February 13, 2020 Articles

Disclosure of Arbitrators’ Interest in Arbitral Institutions

Arbitrators will need to disclose any ownership stakes in the arbitral institutions, and the institutions may need to disclose the amount of business they have previously done with the parties.

By Sunu M. Pillai

“Evident partiality” is one of the very few bases for vacating an arbitration award provided in the Federal Arbitration Act. 9 U.S.C. § 10(a). An allegation of inadequate disclosure by the arbitrator is the most common reason asserted in attempts to vacate an award based on evident partiality. Ever since the Supreme Court’s plurality decision in Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968), there has been a lack of consensus among the circuit courts on what constitutes “evident partiality.” In a recent case of first impression, the Ninth Circuit, which is one of the circuits that require the most disclosure, vacated an arbitration award because the arbitrator failed to disclose that he had an ownership interest in the arbitral institution. Monster Energy Co. v. City Beverages, LLC, 940 F.3d 1130 (9th Cir. 2019).

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