Do arbitrators exhibit “evident partiality,” providing grounds to vacate an arbitration award, by failing to disclose that they are serving as arbitrators in a simultaneous but separate arbitration, where the two arbitrations involve tangentially related parties, share similar issues and include a common material witness? On February 23, 2010, the U.S. District Court for the Southern District of New York (Scheindlin, J.) vacated an award on these grounds in Scandinavian Reins. Co. v. St. Paul Fire & Marine Ins. Co., No. 09 Civ. 9531 (S.D.N.Y. 2010), holding that the arbitrators’ participation in the second arbitration was, in the particular circumstances of the case, a material conflict of interest that should have been disclosed, notwithstanding the arbitrators’ good faith belief that they would not be influenced by any information learned during the other arbitration.

The facts

WW Gear Construction Ltd, the employer, wished to develop a site in the middle of a roundabout directly on the south side of Westminster Bridge in London. McGee, the trade contractor, was a ground works trade contractor and was retained by Gear to carry out excavation and other ground works for the development. The agreed contract sum was £1,812.836.75. McGee completed its work and Gear made some payments. However, disputes arose in relation to payments including McGee’s claims for delay and disruption-related loss and expense.

Click here to read Securities and Exchange Commission Release No. 34-62480.