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In denying a motion to disqualify an arbitrator for “evident partiality,” a federal court in Utah held that the Federal Arbitration Act does not allow courts to inquire into an arbitrator’s qualifications until an award is issued.
In Barlow v. Healthextras Inc., No. 2:05cv00189 PGC, 2006 WL 3306802 (D. Utah Nov. 13, 2006), the Court ordered the parties to arbitrate their dispute. The arbitration agreement provided for arbitration before a panel of three neutral arbitrators.
Several months after the arbitrators were selected, one of the arbitrators, Rich Humphreys, filed a lawsuit on behalf of his client against a sister company of one of the Defendants. The Defendants subsequently moved to disqualify Humphreys as an arbitrator, arguing that the pending lawsuit constituted “evident partiality” under section 10(a)(2) of the Federal Arbitration Act (FAA).
In opposing the motion, Barlow argued that courts do not have authority to disqualify an arbitrator until an award is issued. As support for this argument, Barlow noted that section 10(a)(2) refers to arbitration awards in the past tense.
The Court agreed with Barlow’s interpretation of the FAA and held that the FAA does not allow judicial inquiry into an arbitrator’s qualifications until an award has issued. In reaching this holding, the Court relied largely on the Fifth Circuit’s interpretation of the FAA in Gulf Guaranty Life Insurance Co. v. Connecticut General Life Insurance Co., 304 F.3d 476 (5th Cir. 2002).
The Court’s decision does not mean that a party should withhold allegations of arbitrator bias until an award is issued. On the contrary, the party should raise those allegations as part of the arbitration proceeding, especially if the rules of arbitration provide a mechanism for seeking arbitrator disqualification. See, e.g., Rule 23C of the National Arbitration Forum Code of Procedure.
If a party sits on evidence of arbitrator bias while awaiting an award, the party risks waiving the objection. See Van Pelt v. UBS Financial Services, No. 3:05CV477, 2006 WL 1698861 (W.D.N.C. June 14, 2006).
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