No Man is an Island: Court rules that arbitrators need not live in splendid isolation!

A party who received an adverse arbitration award hired a private investigator to determine if the arbitrator had failed to disclose certain professional relationships with one party that might have indicated that he was not neutral. Those relationships were bar association committee memberships, among other things.

The losing party contended that if he’d known of these facts, he would have disqualified the arbitrator. Hence, he argued, the adverse award should have been vacated.

The appellate court in Nemecek & Cole v Horn (July 23, 2012) Court of Appeals Case No. B233274, reminds us that ordinary and insubstantial business dealings arising from participation in the business or legal communities do not necessarily require disclosure.

However, if such dealings are substantial and involve financial and other considerations creating an impression of possible bias, they must be disclosed.

In this case, the Second Appellate District ruled that mere participation in bar association committees with members of a law firm in an arbitration is not enough to warrant disclosure or disqualification.