## Facts

- A subcontractor sought payment allegedly due for a painting job and proceeded under an arbitration clause tied to a dispute involving the prime contractor and its sureties.
- Each side selected one arbitrator; the two selected a third arbitrator intended to act as the neutral member.
- The neutral arbitrator had a recurring consulting relationship with the prime contractor, earning about $12,000 over four or five years, including work connected to the projects involved in the dispute.
- The parties had no dealings for about a year immediately preceding the arbitration.
- The arbitrator did not disclose the prior business relationship to the subcontractor, and the subcontractor learned of it only after an award issued.
- The subcontractor moved to vacate the award in federal court, arguing the undisclosed relationship showed “evident partiality” under the Federal Arbitration Act (FAA).

## Issues

1. Whether an arbitrator’s failure to disclose significant business dealings with a party constitutes “evident partiality” or an award “procured by . . . undue means” under FAA § 10, justifying vacatur.
2. Whether arbitration dispenses with baseline impartiality expectations that apply to adjudicative decisionmakers.

## Decision

- The Supreme Court reversed the judgment affirming confirmation of the award.
- The Court held that arbitrators must disclose to the parties dealings that might create an impression of possible bias.
- Because the neutral arbitrator did not disclose substantial, repeated dealings with the prime contractor, the award could be vacated under FAA § 10.

## Legal Principles

- FAA § 10 authorizes vacatur where an award was “procured by . . . undue means” or where there was “evident partiality” in an arbitrator.
- “Evident partiality” may be shown by undisclosed relationships that would create an impression of possible bias; proof of actual bias is not required.
- Arbitrators are not expected to be isolated from commercial life, but they must disclose nontrivial relationships so parties can object or waive the conflict before the arbitration proceeds.
- The federal policy favoring arbitration does not justify enforcing awards produced without adequate disclosure of significant potential conflicts.

## Conclusion

The Court required meaningful disclosure by arbitrators of substantial relationships that could reasonably suggest bias, and it permitted vacatur under FAA § 10 when a neutral arbitrator failed to reveal repeated, significant business dealings with one side.


Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145 (1968)