Second Circuit Affirms Order Confirming Arbitration Award Finding No Partiality Related to Arbitrator’s (Attenuated) Personal and Business Relations

An individual appealed from an order confirming an arbitration award. The appellant argued that the district court erred in refusing to vacate the arbitration award on grounds of “evident partiality.” The appellant contended that this basis for vacatur existed because the arbitrator’s law clerk was the father-in-law of one of the petitioners’ brothers, and the arbitrator had a separate business relationship with the law clerk. The Second Circuit was not convinced. Under the FAA, evident partiality may be found only “where a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration.” Similarly, under applicable New York state law, partiality exists if “the arbitrator and the party or witness have some ongoing relationship” and it is shown that the losing party suffered “prejudice to its rights as a result.” The Second Circuit agreed with the district court that the arbitrator’s relationship to the underlying petitioners was not shown to have “crossed the line.” The court noted that this relationship was “far more attenuated than situations where this Court and New York courts have vacated awards for evident partiality.” And even assuming that the appellant had established partiality, which he had not, the Second Circuit agreed with the district court that, because the appellant had knowledge of the relationship in question during the arbitration proceedings, the “evident partiality” objection was waived.

Magid v. Waldman, No. 20-3216 (2d Cir. Feb. 25, 2022).