Section 10(a)(2) of the Federal Arbitration Act (the “FAA”) authorizes courts to vacate awards “where there was evident partiality.  .  .  in the arbitrators.  .  .  .” 9 U.S.C. § 10(a)(2). As respects neutral arbitrators, the U.S. Court of Appeals for the Second Circuit has long held that “[e]vident partiality may be found only where a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration.”  Scandinavian Reinsurance Co. Ltd. v. Saint Paul Fire and Marine Ins. Co., 668 F.3d 60, 64 (2d Cir. 2012) (quotations and citations omitted).

But, particularly in industry and labor arbitration, the parties do not necessarily intend that party-appointed arbitrators on tripartite panels are neutral, that is, disinterested in the outcome, impartial and independent. Can a party vacate an award based on the “evident partiality” of a non-neutral, party-appointed arbitrator, and if so, what standard applies to such a challenge?

In 2012 the Second Circuit in the landmark Scandinavian Re case left open the question “whether the FAA imposes a heightened burden of proving evident partiality in cases in which the allegedly biased arbitrator was party-appointed.” Scandinavian Re, 668 F.3d at 77 & n.21. But in June 2018 the Second Circuit, in Certain Underwriting Members of Lloyds of London v. State, Department of Financial Services, ___ F.3d ___, No. 17-1137-cv., slip op. at 2 (2d Cir. June 7, 2018), 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.” Certain Underwriting Members, ___ F.3d at ___, No. 17-1137-cv., slip op. at 2 (2d Cir. June 7, 2018).

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