Arbitrators Failure to Disclose Relationship With One of the a Parties
An arbitrator's substantive conduct during the proceedings may be used to show bias only in those "extreme and unusual circumstances" where the arbitrator can fairly be said to "manifest infidelity to the law and a deliberate disregard of it." Celtech, Inc. v. Broumand, 584 A.2d 1257, (D.C.1991) at 1260.
In Merit Ins. Co. v. Leatherby Ins. Co., 714 F.2d 673, 680 (7th Cir. 1983) Judge Posner stated that:
the test in this case is not whether the relationship was trivial; it is whether, having due regard for the different expectations regarding impartiality that parties bring to arbitration than to litigation, the relationship between Clifford [the arbitrator] and Stern [party to the arbitration] was so intimate -- personally, socially, professionally, or financially -- as to cast serious doubt on Clifford's impartiality.
Although Stern had been Clifford's supervisor for two years and was a key witness in an arbitration where the stakes to the party of which he was the president and principal shareholder were big, their relationship had ended 14 years before, Clifford had no possible financial stake in the outcome of the arbitration, and his relationship with Stern during their period together at Cosmopolitan had been distant and impersonal.
The fact that they had never socialized, either while working for the same company or afterward (though both were practicing law in Chicago all this time), indicates a lack of intimacy. 714 F.2d at 680.
Judge Posner noted that Commonwealth Coatings "provides little guidance because of the inability of a majority of Justices to agree on anything but the result," 714 F.2d at 681, and after reviewing other courts' applications of that case, determined that although it is difficult to extract from the cases more than a mood, the mood is one of reluctance to set aside arbitration awards for failure of the arbitrator to disclose a relationship with a party. Merit Ins., 714 F.2d at 682.
Judge Posner concluded, to uphold the district court's vacation of the arbitration award in the absence of evidence of actual or probable partiality or corruption would open a new and, we fear, an interminable chapter in the efforts of people who have chosen arbitration and been disappointed in their choice to get the courts -- to which they could have turned in the first instance for resolution of their disputes -- to undo the results of their preferred method of dispute resolution. 714 F.2d at 683.