Digest of Cases Discussing AAA Rules - Part 2D - 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.