Under California and US law, an arbitrator’s award will be confirmed by a court even if the arbitrator is wrong on the law and the facts. This makes the appointment of the arbitrator perhaps the single most important process in arbitration. This article is the first in a series about the ins and outs of arbitrator disqualification for arbitrations seated in California. Today’s topic is the operation of Section 1281.91(a) and (b) of the California Arbitration Act governing arbitrator disqualification for domestic arbitrations seated in California. I will cover disqualification under the Federal Arbitration Act in later posts.
Suppose you have a AAA consumer or commercial arbitration where the AAA or some other administrative body has either made an administrative appointment of a sole arbitrator or selected a sole arbitrator after the parties engaged in striking and ranking from a list of arbitrators. Under Section 1281.91(b), if the nominated arbitrator has made disclosures required by Section 1281.9, either party has the absolute right to disqualify the arbitrator within fifteen days after receiving notice of the disclosure. Roussos v. Roussos,60 Cal. App. 5th 962, 971 (2021). The items that must be disclosed are listed in Section 1281.9. It does not matter if the item disclosed would not support a claim of bias or, indeed, would be considered trivial by any right-thinking person. If the relationship falls within any of the categories of disclosures mandated by the statute, any party has the right to disqualify the arbitrator based on the disclosure. Good cause is not required. Id. The disqualification is automatic like a peremptory challenge under Cal. Code Civ. Proc. 170.6. Id.
What if the nominated arbitrator failed to make the required disclosures? If the nominated arbitrator failed to make the disclosures required under Section 1281.9 within 15 days after being nominated, then under Section 1281.91(a), either party has the right to disqualify the arbitrator. This failure to disclose is distinguishable from a disclosure that says there is nothing to disclose under Section 1281.9. In the event the arbitrator states within 15 days after being nominated that there is nothing to disclose under Section 1281.9 – that is, the arbitrator has none of the disclosable relationships – then the arbitrator has complied with Section 1281.9 and there is no opportunity for disqualification under either 1281.91(a) or (b).
What if the disclosure is made by a party appointed arbitrator or the parties have agreed in advance in their contract that a particular arbitrator will resolve all subsequent disputes? The same rules apply. This means that a party appointed arbitrator can be disqualified even by the appointing party based on disclosures required under Section 1281.9. As to an arbitrator named in a contract, the Court of Appeal in Roussos v. Roussos, Ca. Ct. App. 2d Dist. (Feb. 16, 2021), recently held that even if the parties have agreed in advance on the identity of an arbitrator to resolve subsequent disputes, any party has the right to disqualify the arbitrator based on disclosures required under Section 1281.9. If the arbitrator discloses, for example, a past mediation or arbitration between the parties that, perhaps, led to the contract that named the arbitrator to handle subsequent disputes, the arbitrator nonetheless is subject to disqualification by either party.
Except when an arbitrator has been nominated by a court, the Section 1281.91 disqualification rights are unlimited in number. Parties can commit serial disqualifications so long as the requirements of Section 1281.91(a) or (b) are met. Though, presumably, if it could be shown that a party is engaging in serial disqualifications in bad faith, the other party could ask a court to intervene and nominate an arbitrator. In that event, pursuant to Section 1281.91(b)(2), a party may make one disqualification without cause. All subsequent disqualifications would require a showing of good cause.
The time limits in subsections (a) and (b) are strictly construed and a failure to disqualify the arbitrator in a timely manner waives the right. If the arbitrator fails to make a disclosure that should have been made under Section 1281.9 (i.e., if the arbitrator makes some disclosures but omits a required disclosure), then Section 1281.91(c) and (d) provide the disqualification rights. This is a subject I will cover in a later blog because it has its own complexities.
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