Page 11 - ADR

NYLJ.COM |
Alternative Dispute Resolution | MONDAY, AUGUST 7, 2017 | S11
Arbitrator Bias
« Continued from page S6
ing on the stage of the proceeding and the decision maker. Challenges to arbitrators raised during the course of an arbitration frequently are handled by the arbitral insti- tution or, in the case of ICSID, by the non- challenged arbitrators on the tribunal. In such cases, guidelines like those published by the IBA and ICC carry considerable weight. Challenges to an arbitral award because of bias will be decided by a court in the seat of arbitration, which almost certainly will rule based on the legal standards set out in that country’s laws.
The Federal Arbitration Act permits vaca- tur of an award “where there was evident partiality or corruption in the arbitrators, or either one of them.” 9 U.S.C. §10(a)(3). Various circuits have confirmed the high threshold set by this standard. The First, Second, and Fifth Circuits, for example, have held that “evident partiality” will be found when “a reasonable person,” considering all of the facts, “would have to conclude” that an arbitrator was par- tial to one party. See, e.g., JCI Commc’ns v. Int’l Bhd. of Elec. Workers, Local 103, 324 F. 3d 42, 52 (1st Cir. 2003); Applied Indus. Materials v. Ovalar Makine Ticaret Ve Sanayi, A.S., 492 F.3d 132, 137 (2d. Cir. 2007); Household Grp. v.
Transitioning
« Continued from page S5
or subpoena, conferring with my court attor- ney on a legal issue and checking to see if I’d be allowed to send any cases out for jury selection, all at once. Now, as a private media- tor, I am laser-focused on the matter before me and can get into greater detail, analyzing all of the relevant issues. While I occasionally miss the organized chaos of the courtroom, I am quickly getting used to the pace, structure and dialogue of private mediation.
I have also noticed that, for the most part, attorneys who appear for mediation are gen- erally better prepared to reach a settlement than counsel who appear in court for a settle- ment conference. Many times in court you have a per diem attorney or a young associate who may not know all the details of the case and does not have authority to negotiate. Attorneys at mediation generally know the strengths and weaknesses of their cases, have their clients with them or on phone standby, and know the parameters of where the litiga- tion can settle.
In court, cases often need to “ripen” in order to be in position for settlement. That is, all discovery needs to be completed or the judge is told that the carrier hasn’t evalu- ated the case yet. I have noticed that parties will mediate and settle their cases early on, sometimes before parties have completed discovery, even prior to depositions. In media- tion, if there is a willingness to resolve a case by both sides, it can get done at any stage of the litigation.
Generally, in court, cases mostly settle when the lawyers hear the famous words, “go pick.” In mediation, the parties are there
Caughran, 354 F. App’x 848, 852 (5th Cir. 2009). The D.C. Circuit requires “specific facts that indicate improper motives on the part of the arbitrator.” Al-Harabi v. Citibank, N.A., 85 F.3d 680, 683 (D.C. Cir. 1996). The Ninth Circuit, by contrast, will find “evident partiality” where the facts show a “reasonable impression of bias,” a lower standard. Lagstein v. Certain Underwriters at Lloyd’s, London, 607 F.3d 634, 645-46 (9th Cir. 2010).
British courts similarly will look to local law. In 2016, for example, a British court held that no conflict existed under circumstances that the court acknowledged fell squarely within the IBA Guidelines’ “Red List.” W Limited v M SDN BHD [2016] EWHC 422 (Comm) (2 March 2016). During the course of the arbitration, the parent company to the respondent in the case acquired a subsidiary that was represented by the sole arbitrator’s law firm. Under the IBA rules, a non-waivable conflict exists when an arbitrator’s law firm regularly advises an affiliate of the respondent and the arbitrator’s firm derives substantial financial income from advising the affiliate. Although the acquisition was publicly known, the arbitrator did not disclose that his firm represented and derived revenue from an affiliate of one of the parties.
Following the issuance of two awards, the losing party became aware of the repre- sentation and challenged the awards. While
voluntarily and they are motivated to settle their case. After all, that’s why you’ve paid for the mediation—you want to try to settle. Of course, sometimes people are not realistic about their case, or they use mediation to test the strengths and weaknesses of their posi- tion, or perhaps are trying to obtain informa- tion from the opposing side. However, even if this is so, a settlement can still result out of these circumstances, if the parties “put all of their cards on the table” and are realistic in their evaluation of the case.
Of course, the court uses its best efforts to attempt to resolve cases. However, sometimes the court system’s priorities don’t match the concerns of the attorneys. OCA’s recent empha- sis in “pre-note standards and goals,” I’m sure, is not important to most practitioners and, in my experience, did not assist in obtaining disposi- tions. In private mediation, the mediator and the attorneys are free from the formalities of OCA and the courthouse. This allows me to be more assertive during the mediation and follow up after an initial mediation session which may not end in a settlement. The mediation is not necessarily over if it was unsuccessful at first. I remain in contact afterwards and continue to prod and push the parties to move them closer to a resolution. This does not happen in court, as the parties will generally just wait for the next conference date without the court getting involved.
The bottom line is that private mediation allows cases to be resolved more quickly, more efficiently, with greater cost-effective- ness and with the parties maintaining greater control of the outcome, than allowing your case to slowly meander through the different stages of the court system’s litigation maze. That being said, I am looking forward to con- tinuing this exciting new phase of my career.
acknowledging that the circumstances were problematic under the IBA Guidelines, the court noted that the guidelines were non- binding and took issue with the presumption that a potential apparent conflict of this type would create a non-waivable conflict. Under UK law, an arbitrator can be disqualified in the face of apparent bias where a “fair minded and informed observer” could conclude under the circumstances that a “real possibility” of bias exists. Id. para. 17. The court found that the test could not be met.
Given the varied standards used to assess arbitrator bias, it is not surprising that parties and arbitrators may be confused as to how to act. This confusion, however, should not tarnish the legitimacy or diminish the value of international arbitration as a means of resolv- ing disputes. While certain relationships can lead to biases or implicate an arbitrator’s abil- ity to render an impartial decision, the fact that arbitrators are part of the commercial world and interact with various players in the arbitral process is an advantage of the system. In addressing questions of arbitrator bias, Justice Byron White noted that arbitra- tors are often “effective in their adjudicatory function” because “they are men of affairs, not apart from but of the marketplace.” Com- monwealth Coatings v. Continental Gas., Co, 399 U.S. 145, 150, 89 S.Ct. 337, 21 L.Ed. 2d 301 (1968). Arbitrators, therefore, “are not
Divorce
« Continued from page S4
which hindered visitation.” The Appellate court cited the Silbowitz case as precedent, which delegated to the parent coordinator the authority to oversee the enforcement of the terms of the existing parenting plan but not the explicit authority to resolve issues pertaining to the child’s best interests.
Arbitration is an accepted form of conflict resolution in matters involving equitable dis- tribution. However, it is no longer viewed by the courts as an accepted form of conflict resolution for custody and visitation cases, although arbitration continues to have some acceptance in child support matters, subject to final review by the courts to determine compliance with the Child Support Standards Act and best interests of the child. While mediation has been gaining wider accep- tance by the courts, it is only just beginning to be understood by the courts as a separate discipline apart from other forms of conflict resolution.
Through efforts to provide a better under- standing of the practice of divorce mediation, the courts will gain a greater appreciation of the unique role of divorce mediators, apart from other professionals, and will learn the unique role that divorce mediators can play. Ultimately, the hope is that, through alterna- tive forms of dispute resolution, parties who go through the divorce process will be left feeling a greater sense of control over their own lives and their own destinies, and will be better equipped to resolve their own conflicts with one another in the future, without the need for seeking court intervention to resolve their matters.
automatically disqualified by a business rela- tionship with the parties before them if both parties are informed of the relationship in advance, or if they are unaware of the facts but the relationship is trivial.” Id.
Conclusion
Justice White’s guidance remains valid. Disclosure of potential conflicts can give parties an opportunity to decide up front, and on an ongoing basis, whether it cre- ates a disqualifying issue. Because what is “trivial” may vary from case-to-case, the wise course of action is for an arbitrator to err on the side of disclosure when legiti- mate questions arise. In deciding whether such questions exist, parties and arbitra- tors alike should look to the IBA Guidelines and the laws of the seat of arbitration as complementary checks. The IBA Guidelines can indicate how a specific relationship is viewed generally in the international arbitration field and can guide parties and counsel on how to react. In all cases, though, where there are disclosures that minimally would require a waiver from one of the parties, an attorney should assess how the courts in the seat of arbitration have handled similar circumstances. Such precautions can minimize the chances of upsetting an award later in the process.
Promote Your
NEW YORK STATE BAR TUTORIAL PROGRAM
COURSES & SERVICES IN THE
Donald Chalphin
(215) 557-2359
[email protected]
2017-0807-SS-ADR.indd 11
8/4/17 3:01 PM