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Party-Appointed Neutral Arbitrators

Thursday, April 10, 2025 6:43 PM | Anonymous

Ethical standards for neutral and party-appointed arbitrators

What should an arbitrator do when he or she has a reason to believe that a party-appointed neutral arbitrator is not being neutral? 

What are your thoughts? 


Comments

  • Saturday, April 12, 2025 12:16 PM | Jim Burgess
    Discuss with your case administrator.
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    • Saturday, April 12, 2025 12:19 PM | Anonymous
      What if there is no institution involved?
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      • Saturday, April 12, 2025 12:39 PM | Michael A. Levy
        Please note. Typos are completely gratuitous.
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  • Saturday, April 12, 2025 12:37 PM | Michael A. Levy
    Jim Burgess' response is the easy one. Just take it up with the case administrator and stay out of the issue. The reply is more troublesome. "What if there is no institution involved?" Are you somehow putting your finger on the scale or creating the appeaarance of doing that if you raise it with either or both of thee parties? I'd be interest in the views of others since I don't have the answer to thata one.
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  • Saturday, April 12, 2025 12:40 PM | Jim Purcell
    If it got that apparent, I'd politely (in front of the other arbitrator) ask words to the effect of: "You are a neutral party appointed, right?" When they ask what I mean, I'd say "Seems like you are showing some bias, and we can't do that." Might as well address it directly.
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  • Saturday, April 12, 2025 12:41 PM | Charles H. Brower II
    The easiest, most effective, and nearly automatic response is to discount the arbitrator's influence on co-arbitrators. Beyond that, it depends on the nature of the behavior that throws the arbitrator's independence and impartiality into doubt.
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  • Saturday, April 12, 2025 12:43 PM | Geoffrey BH
    The first step, I suggest. is to confront the person in the presence of the third arbitrator
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    • Saturday, April 12, 2025 12:52 PM | Geoffrey BH
      My apologies. Jim Purcell has made the point already, but more politely!
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  • Saturday, April 12, 2025 12:48 PM | Joel Levine
    My guess is if you think the other party appointed is not neutral, they think you are similarly not neutral. I'd be interested in hearing how often this problem arises as in all but one of my party appointed arbitrator situations, we started amicably and then the other arbitrator was (in my view) advocating for the party which appointed them. The one exception was where the arbitrators ostensibly didn't know who appointed them (although it was sort of clear based on history with the law firms--but proceeded neutrally). I'd also like to hear what the case administrator can effectively do in this situation. Some party appointeds are not even on the AAA panel.
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  • Saturday, April 12, 2025 12:55 PM | steve gladstone
    My thought would be to make a preventive strike in the first meeting of the arbitrators before anyone has a chance to show prejudice. Specifically, first give your thoughts and understanding on neutrality and your role in the case. Then ask how the other arbitrators feel. That way, if issues arise later, you are in a better position to raise. them
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  • Saturday, April 12, 2025 1:34 PM | Dean John Feerick
    I have had this situation when serving as chair and took it upon myself on one occasion , to speak with the party appointed, a first for him, and educated him on the importance of neutrality as a party-appointed. I also made it a prerequisite at the preliminary conference when I served as chair to make neutrality clear to the parties - and on one occasion, with two former judges as my party appointed, they appreciated my doing so out of concern that the parties might not know of their neutrality but hesitated speaking to them about the subject, hoping I would do so.
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  • Saturday, April 12, 2025 2:28 PM | Nasri H Barakat
    The neutrality of the panel and its members is almost always expressed through the prohibition of ex-parte communications. If the arbitrator was initially appointed by a party and after the panel is properly constituted the panel is declared to be a neutral panel, it would be difficult to identify which action the arbitrator takes that is actually initiated because of the lack of neutrality. It is a difficult proposition to deal with because an arbitrator could back an argument even if it is not proven by the facts. Integrity is what keeps the process valid and desired. When arbitrators display an irreproachable integrity then neutrality is enforced by every action of every member of a panel.
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  • Saturday, April 12, 2025 3:15 PM | Steven H Reisberg
    In my experience, strong bias is rare, and takes care of itself. That is why we have 3 members on the Tribunal. Where clear bias is clear to the other arbitrators, it very significantly weakens the influence of that arbitrator. The 2 other neutrals must take care not to give in to unreasonable demands and accept that there may will be a dissent
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  • Saturday, April 12, 2025 4:45 PM | Beverly Hodgson
    The trouble with a “reminder” of the need to be neutral is that it is likely to sound like an accusation and to prompt a retort that the addressee is simply seeing the merit in the party’s argument. My solution is to apply a filter to comments that appear to reflect advocacy.
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  • Saturday, April 12, 2025 4:47 PM | Joe Catania
    On the one hand, my first reaction is that the term “ neutral party appointed arbitrator “ is an oxymoron! :)
    Actually, my experience has been that the party appointed arbitrator is rarely selected in order to seriously stack the deck. I believe most of the time the expectation is simply that the individual will keep things from going off the tracks and to make sure the party gets a fair evaluation. So I think it’s a disservice to posit that the arbitrator will have a bias strong enough to compel advocacy for a particular outcome. ( not suggesting anyone has done that)
    But it does happen. You see it a lot in specific industry arbitration as there may be a real incentive for an arbitrator to be appointed again and again by parties who are constantly in the specific adr forum. Not sure much can be done in those cases but I do believe the comments regarding the chair setting the tone early on are very valid in the great majority of matters.
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  • Saturday, April 12, 2025 5:21 PM | Thomas P. Valenti
    1) While remaining professional and collegial, an arbitrator might raise concerns about neutrality during internal deliberations, particularly if the imbalance affects tribunal integrity. However, this must be done constructively and in line with procedural fairness.
    2) Under the AAA’s Code of Ethics for Arbitrators in Commercial Disputes and arbitration rules:
    • Disclosures are ongoing: Any circumstance that creates a “justifiable doubt” as to impartiality must be disclosed, including past or present relationships or affiliations .
    • If a challenge is warranted, the arbitrator who suspects bias (or any party to the arbitration) can raise a formal challenge through the AAA. The AAA—not the arbitrator—has authority to decide on the remova
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  • Saturday, April 12, 2025 5:32 PM | Lou Chang
    I have had this happen. In a three person arbitration panel, I observed a=one of the arbitrators meeting with an advocate counsel during a recess. I believe the best thing to do is to raise the issue and concern on the record before the full panel and the parties. The problem arises because panel arbitrators come from different jurisdictions or under different arbitration systems or rules with different concepts of the duty of party appointed arbitrators to be independent, neutral or advocate members of the panel. Raising the issue on the record allows for discussion and clarification of the rules and expectations of the parties, advocates and fellow arbitration panelists moving forward.
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  • Saturday, April 12, 2025 6:34 PM | George Lobman
    I have experienced this 20 years ago and spoke to the administrator in confidence. I asked for a monitor to visit the next hearing and view the hearing from afar! The Association has the right to monitor a hearing for their benefit and evaluation. After the monitoring The situation seemed to correct itself.
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  • Saturday, April 12, 2025 9:30 PM | Mark F. Brancato
    This is an issue which, if confirmed, will impair the arbitral process, jeopardize not only any decision that the panel has already made but the panel's ultimate Award, and provide a basis for appeal. Thus, I would refer the issue to the AAA administrator for his/her action. In the meantime, the proceedings should be suspended until the matter the issue is resolved. That, however, is dicey and would have to be handled in such a way as not to disclose to the parties that l suspect my panel-member's impartiality. I readily acknowledge this might not be possible for numerous pragmatic reasons, but I don't see how or why the matter should proceed when there is a cloud of suspicion hanging over it.
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  • Saturday, April 12, 2025 10:59 PM | Peter Neumann
    My instincts are to avoid confrontation and focus on the positions and arguments asserted by the suspect arbitrator, identify defects and assert well -grounded findings of fact and law and conclusions. The non-biased arbitrator will also endorse, or at least resonate with, your well grounded positions so the the biased arbitrator's views should not impact the outcome. That said, the biased arbitrator should be engaged -- even "humored" -- as reasonably necessary to minimize the risk of a dissenting award that could enhance set aside risk. For example, the arguments of the biased arbitrator could be considered, discussed and dispassionately rejected in the award. That will give the biased arbitrator a basis for explaining to the appointing party that he/she did their best to achieve the desired outcome. If the biased arbitrator is engaging in misconduct (such as trying to derail deliberations), that should be reported to the administering institution. If an ad hoc proceeding, I would have to give the latter more thought.
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  • Sunday, April 13, 2025 1:18 PM | Mark J. Bunim
    I agree with the comments of Joe Catania. In insurance coverage arbitrations, which I do a lot of, I see this situation repeatedly, especially with some industry appointed arbitrators, whose own financial well-being is dependent on repeated appointments by the industry. If they do not push the party line, they will be blacklisted. A good Chair will pick this problem up immediately and have a Tribunal-only call and talk about the importance of neutrality and not advocacy for a particular side. Hopefully that solves the problem, but if not, the case administrator needs to be brought in to the issue. If it is an ad-hoc arbitration, then the Chair has an extra high burden of monitoring and addressing the situation. At the end of the day, any arbitration can be decided on a 2 to 1 basis, so the Chair is the key player.
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  • Sunday, April 13, 2025 9:19 PM | Michael Donaldson
    First. call a break in the proceedings and have a meeting with all three arbitrators to discuss the matter. If there is no resolution, see if the questionable behavior happens again and if it does, have a final meeting and let the questionable neutral know that you are going to go to AAA if it happens again, but without any meaning of the arbitrators.
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  • Sunday, April 13, 2025 9:22 PM | M. Christie (Chris) Helmer
    First raise it with the other arbitrator, as he/she may have additional information that would make one change one’s mind and as, if the problem continues, the other arbitrator’s support will be necessary to resolve it. Then, discuss it with the seemingly non-neutral arbitrator, as even if the arbitrator is in fact being neutral, the appearance of impropriety must be avoided. If the lack of neutrality continues, the Chair should discuss it with the institution. Potentially, the arbitrator might need to be removed. If the arbitration is ad hoc, hopefully the procedural rules of the seat will address how to go forward and potentially remove. Chris

    M. Christie (Chris)
    Helmer
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  • Monday, April 14, 2025 8:28 AM | Joseph Bisceglia
    You cannot automatically assume the neutral is biased. Perhaps he or she simply has a different view of the merits. I would first try
    whatever powers of persuasion I could muster to change their view of the case. If real bias is evident, then discuss with the administrator to see if the AAA has any suggestions.
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    • Friday, April 18, 2025 2:00 PM | Allen M. Gruber
      I believe the arbitrator has a duty to raise the issue, as long as the parties are given ample opportunity to address the issue.
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  • Monday, April 14, 2025 10:43 AM | Linda Bond Edwards
    In the case of a private arbitration (without a case manager) perhaps a discussion of the guidelines at the first meeting of the neutral panel might be helpful including, the necessity for all neutrals to remain neutral, regardless of how they came to be a member of the panel. The panel can also discuss generally, what to do if the lack of neutrality becomes an issue.
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  • Friday, April 18, 2025 3:05 PM | Charles Turet
    All panel members are, unless otherwise directed by the arbitration agreement expected and required to be "neutral" in evaluating contested facts or law. If the issue under consideration is a "toss-up", my experience is that the party appointed arbitrator will favor the party appointing him or her, with the Chairman, as the non-party appointed, will determine th outcome of the issue- hence the reason for a 3 person panel.
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