Friday, January 21, 2011

Undisclosed Arbitrator Conflict Results in Vacated Award

The Court of Appeals, Fifth District of Texas just vacated an award in an employment matter because an arbitrator did not disclose a conflict in the form of a prior relationship with a counsel for an adverse party. [Alim v. KBR (Kellogg, Brown & Root) – Halliburton, No. 05-09-00395-CV (Tex. App.—Dallas, Jan. 10, 2011)].

As documented in the written decision, the arbitrator testified that he was aware of his conflicts management responsibilities in accordance with the Code of Ethics for Commercial Arbitrators:
  • "...he also represented that he had diligently conducted a conflicts check, although that check appears to be nothing more than an exercise he conducted from memory."
  • "In his notice of appointment, Rosuck answered 'No' to the following question: 'Have any of the party representatives, law firms or parties appeared before you in past arbitration cases?' In that same notice, Rosuck then attested, under oath, that he had 'diligently conducted a conflicts check.'"
But a relationship did exist, as the arbitrator had previous interaction with counsel on an unrelated past arbitration. Adding weight to the decision, upon specific inquiry about the past relationship, the arbitrator did not acknowledge his error or oversight:
  • "The Court held that the arbitrator’s nondisclosure and his failure to amend his answer to the question specifically inquiring about that fact constituted evident partiality."

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