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Digest of Cases Discussing AAA Rules - Part 2D - AAA Yearbook on Arbitration and the Law - 24th Edition

Author(s): 
Ben H. Sheppard Jr.
Stephen K. Huber
Page Count: 
108 pages
Media Description: 
PDF from "AAA Yearbook on Arbitration and the Law - 24th Edition"
Published: 
September, 2012
Jurisdictions: 
United States
Practice Areas: 
AAA,
Court Decisions
Author Detail: 
STEPHEN K. HUBER is Professor Emeritus at the University of Houston Law Center, and has served as a visiting professor at the University of Texas, Rice University (Political Science), Pepperdine Law School (Dispute Resolution Program), and the University of East Africa (Dar es Salaam, Tanzania). Mr. Huber is a member of the State Bar of Texas, and the editor of Alternative Resolutions, the quarterly journal of the Dispute Resolution Section. He is the author of numerous publications relating to arbitration.

BEN H. SHEPPARD, JR. is a Distinguished Lecturer and Director of the A.A. White Dispute Resolution Center at the University of Houston Law Center. From 1969 through 2005 he practiced at Vinson & Elkins L.L.P. where he was a Partner and Co-Chair of the firm's international dispute resolution practice. He was chair of AAA/ICDR task force that promulgated the 2006 amendment to the ICDR International Arbitration Rules that established a pre-arbitral emergency arbitrator procedure. He was the author of the report and recommendation to the ABA House of Delegates in support of the 2004 Revision to the AAA/ABA Code of Ethics for Arbitrators in Commercial Disputes. He chaired one of the two working groups that promulgated the CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration. He is a past chair of the Disputes Division of the ABA Section of International Law and for five years served as editor-in-chief of The International Arbitration News. He is a member of the American Law Institute and a Fellow of the College of Commercial Arbitrators.

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Originally from: AAA Yearbook on Arbitration and the Law - 24th Edition

D. DIGEST OF CASES DISCUSSING AAA RULES

ALS & Associates, Inc. v. AGM Marine Constructors, Inc., 557 F. Supp. 2d 180 (D. Mass. 2008)

AAA Disclosure Rules Not a Basis for Vacating Arbitration Award

ALS raised the statutory ground of “evident partiality” as the basis for vacating the arbitration award. The central contention was that the arbitrator failed to investigate his connections with AGM, in violation of the AAA (and ABA) Code of Ethics for Arbitrators. The court rejected this contention, holding that violations of the Code of Ethics did not constitute evident partiality. [Of course, such violations can constitute evidence of evident partiality.]

It should be noted first that the AAA’s disclosure rules do not govern this case. See e.g., Merit Insurance Co. v. Leatherby, 714 F.2d 673, 680 (noting that the neither the AAA’s Commercial Arbitration Rules nor the Code of Ethics for Arbitrators are “a proper starting point for an inquiry into an award's validity” because they "do not have the force of law”). Thus, even if the arbitrator's compliance with these rules was imperfect . . . these missteps will not warrant vacatur unless they also fall within the one of the grounds set forth in the FAA. The FAA, however, articulates no grounds for vacatur based on failure to investigate or disclose. Accordingly, courts have recognized that “an arbitrator’s failure to disclose, in and of itself, provides no basis to vacate an award.” ANR Coal Co., Inc. v. Cogentrix of N. Carolina, Inc., 173 F.3d 493, 495 (4th Cir. 1999). It is only when failure to investigate or disclose is linked to evident partiality that vacatur will be warranted.