## Facts

- Insurance Company of the Americas (ICA), a workers’ compensation insurer, purchased reinsurance from Certain Underwriting Members of Lloyd’s of London under reinsurance treaties.
- The treaties required arbitration before a three-member panel: one party-appointed arbitrator for each side and a neutral umpire selected by the two arbitrators.
- The treaties required arbitrators to be “disinterested.”
- ICA appointed Alex Campos as its party-appointed arbitrator.
- Campos did not disclose multiple relationships with ICA-associated individuals, including business connections involving entities linked to ICA’s personnel and operations, and represented that he lacked close ties to ICA.
- The arbitration panel issued an award for ICA of approximately $1.5 million.
- The Underwriters petitioned in federal court to vacate the award under FAA § 10(a)(2), arguing “evident partiality” based on Campos’s nondisclosures.
- The district court vacated the award, applying the ordinary “reasonable person” evident-partiality standard.
- ICA (later represented by the Florida Department of Financial Services as receiver) appealed.

## Issues

1. Under FAA § 10(a)(2), what standard governs “evident partiality” challenges to a party-appointed arbitrator who failed to disclose relationships with the appointing party’s directors, employees, or affiliates?
2. Did the district court err by applying the evident-partiality standard applicable to neutral arbitrators rather than a heightened standard tailored to party-appointed arbitrators?
3. When does a party-appointed arbitrator’s undisclosed relationship justify vacatur: upon nondisclosure alone, or only upon breach of contractual “disinterestedness” or prejudice to the award?

## Decision

- The Second Circuit vacated the district court’s order vacating the arbitration award and remanded.
- The court held that challenges for “evident partiality” impose a higher burden when directed at a party-appointed arbitrator rather than a neutral.
- The court ruled that nondisclosure by a party-appointed arbitrator supports vacatur only if:
  - the undisclosed relationship violates the parties’ contractual requirement that the arbitrator be “disinterested,” or
  - the relationship prejudicially affected the award.
- The district court was instructed to reconsider the motion to vacate under this heightened, party-appointed-arbitrator framework.

## Legal Principles

- Judicial review of arbitration awards under the FAA is narrowly limited; awards are enforced unless a statutory ground for vacatur is affirmatively shown.
- “Evident partiality” under FAA § 10(a)(2) generally requires clear and convincing evidence that a reasonable person would have to conclude an arbitrator was partial.
- For party-appointed arbitrators, the evident-partiality inquiry differs because party-appointed arbitrators may be selected with the expectation that they will favor the appointing party’s position to some degree.
- For party-appointed arbitrators, nondisclosed relationships warrant vacatur only if they either (1) breach contractual qualification requirements (such as “disinterestedness”) or (2) prejudicially affect the award.
- Nondisclosure or ethical-rule violations, standing alone, do not automatically establish “evident partiality”; the focus is on the materiality of the conflict and its contractual or outcome-related consequences.

## Conclusion

The Second Circuit held that FAA evident-partiality challenges to party-appointed arbitrators require a heightened showing beyond nondisclosure, and it remanded for the district court to determine whether the undisclosed relationships violated the treaties’ “disinterested” requirement or prejudicially affected the award.


Certain Underwriting Members of Lloyd's of London v. Fla. Dep't of Fin. Servs., 892 F.3d 501 (2d Cir. 2018)