U.S. Appeals Court Finds Undisclosed Familiarity Among Co-Arbitrators and Counsel Insufficient Ground for Arbitration Award Vacatur Under Federal Arbitration Act or New York Convention

The Eleventh Circuit Court of Appeals recently denied vacatur and confirmed an arbitration award despite the non-prevailing party’s allegations that the arbitral tribunal members failed to disclose that they had been seated with one another on other, unrelated arbitral panels and served on panels with and before which the prevailing party’s attorneys appeared and were therefore biased against the non-prevailing party.

The case, Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panama, related to the expansion of the Panama Canal. Grupo Unidos is a consortium of European companies contract to design and build a new set of locks for the Panama Canal. After complications and delays, Grupo Unidos did not complete its contractual obligations until almost two years past the deadline. Several arbitrations between Grupo Unidos and the canal authority commenced as a result of the delay.

At issue in this case was the Panama I Arbitration, which involved a three-member arbitral tribunal with the International Court of Arbitration of the International Chamber of Commerce. Prior to the commencement of the arbitration, all three members of the tribunal made disclosures as to potential conflicts. Following five years of arbitration, the tribunal awarded the canal authority almost $240 million dollars in damages. Following the arbitration award, Grupo Unidos requested additional disclosures from the tribunal members, seeking evidence of arbitrator bias. The additional disclosures revealed that: (1) one of the arbitrators nominated another tribunal member to serve as chair in an unrelated arbitration; (2) during the pendency of the Panama I arbitration one of the tribunal members served as co-arbitrator in an unrelated arbitration with one of the canal authority’s attorneys; (3) prior to the Panama I arbitration, another tribunal member served as co-arbitrator on an unrelated arbitration with one of the canal authority’s attorneys; and (4) one of the tribunal members has been serving on a panel in a case in which one of the canal authority’s attorneys represents a party. Grupo Unidos claimed the relations were evidence of bias against them and sought to vacate the award in the United States District Court for the Southern District of Florida.

The District Court declined to vacate the award and confirmed. Grupo Unidos appealed. The Eleventh Circuit affirmed the District Court’s award confirmation, under both the Federal Arbitration Act (“FAA”) and New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). The Eleventh Circuit held that merely serving on the same tribunals, and even nominating a fellow arbitrator as chair, is not sufficient to show evident partiality or corruption among the arbitrators. The Panama I arbitrators were experienced, sought-after neutrals with decades of experience and dozens of cases, with particular expertise in construction arbitration, a niche area. Thus, it is unsurprising the arbitrators may serve on other panels together and know one another professionally – that is not tantamount to bias, the Eleventh Circuit concluded. Additionally, again given the niche legal area, it is also not surprising that counsel may appear before neutrals in more than one case. Again, such familiarity is not tantamount to bias. Thus, the Eleventh Circuit found there were no grounds to vacate the award under either the FAA or New York Convention.


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