Lloyd's Maritime and Commercial Law Quarterly
DISCLOSURE REQUIREMENTS IMPOSED ON ARBITRATORS IN MARITIME ARBITRATIONS UNDER UNITED STATES LAW
John P. Meade
of Messrs. Graham & James, Attorneys, Washington, D.C., U.S.A.
Questions concerning disclosure by arbitrators of dealings with parties to arbitrations have given rise to considerable litigation in United States Courts. This article will analyse the resolution of these questions by U.S. Courts and comment on them, particularly in the context of maritime arbitration, tracing the development of case law delimiting the disclosure required of arbitrators from the important 1968 Supreme Court decision in Commonwealth Coatings Corp. v. Continental Casualty Co.
1
The disclosure rules of the American Arbitration Association and the Society of Maritime Arbitrators will be examined to determine how those bodies have interpreted the judicial pronouncements regarding the proper standard of disclosure. Finally, the article offers some suggestions as to how the disclosure rules of the Society of Maritime Arbitrators might be modified to deal more effectively with the disclosure problem in light of the most recent judicial decisions on the subject.
I. Introduction.
The great majority of American maritime arbitrations takes place, according to the charter-party terms, in the city of New York, and the Court opinions dealing with maritime arbitrations are usually handed down by the New York State Courts or the Federal Courts sitting in New York City. Although maritime arbitrations are governed exclusively by the legal rules laid down under a Federal statute, the United States Arbitration Act,2 Courts in both the State and U.S. Federal system have the jurisdictional authority to decide questions involving maritime arbitrations.3 However, the different “citizenship” of the parties to most maritime arbitrations gives either party the right, under a Federal statute,4 to have an action involving the arbitration “removed” to the Federal Court. The result is that most such actions are heard in the Federal Courts in New York City.
As an arbitrator acts in a quasi-judicial capacity,5 and as a result of his broad grant of power, he should be impartial and non-partisan6 so as to assure the parties of the fairness of the proceedings.7 One aspect of the problem of arbitrators’ impartiality is
1 393 U.S. 145 (1968).
2 9 U.S.C. ss. 1-14 (1964), hereinafter referred to simply as “the Arbitration Act.”
3 28 U.S.C. s. 1333 (1970). Although State Courts have concurrent jurisdiction in maritime arbitrations, they are bound to apply Federal maritime law in rendering their decisions. See Robert Lawrence Co. v. Devonshire Fabrics Inc., 271 F. 2d 402 (2d Cir. 1959), cert. dismissed, 364 U.S. 801 (1960).
4 28 U.S.C. s. 1441 (1970).
5 American Eagle Fire Ins. Co. v. New Jersey Ins. Co., 240 N.Y. 398; 148 N.E. 562 (1925).
6 As is discussed in more detail below, the standard of disclosure discussed in this article applies to the third arbitrator customarily selected by the two party-appointed arbitrators in tripartite tribunals. The arbitrator nominated by a party is not expected to be non-partisan, but it has been said that he is bound not to act in flagrant disregard of the rights of the other party. See M. Domke, “The Law and Practice of Commercial Arbitration” s. 20.03 at 197 (1968) and cases cited therein.
7 See Kutner, “Homo Arbiter: Emerging Judicial Man—Suggestions for Qualifications and Credentials”, 37 Tenn. L. Rev. 364 (1970).
399