November 2012 Vol. 9, No. 3

9.3.16

C.C.P. §1281.9: Arbitrator’s Duty To Disclose

Case:

Comerica Bank v. Howsam (2012) 208 Cal.App.4th 790

Issue:

In an international commercial arbitration conducted pursuant to C.C.P. §1297.11 et seq., did an arbitrator’s failure to disclose timely that he had represented a client who had an account and over which he had signatory authority warrant vacation of the arbitration award?

Holding:

No.  The Court of Appeal observed that an arbitrator’s duties under California’s international commercial arbitration statutes (“international arbitration statutes”) and the consequences from failure to disclose materially differ from those governing domestic disputes.  The requirements of the international commercial arbitration statutes expressly supersede those under the domestic arbitration statutes.  (C.C.P. §1297.17.)  An international commercial arbitrator’s failure to disclose a C.C.P §1297.121 disqualifying ground is not specifically listed in C.C.P. §1286.2(a) as a basis for vacating an arbitration award, even though subsection 6 of §1286.2(a) makes an arbitrator’s failure to disclose a ground for disqualification of which the arbitrator was then aware a ground to vacate the award in a domestic dispute.  (208 Cal.App.4th at 822.)  A litigant in an international commercial arbitration may challenge such a failure to disclose by way of writ petition rather than through a post-award judicial vacatur order.  (Ibid.)     

Note:

The Court of Appeal also rejected defendants’ argument that the award should be vacated because it was secured through corruption, fraud, or other undue means because, among other things, the arbitrator overbilled both sides for his services.  The billing errors were the result of negligent miscalculation, were corrected, and were to the detriment of both sides.  (Id. at 825-826.)

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