Court’s Authority to Remove an Arbitrator

Courts have very limited authority to intervene in arbitral matters prior to a final arbitration award. Essentially they may determine the validity and scope (arbitrability of particular issues) of an arbitration agreement and enforce it. See Gulf Guar. Life Ins. Co. v. Conn. Gen. Life Ins. Co., 304 F.3d 476 (5th Cir. 2002). Section 4 of the Federal Arbitration Act (FAA), 9 U.S.C. § 4, provides an expedited procedure to accomplish these duties. It is unusual for a court to intervene in an arbitration once it is underway, and even more unusual for a court to remove an appointed arbitrator. The FAA provides a mechanism for a court, on application of a party to an arbitration agreement, to appoint an arbitrator or umpire if normal processes fail, 9 U.S.C. § 5, but no authority to remove an arbitrator or umpire if bias, corruption, or partiality is alleged prior to an award. The Fifth Circuit’s opinion in Gulf Guaranty notes that court involvement in the removal of arbitrators is contrary to the FAA’s basic policy of ensuring that cases move into arbitration quickly and are decided expeditiously. In addition, there is a risk that hearing such complaints will introduce unacceptable delay into the process, because a party who successfully objected to an arbitrator would not be constrained from objecting to that arbitrator’s replacement.

The traditional limits on court interference with ongoing arbitrations notwithstanding, two courts removed arbitrators from major cases at year-end.

Disclosure, Disclosure, Disclosure

On December 31, 2013, the United States District Court for the District of Nevada entered an order removing arbitrator Brendan Hare from a long-running case pitting hundreds of condominium buyers against Turnberry/MGM Grand Towers LLC. Sussex v. Turnberry/MGM Grand Towers, LLC, No. 2:08-cv-00773-MMD-PAL (D. Nev. Dec. 31, 2013), ECF No. 141. No one alleged that Hare was actually biased against any party; he was removed because after he had been selected, he started a company designed to assist in financing major litigation and failed to disclose that fact.

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