• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Reinsurance Focus

New reinsurance-related and arbitration developments from Carlton Fields

  • About
    • Events
  • Articles
    • Treaty Tips
    • Special Focus
    • Market
  • Contact
  • Exclusive Content
    • Blog Staff Picks
    • Cat Risks
    • Regulatory Modernization
    • Webinars
  • Subscribe
You are here: Home / Arbitration / Court Decisions / Confirmation / Vacation of Arbitration Awards / COURT VACATES ARBITRATION AWARD FOR ARBITRATOR’S EVIDENT PARTIALITY

COURT VACATES ARBITRATION AWARD FOR ARBITRATOR’S EVIDENT PARTIALITY

June 6, 2017 by Michael Wolgin

A New York Court vacated an arbitration award, finding that a party appointed arbitrator’s undisclosed relationships with the appointing party amounted to a relatively infrequent instance in which such nondisclosure demonstrated evident partiality by clear and convincing evidence. In doing so, the court confirmed that “evident partiality” standard applies in tripartite arbitration involving party appointed arbitrators.

The arbitration at issue arose from a dispute where the reinsurers denied coverage for two workers’ compensation claims by the reinsured. Pursuant to the reinsurance treaties’ arbitration clause, each side appointed an arbitrator and the party appointed arbitrators then selected an umpire. The arbitration resulted in an award for the reinsured and the reinsurers brought this action against the reinsured to vacate the award. The plaintiffs argued that the arbitrator appointed by the defendant (“arbitrator”) failed to disclose his significant business relationships with numerous executives of the defendant, which demonstrated such “evident partiality” as to warrant vacatur of the arbitration award. The court granted plaintiff’s motion to vacate the arbitration award.

In finding “evident partiality,” the court considered the arbitrator’s nondisclosure of his relationships with the defendant’s numerous principals. Those principals were involved in the arbitrator’s own business in their capacity as the Chief Financial Officer, Managing General Agent, National Claims Manager, and counsel. The court found particularly relevant the arbitrator’s nondisclosure of his relationship with a director of the defendant whom the arbitrator hired as the Chief Financial Officer of the arbitrator’s own company just months before the arbitration hearing. The court held that a reasonable person would conclude that an arbitrator who failed to disclose such material relationships was partial to one side. Also, in response to defendant’s argument that evident partiality standard applies “with reduced force, or not at all” in tripartite industry arbitration involving party appointed arbitrators, the court cited a Second Circuit case where the court applied the evident partiality standard to an arbitration panel with the same arrangement. Certain Underwriting Members at Lloyd’s of London v. Ins. Co. of the Americas, Case No. 16-00374 (USDC S.D.N.Y. Mar. 31, 2017)

This post written by Rollie Goss.

See our disclaimer.

Filed Under: Confirmation / Vacation of Arbitration Awards, Week's Best Posts

Primary Sidebar

Carlton Fields Logo

A blog focused on reinsurance and arbitration law and practice by the attorneys of Carlton Fields.

Focused Topics

Hot Topics

Read the results of Artemis’ latest survey of reinsurance market professionals concerning the state of the market and their intentions for 2019.

Recent Updates

Market (1/27/2019)
Articles (1/2/2019)

See our advanced search tips.

Subscribe

If you would like to receive updates to Reinsurance Focus® by email, visit our Subscription page.
© 2008–2025 Carlton Fields, P.A. · Carlton Fields practices law in California as Carlton Fields, LLP · Disclaimers and Conditions of Use

Reinsurance Focus® is a registered service mark of Carlton Fields. All Rights Reserved.

Please send comments and questions to the Reinsurance Focus Administrators

Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please contact us. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites. This site may be considered attorney advertising in some jurisdictions.