Chapter 11 - § 11.3 • ARBITRATOR NEUTRALITY

• Jurisdiction: Colorado

§ 11.3 • ARBITRATOR NEUTRALITY

The CRUAA, C.R.S. § 13-22-211(2) (2016) provides:

(2) An individual who has a known, direct, and material interest in the outcome of the arbitration proceeding or a known, existing, and substantial relationship with a party may not serve as an arbitrator if the agreement requires the arbitrator to be neutral.

The FAA does not have such a provision. On the other hand, in City & County of Denver v. District Court for City & County of Denver,¹² the Colorado Supreme Court quoted the New York Court of Appeals as to the right of the parties to agree upon the method for adjudication of their disputes, saying the case held:

. . . that arbitration clause which named the attorney for one of the parties as the arbitrator was valid where full disclosure occurred; absent the "real possibility that injustice will result, the courts of the state will not rewrite the contract for the parties."¹³

In 2004, the American Bar Association and the American Arbitration Association promulgated a revised Code of Ethics for Arbitrators in Commercial Disputes. This Code is discussed in § 11.9.2 of this chapter. The most significant change in the Code of Ethics is the presumption stated in the Note on Neutrality and Canon IX.A that all arbitrators are neutral. Even party-appointed arbitrators are presumed to be neutral, with most of the same obligations as non-party-appointed arbitrators. This reverses the presumption contained in the 1977 Code that party-appointed arbitrators were presumed to be partial to the party appointing them.

The Code of Ethics provides in Canon IX.C that the party-appointed arbitrator should ascertain whether he or she is to serve as a neutral pursuant to the parties' agreement and inform the parties and the other arbitrators if he or she will not be acting as a neutral. Once non-neutral status is determined, the arbitrator is released from some of the provisions of Canon X of the Code of Ethics.

All arbitrators, regardless of appointment and neutral status, must disclose their interests and relationships. In addition to the time-honored disclosures of financial or personal interest in the outcome and prior knowledge of the dispute, Canons II.A and X.B require arbitrators to disclose "[a]ny known existing or past financial, business, professional or personal relationships which might reasonably affect impartiality or lack of independence in the eyes of any of the parties."

While a prospective neutral arbitrator may have ex parte communications with any party about the identities of parties, counsel, or witnesses and the general nature of the case and his or her suitability to serve (Canon III.B), non-neutral party-appointed arbitrators may have full communication with the appointing party...