Right to Challenge a Party Appointed Arbitrator - What are your thoughts?

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Does a party have the right to challenge a party appointed arbitrator for conflicts? What should be the standards, if any, for removal? Are the standards different than those for challenging arbitrators appointed by an arbitral institution? Are the standards different for non-neutral arbitrators?

Please provide your thoughts/comments below.


6 Comments

In arbitrations where the party appointed is expected to act as advocate, I believe that the challenge for conflict may not necessarily lead to the disqualification or removal of the arbitrator. In one instance, the party appointing me challenged my counterpart because he was engaged as an expert by the party appointing him to the arbitration we were conducting. When the party appointing me asked for my opinion, I suggested they drop the challenge because the arbitrator was engaged as an advocate. When the panel is a neutral panel then the standards should be and are different. In these cases a challenge should be upheld by the institution and the arbitrator should be replaced. Non-neutral arbitrators appointed by a party should be expected to act as advocates and therefore unless the conflict is obvious, they should continue to serve. In many cases the conflict standards apply more stringently, as they should, to the neutrals and certainly to the Chairperson of the panel.

I was a party appointed arbitrator in a matter where the party who appointed me (Claimant) petitioned AAA to remove Respondent's party appointed arbitrator on the grounds that he had, in the past, represented Claimant in a matter. AAA granted the application.
I think that if there is a recent past financial relationship between the party appointed arbitrator and appointing counsel or any financial relationship between the party appointed arbitrator and either party, then the party appointed arbitrator is subject to possible removal.
I do believe that there is a higher threshold for removing a party appointed arbitrator than an arbitrator appointed by an arbitral institution. As for non-neutral arbitrators, the courts have granted a lot of leeway to allowing a non-neutral arbitrator, even if financially entangled with their appointing party, to remain. In a non-neutral situation, the appointed arbitrator would need to have a clear and direct conflict with the other side.

I have never understood why an arbitration panel should allow a panel member who is an advocate for one of the parties in the first place. It seems against the whole principle that a panel should be composed of neutral members who decide the matters at hand. When there are advocate members and the chairperson is the only neutral member, that puts her in the difficult position of having to weigh the comments by the other members as well as by the evidence presented. I can't imagine how such a panel would lead to an optimum result.

My feeling is that if a party-appointed arbitrator will become a neutral arbitrator on that Panel, she or he should not come with the baggage of conflicts-of-interest. Nor, for that matter, should a party-appointed arbitrator who will not be considered a neutral arbitrator have any such conflicts. This is because a party-appointed arbitrator with conflicts will have scant influence over the Chair as the case progresses through deliberation.

All arbitrators are neutral (except for Canon X arbitrators) and are subject to the same disclosure obligations and may be challenged for partiality. Canon X arbitrators may be predisposed toward the party who appointed them but otherwise must not have a financial interest in the matter and must act in good faith and with integrity and fairness.

This should be governed by the terms of the arbitration agreement. If the agreement is silent on challenging a party appointed arbitrator, then there should not be allowed any challenge. If the parties to the agreement wanted a way to challenge the party appointed arbitrator, then the parties should have put this in the written agreement. Because of this, I do not think the AAA rules on arbitration appointments apply and the subsequent disclosures.

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About this Entry

This page contains a single entry by Jeffrey Zaino published on May 22, 2022 11:16 AM.

Advocate Criticizing an Arbitrator During a Pending Case - What are your thoughts? was the previous entry in this blog.

Quantity of Arbitrators - What are your thoughts? is the next entry in this blog.

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