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Considering the small size of the legal community in Anchorage, an arbitrator’s connections with attorneys representing arbitrating parties are unlikely to support a finding of evident partiality when there are no financial incentives for the arbitrator, the Supreme Court of Alaska held.
In Kinn v. Alaska Sales and Service, Inc., No. S-11748, S-11768, 2006 WL 2789375 (Alaska Sept. 29, 2006), Kinn and Alaska Sales arbitrated a dispute that arose after Alaska Sales purchased a car dealership and the attached land from Kinn. The arbitrator issued an award in favor of Alaska Sales and Kinn sought to have the award vacated, claiming that the arbitrator was evidently partial.
Kinn argued that Davis, the arbitrator, should have disclosed the fact that he represented a client who was aligned with a client of Bankston’s in a separate action. Bankston was Alaska Sales’ attorney in the arbitration proceeding. Kinn also pointed out that Davis participated in a bar event coordinated by Bankston.
To determine if an arbitrator is evidently partial, a court looks at “whether the relationship would cause a reasonable person to doubt the impartiality of the arbitrator, particularly on grounds of ‘some financial interest or other loyalty owed to one side of the dispute.’” Cellular Radio Corp. v. OKI Am., Inc., 664 A.2d 357, 360-61 (D.C. 1995).
In this case, the Court held that Davis’s connections were not sufficient to cause a reasonable person to doubt his impartiality. Kinn did not point to any financial interest that Davis had in the outcome of the arbitration.
Additionally, Davis’s relationship with the attorney for Alaska Sales was insufficient to show evident partiality because Davis’s and Bankston’s clients who were aligned in a previous lawsuit had different interests in that suit. Additionally, Davis had a stronger friendship with the wife of Kinn’s attorney than he did with Bankston.
Finally, the Court noted that, considering the small size of the legal community in Anchorage, arbitrators would inevitably have connections of some sort with attorneys in an arbitration proceeding, be it through attending bar events sponsored by each other or referring cases to each others’ firms. Therefore, the Court held that Davis’s connections to the Anchorage legal community did not constitute evident partiality.
Kinn also challenged the superior court’s decision to remand future disputes regarding the arbitration award to arbitration. However, this Court upheld the superior court’s judgment because “many jurisdictions now permit arbitrators to exercise limited, continuing jurisdiction over the issues that they were initially responsible for adjudicating.”
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