Speak Now or Hold Your Peace: Prearbitration Express Waivers of Evident-Partiality Challenges

This Article proposes that parties and arbitrators should use, and courts should enforce, express prearbitration waivers of certain evident-partiality challenges as a way to avoid uncertainty and expense caused by widely-acknowledged disarray in the doctrine of evident partiality. Courts considering evident-partiality cases mainly have focused on (and disagreed about) the content of the doctrine and the circumstances in which a party can constructively waive an evident-partiality challenge by failing to object to an arbitrator despite knowing about a particular relationship. Similarly, the academic literature examining evident partiality has focused on the appropriate judicial test for assessing partiality, rules for defining the scope of an arbitrator's duty to disclose, and proposals for reconciling the division in the courts. This Article takes a different approach. It is the first examination of the use of party waivers to cut off judicial evident-partiality challenges and avoid the uncertainties in the doctrine. The solution proposed in this Article is that parties can consensually avoid the current uncertainty over evident-partiality doctrine through express prearbitration agreements to waive certain judicial challenges. This Article explains why using express evident-partiality waivers should be attractive to parties. It also argues that courts should be willing to enforce such waivers under the Federal Arbitration Act. Enforcing them is theoretically consistent with arbitration's fundamental policies of resolving disputes based on the parties' consent and allowing the parties to choose for themselves the most efficient procedures to resolve their dispute. These policies are strongly reinforced by recent Supreme Court opinions in other areas of arbitration law.INTRODUCTIONOne of the few ways a losing party can challenge the result of an arbitration in an American court1 is to argue that the arbitrator displayed "evident partiality" that tainted the arbitration.2 Evident partiality essentially means that either the arbitrator was actually biased in favor of a party, or there were facts unknown to the parties that could make an objective observer think the arbitrator was biased.3Beyond that essence, however, courts and theorists are and have long been deeply divided about the content and the application of the doctrine of evident partiality, offering different formulations of the evident-partiality test and reaching conflicting results in similar cases.4 At the same time, judicial reduction of alternative avenues to challenge arbitration awards, such as "manifest disregard" of law or facts,5 has increased pressure on the fractured evident-partiality doctrine. "Manifest disregard" refers to the judicially-crafted doctrine allowing vacatur of an award based on the "manifest disregard" of facts or law by the arbitral panel.6 With greater frequency, disappointed losing parties mount evident-partiality challenges as their best hope for overturning an award. As a result, before an arbitration, parties face significant uncertainty and the unattractive possibility of extended, expensive post-arbitration litigation of an evident-partiality challenge.While courts and scholars wrestle with defining and rationalizing evident partiality, this Article recommends a different approach: Parties can use express, prearbitration7 waivers of evident-partiality objections to reduce uncertainty and increase efficiency by foreclosing a large number of the most inefficient type of evident- partiality challenges. The Article's core argument is that concerned parties can use waivers to avoid the muddle of current evident- partiality doctrine. At the same time, courts should enforce these waivers as consistent with arbitration's fundamental principles of consensual dispute resolution and procedural efficiency.8After this introduction, Part II gives background about the doctrine of evident partiality, explaining its origins and purposes, and describing the workings of the pre-arbitration disclosure process and post-award judicial evident-partiality challenges. …