SECOND CIRCUIT CLARIFIES PARTIALITY STANDARD FOR PARTY-APPOINTED ARBITRATORS

On June 7, 2018, the United States Court of Appeals for the Second Circuit, held that a party seeking to vacate an award under Section 10(a)(2) of the Federal Arbitration Act sustains a higher burden to prove evident partiality with respect to a party-appointed arbitrator than the “reasonable person standard” generally applied to neutral arbitrators. The Court articulated the following applicable standard for party-appointed arbitrators: “[a]n undisclosed relationship between a party and its party-appointed arbitrator constitutes evident partiality, such that vacatur of the award is appropriate if: (1) the relationship violates the contractual requirement of disinterestedness; or (2) it prejudicially affects the award.” (Citations omitted.)

Certain Underwriting Members of Lloyds of London v. State of Florida, Department of Financial Services, as Receiver for Insurance Company of the Americas