LD 1218, Page 45 - 121th Legislature, FIRST REGULAR Session

relationship between arbitrator and a party is too insubstantial

for "reasonable person" to conclude that there was improper

partiality so as to vacate award under FAA); Beebe Med. Center,

Inc. v. Insight Health Servs. Corp., 751 A.2d 426 (Del. Ch.

1999) (finding that an arbitrator's nondisclosure of a

relationship with an attorney representing a party in

arbitration matter is substantial enough to create a "reasonable

impression of bias" that requires vacatur of arbitration award).

The "reasonable person" test is intended to make clear that the

subjective views of the arbitrator or the parties are not

controlling. However, parties may agree to higher or lower

standards for disclosure under Section 4(b)(3) so long as they

do not "unreasonably restrict" the right to disclosure. For

instance, in labor arbitration under a collective-bargaining

agreement because the parties often interact with each other and

arbitrators, and have personal relationships with each other and

arbitrators, the Code of Professional Responsibility of

Arbitrators of Labor-Management Disputes provides: "There should

be no attempt to be secretive about such friendships or

acquaintances but disclosure is not necessary unless some

feature of a particular relationship might reasonably appear to

impair impartiality." Section 2.B.3.a. Thus a reasonable person

in the field of labor arbitration may not expect personal,

professional, or other past relationships to be disclosed. In

other fields where parties do not have ongoing relationships, an

arbitrator may be required to disclose such relationships.

Section 12(a) requires an arbitrator to make a "reasonable
inquiry" prior to accepting an appointment as to any potential
conflict of interests. The extent of this inquiry may depend
upon the circumstances of the situation and the custom in a
particular industry. For instance, an attorney in a law firm
may be required to check with other attorneys in the firm to
determine if acceptance of an appointment as an arbitrator
would result in a conflict of interest on the part of that
attorney because of representation by an attorney in the same
law firm of one of the parties in another matter.

Once an arbitrator has made a "reasonable inquiry" as required
by Section 12(a), the arbitrator will be required to disclose
only "known facts" that might affect impartiality. The term
"knowledge" (which is intended to include "known") is defined
in Section 1(4) to mean "actual knowledge."

Section 12(b) is intended to make the disclosure requirement a
continuing one and applies to conflicts that arise or become
evident during the course of arbitration proceedings. Sections
12(a) and (b) also provide to whom the arbitrator must make
disclosure. The arbitrator must disclose facts required under
Section 12(a) and (b) to the parties to the arbitration
agreement

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