Magazine article Dispute Resolution Journal

Party-Appointed Arbitrator, Nondisclosure and Evident Partiality

Magazine article Dispute Resolution Journal

Party-Appointed Arbitrator, Nondisclosure and Evident Partiality

Article excerpt

REINSURANCE

The 6th Circuit upheld an arbitration award over a claim that a party-appointed arbitrator failed to disclose possible conflicts of interest. The court found that a reasonable person would not conclude that the arbitrator was partial to one party over the other.

This reinsurance dispute between Nationwide and Home Insurance was referred by a district court to arbitration. The arbitration panel reached an unanimous award in favor of Home. Nationawide then filed a lawsuit in federal court seeking to vacate the final award for evident partiality based on the alleged failure of Home's party-apointed arbitrator to disclose certain business and social contacts with Home. The district court denied Nationwide's motion and confirmed the award, relying mainly on Apperson v. Fleet Carrier Corp., 879 F.2d 1344 (6th Cir. 19_), which held that partiality exists "where a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration." Nationwide appealed, arguing that the fact of the nondisclosure alone mandated vacatur under either a "reasonable impression of bias" or "appearance of bias" standard.

The 6th Circuit disagreed. It concluded that the case did not warrant deviating from Apperson V objective inquiry into evident partiality, particularly where the complaint of evident partiality concerned a partyappointed arbitrator. The court noted that the parties required the arbitrators to come from within the reinsurance industry. Moreover, it found that this was not a case of nondisclosure, as Home's arbitrator made full and timely disclosures regarding his business relationship with Home. The court also found that Homes' arbitrator's social engagements did not constitute improper or prohibited ex parte contacts. …

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