Originally from World Arbitration And Mediation Review (WAMR)

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FAILURE BY ARBITRATOR TO DISCLOSE INFORMATION ABOUT DEALINGS WITH PARTY TO ARBITRATION CONSTITUTES EVIDENT PARTIALITY; VACATUR OF ARBITRATION AWARD GRANTED BY NINTH CIRCUIT

The U.S. Ninth Circuit Court of Appeals ruled that, under the evident
partiality standard, an arbitrator has a duty to investigate and disclose
possible conflicts arising out of new employment obtained during an
arbitration proceeding.1
In New Regency Productions, Inc. v. Nippon Herald Films, Inc., New
Regency and Nippon Herald contracted for Nippon Herald to distribute five
films produced by New Regency. Eight years later, Nippon Herald alleged
New Regency had failed to distribute one of the films. They sued New
Regency for violation of the distribution contract and for payment under a
cross-collateralization provision.
Instead of pursuing action in court, the parties agreed to enter into
arbitration and selected William J. Immerman as a neutral arbitrator. Before
commencing the arbitration hearing, Immerman disclosed to both parties his
previous involvement in arbitration proceedings in which counsel for New
Regency had represented a party, and his involvement in previous
negotiations with New Regency executives before their employment as New
Regency executives. Immerman also disclosed there was a possibility he
may be called as a percipient witness in a separate action. The action would
be brought by the same firm representing New Regency in this arbitral
proceeding, and would be against Crusader Entertainment, a company where
Immerman was currently employed as an executive. Fully informed, the
parties agreed to proceed with Immerman as their arbitrator.