By Dr. Darik Cruz

Introduction

The arbitral award represents the outcome of arbitration. We can consider two aspects; whether or not the arbitral award is binding. In the case of arbitral award binding, the parties have a duty to comply with the decision of the arbitral tribunal. Notwithstanding, section 10(a)(2) of the Federal Arbitration Act establishes:

"(a) In any of the following cases the United States court in and for the district wherein the award was made may make an order vacating the award upon the application of any party to the arbitration—

(1) where the award was procured by corruption, fraud, or undue means;

(2) where there was evident partiality or corruption in the arbitrators, or either of them;

(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or

(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made."¹

In particular, subsection 10(a)(2) mentions the evident partiality or corruption in the arbitrators, but how can we handle this situation? It is necessary to start an ethics process against the arbitrators before or after submitting the claim before the United States Court, or we need to start the claim directly to the United States District Court.

Well, in Certain Underwriting Members of Lloyds of London v. State of Florida, Dep’t of Fin. Serv.², "the United District court concluded under our reasonable person standard that the ICA (Insurance Company of America)-appointed arbitrator was impermissibly partial to ICA."³ "Then the United States Second District held that a party seeking to vacate an award under Section 10(a)(2) must sustain a higher burden to prove evident partiality on the part of an arbitrator who is appointed by a party and who is expected to espouse the view or perspective of the appointing party."⁴

The United States District court understood that the arbitrator was partial in the case. When this case went to the Second Circuit Court, the necessity of a higher burden proved evident partiality. But what is really considered evident partiality?

Evident partiality

National Football League Management v. National Football Players Association, states about the evident partiality, "Evident partiality may be found only ‘where a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration."⁵ Also, this decision added that the party seeking vacatur must prove evident partiality by clear and convincing evidence.

In addition, the courts have included in the discussion the difference between "active partiality" and "passive partiality". "Active partiality" refers to actions by the arbitrator indicating that he or she is predisposed in favor or against one of the parties.⁶ "Passive" partiality refers to circumstances surrounding the arbitrator that may give rise to inferences of partiality, even where there is no demonstration of active partiality, such as an arbitrator’s relationship with one of the parties.⁷

Although the parties can present this claim of evident partiality, it is important to review the contract process about how to select the arbitrators by the parties. If the parties select any provider, they should review the ethical standards as a part of consideration before establishing and selecting them. There are many Alternative Disputes Resolution (ADR) providers to serve consumers, commercial, and international matters.

Alternative Disputes Resolution (ADR) providers

The United States Supreme Court decision in Commonwealth Coating Corp. v. Continental Casualty Co., discussed and decided about arbitrator impartiality. Especially, whether the neutral arbitrator’s failure to disclose his sporadic, but repeated and significant business relationship with another party to the arbitration required that the arbitration award be vacated. As a note of the case, the third arbitrator conducted large business in Puerto Rico. In the case the discussion is in subsection 10(a)(1) and subsection 10(a)(2), our discussion is addressed in subsection 10(a)(2) of evident partiality.

The U.S. Supreme Court decided that the award can be overturned if an arbitrator fails to disclose a prior business relationship, because that arbitrator must be more scrupulous to safeguard impartiality. In this case, the American Arbitration Association (hereinafter AAA) was the provider, whose reference to Section 18 "Disclosure by Arbitrator of Disqualification" was discussed along with part of Canon 33 of Judicial Ethics.

Generally, ADR providers have code of ethics, and each jurisdiction (states or territories) has Rules of Professional Conduct to regulate arbitrators and/or attorneys who are conducting the arbitration process. Also, it is very important how the parties select the arbitrator for the dispute. Just to mention and recognize, the providers in the United States are the AAA and the Judicial Arbitration and Mediation Services (hereinafter JAMS).

American Arbitration Association (AAA)

The AAA is a nonprofit corporation and one of the larger ADR providers in the United States. The AAA provides services for consumers, commercial, and international matters as part of the daily offerings. Also, they have the code of ethics for commercial and consumer areas. For example, and just to mention one of these codes, the Code of Ethics for Arbitrators in Commercial Disputes (2004) is the most widely used of standards setting out ethical responsibilities for U.S. arbitrators, including obligations to uphold the fairness and integrity of the arbitration process.⁸

Judicial Arbitration and Mediation Services (JAMS)

JAMS is a profit corporation that offers efficiency, speed, and results. JAMS is a full service alternative dispute resolution institution in the US that provides arbitration and mediation services for domestic and international disputes. JAMS maintains a roster of neutrals who are available to serve as arbitrators and mediators, many of whom are former judges.⁹ In order to save clients time and money, JAMS has instituted procedural options that allow the crafting of a process that is commensurate with the dispute.¹⁰

Conclusion

Section 10(a)(2) of the AAA establishes an option to challenge the arbitral award when the arbitrator does not comply with high standards of ethics. The evident partiality is a substantial evaluation to evaluate when the party presents the claim in the United States District Court. As we saw, the burden of proof is bigger and necessary to vacate an arbitration decision. When the parties are contracting others and are evaluating the ADR providers, it is very important to review and be conscious of the guidelines of ethics for arbitrators.

Nevertheless, if the case represents apparent misconduct, the "Ethic of Code" that regulates attorneys in any jurisdiction like the American Bar Association (AAA) or Rules of Professional Conduct for Puerto Rico could be enough to start or evaluate any claims presented by the parties who allege that they are affected by the arbitrators for the mere improper appearance. Finally, and answering our question, any process according to section 10(a)(2) is necessary to submit the claim in the United States District Court.

FOOTNOTES

¹ 9 US Code §10.
² 892 F.3d 501 (2018).
³ 892 F.3d. 501 (2018).
⁴ 892 F.3d. 501 (2018).
⁵ NFL Management Council v. National Football Association, 820 F. 3d 527 (2nd Cir. 2016).
⁶ Leonard L. Riskin, et. als., Dispute Resolution and Lawyers, Sixth edition (2019).
⁷ Leonard L. Riskin, et als., Dispute Resolution and Lawyers, Sixt edition (2019).
⁸ Jay Folberg, et. als. Resolving Disputes, Fourth Edition (2022).
⁹ JAMS. (last visited May 27, 2026).
¹⁰ JAMS. (last visited May 27, 2026).