By: A. Kelly Turner, Esq., Senior Counsel, AAA-ICDR
Any doubt as to whether an arbitrator should make a disclosure should be resolved in favor of disclosure.
The arbitrator should not judge the significance of the potential conflict or contact but rather make the disclosure and let the parties determine its significance. As a guiding principle: if a relationship or interest crosses the arbitrator’s mind, the arbitrator should disclose it.
Arbitrators for a case administered by an arbitral organization are required to provide full, complete disclosures of relevant conflicts, contacts, relationships, and interests to the lawyers, parties and witnesses appearing before them, with sufficient detail (subject to any duties of confidentiality they may have as to other arbitrations or mediations) to fully inform the parties of the potential conflict.
If the arbitrator does not provide enough of the Who, What, When, Where, and How, the organization will ask for that additional information, which could delay confirmation of the arbitrator’s appointment.
Under The Code of Ethics for Arbitrators in Commercial Disputes, disclosures also should be made in private or ad hoc arbitrations (proceedings where the parties make all the arrangements for the arbitration). In those cases, however, the question then arises as to who decides any objection to the arbitrators based on a disclosure—the arbitrators themselves?
The answers to the important questions in the following situations could impact the parties’ decision of whether or not to accept the arbitrator and the organization’s decision of whether to reaffirm or remove the arbitrator if there is an objection
Scenario 1: The arbitrator is “acquainted…from a professional standpoint” with several lawyers and one of the other arbitrators. Absent from that disclosure, however, are details about those professional acquaintances. Have the listed lawyers appeared before the arbitrator in a prior or current arbitration or mediation? Have they been, or are they currently, adverse to or co-counsel with the arbitrator? Alternatively, does the arbitrator simply know of them as members of the legal community or bar groups or served on committees or panels with them?
Scenario 2: The arbitrator’s firm represented one of the parties “in an unrelated matter.” With no other detail, it is difficult for the parties to determine the potential impact of that disclosure. Is that matter still pending? If not, did it conclude 10 days ago, 10 months ago, or 10 years ago? Was it a substantial representation–a $10 million lawsuit as opposed to a $5,000 title check? Was the arbitrator personally involved in the matter, or was it someone from the arbitrator’s office, or someone from another of the firm’s offices?
Scenario 3: The arbitrator’s prior firm, Firm A, merged into Firm B. Must the arbitrator, now at post-merger Firm AB, include in his disclosures information regarding contacts Firm B partners had pre-merger with the parties, the lawyers and firms, and the witnesses in the arbitration? The answer is yes, those contacts should be disclosed if available through the firm’s conflicts database. An arbitral organization may give those contacts little weight should a party object to the arbitrator’s appointment, but it is better to have made those disclosures. Failure to disclose what the arbitrator may deem nonmaterial can appear, from a party’s perspective, to be the purposeful hiding of information.
An arbitrator’s duty to disclose does not stop at appointment but continues throughout all stages of the arbitration. The arbitrator should conduct conflicts checks and make disclosures whenever new information emerges about the case participants, such as new or additional counsel or fact or expert witnesses.
Best practice advice: All disclosures should be in writing. If a disclosure emerges at a hearing, the arbitrator should leave the hearing, immediately contact the administering organization, and forward the written disclosure. The provider then will facilitate the process of communicating the disclosure to the parties if they are not already aware and obtain their response. (Obviously, if the arbitration is ad hoc, this development is more difficult to manage.)
It is understood that full and complete disclosures can be time consuming. The goal is not to create unnecessary work for arbitrators but to protect the arbitration process and, ultimately, the rendered award.
Through its Rules and The Code of Ethics for Arbitrators in Commercial Disputes, the AAA is rigorous on the subject of disclosures and the conduct of its Roster of Arbitrators. In large, complex cases, the AAA Administrative Review Council (ARC) decides parties’ requests for arbitrator removal—which often are based on what the arbitrator disclosed or failed to disclose.
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