Fifth Circuit articulates evident partiality standard
In a software licensing dispute, a sole arbitrator entered an award, only to have the award vacated by a District Court on the basis that the arbitrator had failed to disclose an instance in which he had served as one of many co-counsel in a lawsuit with one of the counsel in the arbitration. The District Court vacated the arbitration award, on the basis that the prior relationship “might have conveyed an impression of possible partiality to a reasonable person.” A panel of the Fifth Circuit affirmed, but in an en banc decision, the full Fifth Circuit reversed, finding that the nondisclosure of “a trivial or insubstantial prior relationship” did not merit vacating the award under the evident partiality standard. The relevant legal standard arises out of a plurality Supreme Court opinion, and the en banc opinion noted a split of the Circuits as to what legal standard for evident partiality comes from the Supreme Court's opinion, with the en banc opinion alinging with the way in which the majority of Circuit Courts had interpreted the opinion. Positive Software Solutions, Inc. v. New Century Mortgage Corp., Case No. 04-11432 (5th Cir. Jan. 18, 2007). There is a prior Reinsurance Focus posting about this case dated June 6, 2006, which includes the Fifth Circuit panel opinion.
