One of the bedrock assumptions underlying arbitration law is that parties who choose arbitration implicitly agree to forgo some of the procedural niceties of litigation. In effect, they trade some of the protections of the formal judicial process for the speed, cost savings and decision by industry experts potentially available in arbitration. This trade-off is made enforceable by the Federal Arbitration Act (FAA), which (among other things) sharply restricts the circumstances under which courts may vacate arbitration awards.
Ironically, however, courts sometimes seek to hold arbitrators to standards stricter than those applicable to judges. A recent example is the February decision by Judge Shira Scheindlin in Scandinavian Reinsurance Co. Ltd. v. St. Paul Fire & Marine Insurance Co.1 In Scandinavian Re, Judge Scheindlin vacated an arbitration award on the basis of the “evident partiality” of two arbitrators who neglected to make disclosures concerning their service in a different arbitration. Notably, the matters that Judge Scheindlin held should have been disclosed did not relate to relationships between the arbitrators and the parties. As a result, those matters were not obvious indicators of bias.
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