly as Editor in Chief of the first, second, and third editions of The College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration. He also is the Editor of, and a contributing author to, The Leading Practitioners’ Guide to International Oil & Gas Arbitration (Juris 2015) and serves on the Board of Editors of the Journal of World Energy Law & Business (OUP/AIPN). He is a graduate of the University of Notre Dame (BA 1976) and the University of Iowa College of Law (JD 1978), where he served as a Note & Comment Editor on The Iowa Law Review.
Richard Chernick, Los Angeles, California
Robert A. Holtzman, Los Angeles, California
Because nonneutral arbitrators continue to be appointed by parties to domestic arbitrations, arbitrators should be familiar with the appointment process and other considerations concerning nonneutral conduct and disclosures.
This chapter addresses best practices associated with arbitrations involving nonneutral arbitrators. Additional chapters of the Guide—for example, Chapters 2, 4, and 15, respectively pertaining to arbitrator appointment and disclosures, arbitrators’ fees and expenses, and intratribunal relations—are relevant to a discussion of nonneutral arbitrators and, therefore, also should be considered by the reader.
I. ARBITRATOR SELECTION GENERALLY
A. Parties’ Arbitration Agreement
Because the use of nonneutral arbitrators continues as a permitted practice in domestic arbitrations in the United States, a well-drafted arbitration clause will state clearly whether the party-appointed arbitrators on a tripartite panel will be neutral or nonneutral. This distinction is particularly important because courts are obligated to enforce the selection process agreed upon by the parties, see, e.g., 9 U.S.C. § 5; UAA § 3; RUAA § 11(A); Cal. Civ. Proc. Code § 1281.6, and because an arbitration administrator or appointing authority can exceed its powers if the selection process is not in compliance with the parties’ agreement, see Brook v. Peak Int’l, Ltd., 294 F.3d 668, 673-74 (5th Cir. 2002) (“The AAA’s departure from the selection procedure . . . was utterly unwarranted.”); Americo Life v. Myer, 440 S.W.2d 18, 21 (Tex. 2014) (affirming the vacatur of an arbitration award when the AAA disqualified two party-appointed arbitrators based on a finding of partiality despite the fact that the parties’ arbitration agreement permitted the appointment of nonneutral arbitrators).