Non-Neutral Arbitrators - Chapter 3 - The College of Commercial Arbitrators Guide to Best Practices in Commercial Arbitration - 2nd Edition

James M. Gaitis is the former Director of the International Dispute Resolution and Management Programme at the Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee, Scotland, where he continues to serve as a member of the Global Faculty.

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NON-NEUTRAL ARBITRATORS

Because non-neutral 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.

I. ARBITRATOR SELECTION GENERALLY

A. Parties’ Arbitration Agreement

The use of non-neutral arbitrators continues as a permitted practice in domestic arbitrations in the United States. Thus, a well-drafted arbitration clause will not only specify the number and qualifications of arbitrators and the process for selecting and appointing them but also clearly state 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 exceeds its powers if the selection process is not in compliance with the parties’ agreement, Brook v. Peak Int’l, Ltd., 294 F.3d 668, 673-674 (5th Cir. 2002) (“The AAA’s departure from the selection procedure . . . was utterly unwarranted.”).

B. Institutional Rules and the AAA/ABA Code

A reference in an arbitration clause to an arbitral institution or its rules is sufficient to adopt that institution’s selection process and under some rules, authorize administration of the arbitration by that institution. Although institutional arbitration rules provide for most disputes to be resolved by a single arbitrator, those same rules, with some exceptions, permit the parties to specify the number of arbitrators and appoint arbitrators that are not neutral.

Table of Contents:

I. ARBITRATOR SELECTION GENERALLY

A. Parties’ Arbitration Agreement

B. Institutional Rules and AAA/ABA Code

II. LIMITATIONS ON CHOICE OF NON-NEUTRAL ARBITRATORS

A. Parties’ Arbitration Agreement

B. Applicable Law and Ethical Rules

III. DETERMINING STATUS OF PARTY-APPOINTED ARBITRATORS

A. Party-Appointed Arbitrators’ Role in Determining Status of Arbitrators

B. Chairperson’s Role in Determining Status of Party-Appointed Arbitrators

IV. DISCLOSURES BY NON-NEUTRAL ARBITRATORS

A. General Practice of Disclosure

B. Unique State Requirements Relating to Disclosures

C. Changes in Status of Arbitrators

V. NON-NEUTRAL ARBITRATOR CONDUCT

A. Ensuring a Fundamentally Fair Hearing

B. Ex Parte Communications

C. Providing Assistance to the Parties

VI. VALUE OF NON-NEUTRAL ARBITRATORS IN COMMERCIAL ARBITRATIONS