Court Opinion

ID: 9760317
Source: CourtListenerOpinion
Date Created: 2023-08-29 00:48:01.944117+00
Date Added: 2024-06-11T07:29:10.847190
License: Public Domain

The opinion of the Court was delivered by
PASHMAN, J.
In this case we are called upon to decide whether the existence of an undisclosed, substantial business relationship between a party-designated arbitrator in tri-partite arbitration and the party designating that arbitrator constitutes “evident partiality” under N.J.S.A. 2A:24-8(b) and is therefore grounds for vacating the arbitration award.
Both the trial court and the Appellate Division held that it did constitute partiality. We granted Barcon’s petition for certification, 84 N.J. 422 (1980). Because we share the Appellate *183Division’s concern “for the rightness in this way of doing business, open, aboveboard and candid,” 172 N.J.Super. 186,189, and for the need to prohibit “any appearance of bias sufficient to discredit this useful adjudicatory tool sanctioned in the law and controlled by its statutes,” id. at 190, we now affirm its judgment to vacate the arbitration award.
In addition, we establish prospectively the requirement that every arbitrator, whether party-designated or “neutral,” disclose to the parties, prior to the commencement of arbitration proceedings, any relationship or transaction that he has had with the parties or their representatives. This disclosure should also include any other fact which would suggest to a reasonable person that the arbitrator is interested in the outcome of the arbitration or which might reasonably support an inference of partiality.
I
In 1974 plaintiff, Barcón Associates, Inc. (Barcón), a general contractor, entered into a construction subcontract with defendant Tri-County Asphalt Corporation (Tri-County). Disagreements arose under the subcontract which led Barcón to institute a suit against Tri-County in September 1975.
In December 1975, on Tri-County’s motion, the trial court stayed the suit pending arbitration pursuant to terms of the parties’ subcontract. That subcontract provided that any disagreement
shall, upon written notice of either to the other party, be submitted to three arbitrators for decision. Each party shall choose one arbitrator..., the third to be chosen ... by the two thus selected.
Tri-County designated as its arbitrator Gareld R. Gray, an officer of an international contracting firm.1 Barcón chose *184Vincent Spatz, a New Jersey general contractor, as its arbitrator. Gray and Spatz agreed upon Allen Arnowitz, a New Jersey consulting engineer, as the neutral arbitrator and chairman of the panel.
Arbitration hearings were held in January and March 1977. Several months later the arbitration panel informed the parties that by a two-to-one vote the panel had decided in favor of Barcón, and that Tri-County should pay Barcón $29,500 “in settlement of all claims” between the parties.
In December 1977, Barcón sought confirmation of the award in the Superior Court pursuant to N.J.S.A. 2A:24-7.2 Tri-County counterclaimed that the award should be vacated on grounds of the “evident partiality and misconduct” of Spatz, the arbitrator designated by Barcón.
The basis of Tri-County’s counterclaim was the business dealings that Spatz had with Barcón in 1977 throughout the pendency of the arbitration proceedings. Tri-County contended that Spatz “transgressed into the realm of ‘evident partiality’ when he failed to disclose” these dealings. In fact, Spatz had done business with Barcón for approximately twenty years by the time of his designation as Barcon’s arbitrator in this case. Two transactions between Spatz’s construction company and Barcón were ongoing during the arbitration proceedings in 1977.
One involved paving work completed by Spatz’s firm in August 1976.3 Spatz’s firm billed Barcón $25,215.84 for this work *185on August 31, but by the time arbitration hearings began in January 1977 Barcón had made no payments on this account and owed Spatz $26,763.15, the original balance due plus interest, against this bill. In February 1977 Barcón paid $3,000 and on March 1 Spatz sent' to the president of Barcón a bill showing a balance due of $24,527.05, on which Spatz wrote “Joe — Since August!!! Please. Vin.” Barcón made further payments of $3,000 in March and $10,000 in April, but at the time the arbitration panel rendered its award on December 9, 1977, Barcón still owed Spatz over $13,000 on this account.
The second ongoing transaction involved paving work done by the Spatz firm for Quail Ridge Corporation, a wholly-owned subsidiary of Barcón. This was part of a long-term project that commenced before the arbitration and continued after. Payments received on this account included one of $43,005.78 made in July 1977 while the arbitration panel was still deliberating.
In April 1978 the trial court, in a decision from the bench, vacated the arbitration award because of Arbitrator Spatz’s “evident partiality within the meaning of N.J.S.A. 2A:24-8(b).” 4 However, in response to Barcon’s subsequent motion to settle the form of judgment, R. 4:42-1, the court held further evidentiary hearings to determine whether Tri-County had knowledge, before or during the arbitration proceedings, of Spatz’s dealings with Barcón and thereby waived its right to object after the proceedings had ended. Following these hearings, Judge Stanton rendered a thorough written opinion supporting his decision to vacate the award. The trial court said that although “reasonable men would expect a party-designated arbitrator to have a general cast of mind broadly favorable to the position of the designating party,” such a “broadly favorable predisposition of mind ... cannot be permitted to become bias or to degenerate *186into partisanship, nor can objective appearances of bias or partisanship be permitted.” 160 N.J.Super. 559, 570.
On appeal, the Appellate Division affirmed, expressing its strong disapproval of “any appearance of bias sufficient to discredit this useful adjudicatory tool.” 172 N.J.Super. at 190. In addition, the court adopted a requirement, based on Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145, 149, 89 S.Ct. 337, 339, 21 L.Ed. 301, 305 (1968), that “arbitrators disclose to the parties any dealings that might create an impression of possible bias.”
II
Commercial arbitration is a long-established practice in New Jersey consistently encouraged by the Legislature. Even under seventeenth century colonial rule, arbitration was fostered by statute, Boskey, A History of Commercial Arbitration in New Jersey (pt. 1), 8 Rut.—Cam.L.J. 1, 5 (1976), reflecting a public policy unchanged to the present day and embodied in the current arbitration act, N.J.S.A. 2A:24-1 to -11, Hudik-Ross, Inc. v. 1530 Palisade Ave. Corp., 131 N.J.Super. 159, 166 (App.Div.1974).
The courts of this State have also favored arbitration. E. g., Kearny PBA Local # 21 v. Town of Kearny, 81 N.J. 208, 221 (1979); Daly v. Komline-Sanderson Engineering Corp., 40 N.J. 175, 177 (1963); Ukrainian National Urban Renewal Corp. v. Muscarelle, Inc., 151 N.J.Super. 386, 396-97 (App.Div.1977), certif. denied, 75 N.J. 529 (1977); Public Utility Construction and Gas Appliance Workers, Local 274 v. Public Service Elec. & Gas Co., 35 N.J.Super. 414, 419 (App.Div.1955), certif. denied, 19 N.J. 333 (1955); Eastern Engineering Co. v. City of Ocean City, 11 N.J.Misc. 508, 510 (Sup.Ct.1933); Fennimore v. Childs, 6 N.J.L. 386,388 (Sup.Ct.1797). Because it has retained this status in the law and because it offers significant advantages to the parties, arbitration is a widely-used means of resolving commercial disputes. See Boskey, supra (pt. 2), 8 Rut.-Cam.L.J. 284, 309-10 (1977).
*187Arbitration is “a substitution, by consent of the parties, of another tribunal for the tribunal provided by the ordinary processes of law,” and its object is “the final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner, of the controversial differences between the parties.” Eastern Engineering, supra, 11 N.J.Misc. at 510-11, quoted in Carpenter v. Bloomer, 54 N.J.Super. 157,162 (App.Div.1959). Arbitration can attain its goal of providing final, speedy and inexpensive settlement of disputes only if judicial interference with the process is minimized; it is, after all, “meant to be a substitute for and not a springboard for litigation.” Korshalla v. Liberty Mutual Ins. Co., 154 N.J.Super. 235, 240 (Law Div. 1977). Consequently, “every intendment is indulged in favor of the award and it is subject to impeachment only in a clear case.” Carpenter v. Bloomer, supra, 54 N.J.Super. at 168; accord, Kearny PBA Local # 21, supra, 81 N.J. at 221 (“An arbitrator’s award is not to be cast aside lightly.”); Eastern Engineering, supra, 11 N.J.Misc. at 511; International Brotherhood of Teamsters, Local 560 v. Bergen-Hudson Roofing Supply Co., 159 N.J.Super. 313, 315 (Ch.Div.1978); Leslie v. Leslie, 50 N.J.Eq. 103, 108 (Ch.1892), aff’d, 52 N.J.Eq. 332 (E & A 1894).
These principles are incorporated in the arbitration act, N.J.S.A. 2A:24-1 to -11. The act grants arbitrators extremely broad powers and extends judicial support to the arbitration process subject only to limited review. A court may compel an uncooperative party to arbitrate, N.J.S.A. 2A:24-3, and may stay litigation pending arbitration, N.J.S.A. 2A:24-4. Arbitrators are empowered to subpoena witnesses and evidence, and such subpoenas will be enforced by the courts, N.J.S.A. 2A:24-6. “[Arbitrators decide both the facts and the law,” Daly v. Komline-Sanderson, supra, 40 N.J. at 178, and the determinations of arbitrators are given collateral estoppel effect by reviewing courts, Ukrainian National Urban Renewal Corp. v. Muscarelle, supra, 151 NJ.Super. at 398. Courts are available to confirm arbitration awards, N.J.S.A. 2A:24-7. Arbitrators are given these extensive powers subject to judicial review limited *188to the narrow grounds of arbitrator partiality or corruption, fraud, undue means, conduct prejudicial to the rights of a party or failure to make a “mutual, final and definite award,” N.J.S.A. 2A:24-8, or “evident” mistakes by the arbitrators, N.J.S.A. 2A:24-9.
A necessary corollary of the fact that arbitrators function with the support, encouragement and enforcement power of the state is the requirement that they adhere to high standards of honesty, fairness and impartiality. “An arbitrator acts in a quasi -judicial capacity and must render a faithful, honest and disinterested opinion upon the testimony submitted to him.” Brotherton, Inc. v. Kreielsheimer, 8 N.J. 66, 70 (1951); see also Carpenter v. Bloomer, supra, 54 N.J.Super. at 162; Eastern Engineering, supra, 11 N.J.Misc. at 511; Leslie v. Leslie, supra, 50 N.J.Eq. at 107; Kearny PBA Local # 21, supra, 81 N.J. at 226 (Pashman, J., concurring); Commonwealth Coatings Corp. v. Continental Casualty Co., supra, 393 U.S. at 148-49, 89 S.Ct. at 339, 21 L.Ed.2d at 304-05; American Eagle Fire Ins. Co. v. New Jersey Ins. Co., 240 N.Y. 398, 405,148 N.E. 562, 564 (1925); J. P. Stevens & Co. v. Rytex Corp., 34 N.Y.2d 123, 129, 312 N.E.2d 466, 469, 356 N.Y.S.2d 278, 282 (1974).
We emphasize that these standards must govern the conduct of all arbitrators in whose hands the dispute resolution process is entrusted — not only so-called “neutral” arbitrators but party-designated arbitrators as well.
In American Eagle Fire Ins. Co. v. New Jersey Ins. Co., supra, Judge Pound of the New York Court of Appeals made several accurate observations about party-designated arbitrators.
[T]he practice of arbitrators of conducting themselves as champions of their nominators is to be condemned as contrary to the purpose of arbitrations, and as calculated to bring the system of enforced arbitrations into disrepute.... [A party-designated arbitrator] is not an advocate whose function is to convince the umpire or third arbitrator.... He must lay aside all bias, and approach the cause with a mind open to conviction and without regard to his previously formed opinions as to the merits of the party or the cause. He should sedulously refrain from any conduct which might justify even the inference that either party is the special recipient of his solicitude or favor. [240 N. Y. at 405,148 N.E. at 564]
*189Our Legislature shares this view. The statute governing the vacation of awards for arbitrator partiality or corruption draws no distinction between neutral and party-designated arbitrators. N.J.S.A. 2A:24-8(b) provides that a court shall vacate arbitration awards,
[w]here there was either evident partiality or corruption in the arbitrators, or any thereof .... [emphasis added]
Although arbitration originates in the contract of the parties and is a process which may operate without any court involvement, we reject the notion, repeatedly asserted by the dissent, that the parties’ contract should prevail over all other considerations. In particular, we give priority to the need to maintain the integrity of arbitration and public faith in the process. The dissent objects that our holding today disregards “the paramount public policy consideration” of encouraging “voluntary arbitration as a means of resolving commercial disputes informally, expeditiously, relatively inexpensively, and in a manner that relieves our overburdened judicial resources,” post at 210. However, it is our strongly held view that honest, fair and impartial arbitration is as important as the finality of arbitration. See Moshier v. Shear, 102 Ill. 169, 174 (1881) (commenting, in regard to commercial arbitration, that “however desirable it may be to terminate protracted contention, it is more desirable that justice shall be administered, free from all improper or corrupting influences.”). Cf. Graham v. Scissor-Tail, Inc., 28 Cal.3d 807, 623 P.2d 165,171 Cal.Rptr. 604, 618, 615 (1981) (disapproving “complete contractual autonomy in the choice of an arbitrator,” which must give way to “the common law requirement of fair procedure”). Because of the confidentiality in which arbitrators conduct their deliberations, the goal of ensuring that they will adhere to high standards will best be attained by requiring them to avoid not only actual partiality but also the appearance of partiality.5 Commonwealth Coatings *190Corp. v. Continental Casualty Co., supra, 393 U.S. at 150, 89 S.Ct. at 340,21 L.Ed.2d at 305 (“[A]ny tribunal permitted by law to try cases and controversies not only must be unbiased but must also avoid even the appearance of bias.”); Northwest Mechanical, Inc. v. Public Utilities Comm’n of City of Virginia, Minn., 283 N.W.2d 522, 524 (1979); Moshier v. Shear, supra, 102 Ill. at 174-75; see J.P. Stevens & Co. v. Rytex Corp., supra, 34 N.Y.2A at 126-27, 312 N.E.2d at 467-68, 356 N.Y.S.2d at 280.
Although standards pertaining to the requisite impartiality of party-designated arbitrators are not susceptible to precise formulation in the abstract, some general observations can be made. As a starting point, we register our agreement with the following principle which appears in the Code of Ethics for Arbitrators in Commercial Disputes jointly drafted by the American Arbitration Association and the American Bar Association. Party-designated arbitrators, according to the Code,
may be predisposed toward the party who appointed them but in all other respects are obligated to act in good faith and with integrity and fairness. [Holtzmann, The First Code of Ethics for Arbitrators in Commercial Disputes, 33 The Business Lawyer 309, 319 (1977)]
While a party-designated arbitrator may approach the arbitration proceedings with some sympathy for the position of the party designating him, such an arbitrator must remain faithful to the obligation which rests upon him to maintain “broad public confidence in the integrity and fairness of the [arbitration] process.” Id. at 312. Thus, all arbitrators should “conduct the proceedings in an evenhanded manner and treat all parties with equality and fairness at all stages of the proceedings.” Id. at 316. Most important, arbitrators “should decide all matters justly, exercising independent judgment, and should not permit outside pressure to affect the decision.” Id. at 317. All arbitrators, party-designated and neutral, must exercise their responsi*191bilities in a manner worthy of the great trust and power placed in them by the Legislature and courts of this State.
Whether a particular party-designated arbitrator has run afoul of these precepts and shown evident partiality can be decided only on the facts of each case. To illustrate, if it were shown that there existed a possible conflict of financial interest on the part of the arbitrator; or that the arbitrator prejudged the dispute because of bias or partisanship; or that there was animus on the part of the arbitrator against the other side, such a showing would demonstrate evident partiality. The party alleging that an arbitrator was impermissibly biased has the burden of proving that allegation by a preponderance of the evidence introduced concerning these or any other relevant factors.
Ill
Applying the above principles to the facts of this case, the judgment of the Appellate Division vacating the arbitration award must be affirmed. No actual bias or partiality on the part of Arbitrator Spatz has been alleged. Nevertheless, throughout the pendency of the arbitration proceedings, Spatz was engaged in business dealings with and was owed substantial sums by the party which designated him. This relationship creates too great an appearance of partiality to be permitted. An arbitrator cannot, if challenged by the other side, be allowed to participate in the resolution of a dispute when such a manifest conflict of interest exists. As the trial court concluded,
the line between the acceptable general predisposition of attitude permitted in the case of a party-designated arbitrator and impermissible bias or partisanship (or the appearance thereof) is crossed when the arbitrator is involved in active and significant business dealings with a party during the pendency of the arbitration proceedings. The idea of biased or partisan arbitration is conceptually inadmissible, and the law simply cannot allow any judicially enforceable arbitration proceeding to be anything other than an impartial proceeding which has appropriate appearances of impartiality. [160 N.J.Super. at 570-71,390 A.2d 684]
*192IV
We recognize that considerable waste results when an award is vacated after the proceedings have run their full course with the consequent investment of time and money by the parties. It is necessary to reduce the risk that such waste will occur and to remain faithful to the goals of minimizing judicial involvement and leaving the arbitration process in the hands of the parties, as well as to effectuate the intent of the Legislature that all arbitrators be impartial. Accordingly, we adopt the requirement that every arbitrator, neutral or party-designated, make full disclosure of possible conflicts of interest to the parties, prior to commencement of arbitration proceedings.6 This disclosure should reveal any relationship or transaction that he has had with the parties or their representatives as well as any other fact which would suggest to a reasonable person that the arbitrator is interested in the outcome of the arbitration or which might reasonably support an inference of partiality. See Richco Structures v. Parkside Village, Inc., 82 Wis.2d 547, 557, 263 N.W.2d 204, 211 (1978) (applying a similar disclosure requirement to neutral arbitrators); accord, Commonwealth Coatings Corp. v. Continental Casualty Co., supra, 393 U.S. at 149, 89 S.Ct. at 339, 21 L.Ed.2d at 305 (Arbitrators must disclose “any dealings that might create an impression of possible bias.”); Sanko S.S. Co., Ltd. v. Cook Industries, Inc., 495 F.2d 1260, 1264 (2d Cir. 1973) (“[Arbitrators should disclose fully all their relationships with the parties, whether these ties be of a direct or indirect nature.”); J. P. Stevens & Co., Inc. v. Rytex Corp., supra, 34 N.Y.2d at 129-30, 312 N.E.2d at 469, 356 N.Y.S.2d at 283 (“[A]ll arbitrators before entering upon their duties should make known any relationship direct or indirect that they have with any party to the arbitration, and disclose all facts known to *193them which might indicate any interest or create a presumption of bias.”); Northwest Mechanical, Inc. v. Public Utilities Comm’n of City of Virginia, supra (applying disclosure requirement to both a party-designated arbitrator and a neutral arbitrator); Johnston v. Security Ins. Co. of Hartford, 6 Cal.App.3d 839, 843, 86 Cal.Rptr. 133, 136 (1970) (applying disclosure requirement to neutral arbitrator); American Arbitration Association, Commercial Arbitration Rules § 19 (1980 ed.) (neutral arbitrators must disclose “any circumstances likely to affect impartiality, including any bias or any financial or personal interest in the result of the arbitration or any past or present relationship with the parties or their counsel.”); M. Domke, Commercial Arbitration 72 (1965); G. Goldberg, A Lawyer’s Guide to Commercial Arbitration 39-40 (1977).7
Such a pre-arbitration disclosure requirement has several advantages. It will, as suggested above, reduce the likelihood of potentially wasteful post-arbitration challenges, which may well be brought by “a suspicious or disgruntled party ... as a pretext for invalidating the award,” Commonwealth Coatings, supra, 393 U.S. at 151, 89 S.Ct. at 340, 21 L.Ed.2d at 306 (White, *194J., concurring). Furthermore, this procedure will enhance the integrity of arbitration with little hardship to the parties. The mere fact that a party-designated arbitrator discloses a prior relationship with the party will not necessarily disqualify him. Many such relationships would not constitute “evident partiality” under N.J.S.A. 2A:24-8(b).
Disclosure will leave to the parties themselves the initial decision as to whether to object to an arbitrator designated by the other side and, if necessary, to seek judicial determination of whether that arbitrator appears to be too partial to be permitted to participate in the arbitration. This procedure is thus consistent with the goal of minimizing judicial interference in the arbitration process, and recognizes that the parties, as active participants in their respective industries, are well situated to decide when to object because contacts between an arbitrator and the party designating him create too great a likelihood of bias.
We recognize that arbitrators are often chosen precisely because they are experienced in the industry in which the dispute has arisen. When an industry is small, the possibility that potential arbitrators have had some prior contact with one or both of the parties is considerable. See G. Goldberg, A Lawyer’s Guide to Commercial Arbitration, supra, at 39. We fully agree with Justice White’s observations that
[arbitrators are not automatically disqualified by a business relationship with the parties before them if both parties are informed of the relationship in advance, or if they are unaware of the facts but the relationship is trivial. I see no reason automatically to disqualify the best and most capable potential arbitrators.
The judiciary should minimize its role in arbitration as judge of the arbitrator’s impartiality. That role is best consigned to the parties, who are the architects of their own arbitration process, and are far better informed of the prevailing ethical standards and reputations within their business.
If arbitrators err on the side of disclosure, as they should, it will not be difficult for courts to identify those undisclosed relationships which are too insubstantial *195to warrant vacating an award. [Commonwealth Coatings, supra, 393 U.S. at 151-52, 89 S.Ct. at 340-341, 21 L.Ed.2d at 305-06 (White, J., concurring)]
As the Wisconsin Supreme Court said in Richeo Structures, supra,
A rule of full disclosure strikes the proper balance between ensuring finality of arbitration awards and ensuring justice and fairness (and the appearance of justice and fairness) in arbitration proceedings. It permits the fully informed parties to balance the need for impartial arbitrators and the need for experienced, knowledgeable arbitrators when they select the arbitration panel. [82 Wis.2d at 560, 263 N.W.2d at 212]
At the same time, we emphasize that the arbitrators must make full disclosure prior to the commencement of proceedings and also inform the parties of any pertinent facts that arise once proceedings have begun. A party can make a sound judgment as to an arbitrator’s possible partiality only if the arbitrator discloses all relevant information. When a relevant fact is not disclosed at the outset of the proceedings and the award is later challenged, the reviewing court may vacate the award if it concludes that the undisclosed fact would have been such as to lead a reasonable person to object to the designation of the arbitrator in question. There need not be evidence that the arbitrator was actually biased. See Richco Structures, supra, 82 Wis.2d at 562, 263 N.W.2d at 213.
However, should an arbitrator make full disclosure and the other party fail to object at that time, that party will be held to have waived any right later to object to the designation of the arbitrator on the grounds so revealed. This is in accordánce with settled law. International Brotherhood of Teamsters, Local 560 v. Bergen-Hudson Roofing Supply Co., supra, 159 N.J.Super. at 316; Hartwyk v. Monroe Calculating Machine Co., 13 N.J.Super. 160, 164-65 (Ch.Div. 1951); Milliken Woolens, Inc. v. Weber Knit Sportswear, Inc., 11 App.Div.2d 166, 168, 202 N.Y.S.2d 431, 434 (1960).
Parties should, if they approach the matter in good faith, have no problem agreeing on arbitration panels prior to the commencement of proceedings. Furthermore, as a result of the full disclosure rule which we adopt today, post-award challenges in *196the courts will be very infrequent. It is clearly in the interests of all concerned for the two parties to review the disclosures made by arbitrators under the rule in a spirit of fairness and reasonableness.
V
With all due deference to the dissent’s knowledge of the field of commercial arbitration, we think it appropriate to emphasize that it is the judicial enforceability of an arbitration award that is at issue here, not just the state of commercial practice in the field of arbitration. The parties may agree to any form of dispute resolution that they wish, but they may not seek the backing of the courts for private actions that, while substituting for the judicial function, are fraught with the appearance of bias. Notwithstanding commercial practice, however prevalent, the Court must examine independently the propriety of allowing arbitrators, although designated by the parties, to act as advocates in the arbitration proceedings, since by law the results of these proceedings are enforceable by the courts.
As regards the present state of the practice of commercial arbitration, the dissent apparently assumes that all parties to commercial arbitration agreements are equally sophisticated and experienced. But not all parties to commercial arbitration agreements enjoy the advantage of a battery of legal advisors at every step of the process. Consequently, we should not hesitate to resist a commercial practice that, if as prevalent as the dissent contends, taints the very process which allows the parties to resolve disputes without recourse to the courts. We wonder as well why the dissent believes that all parties to tri-partite arbitration agreements actually intend to allow an advocate for the opposing side to have the ear of the one neutral arbitrator throughout the panel’s private deliberations.
The dissent’s criticisms of our position indicate an unwillingness to read this opinion as written. Nowhere do we suggest that an arbitrator “would have been qualified to sit on the panel *197even though his prior business dealings had rendered him totally dependent on the party selecting him, and his future business life similarly dependent, just so long as there were no present, ongoing business dealings between them.” Post at 208. The dissent incorrectly ascribes such a view to us and then conveniently calls it “untenable.”8
The dissent also places undue emphasis on the rule of waiver we have adopted for these arbitration proceedings. The rule that a party waives a ground for challenging an adverse disposition when it fails to note a timely objection is simply a procedural rule of litigation necessary to avoid unfairness to the other party and waste of adjudicatory resources. Cf. R., 1:7-2, 1:7-5, and 2:10-2 (time for objections and notice of errors on appellate review). Courts can only rule on the apparent partiality of an arbitrator if one of the parties objects and brings the matter before the courts. It would be inequitable and wasteful to allow a party to withhold its objections until after the panel has rendered an unfavorable decision. While we do not condone arbitration awards made by a panel whose members are not impartial, we see a greater evil in permitting parties that are aware of grounds for objection to put the other party and the panel through the time and expense of arbitration proceedings before challenging the proceedings.
Contrary to the dissent’s assertion, what we find “most objectionable” is not “arbitrator Spatz’s failure to disclose his substantial business relationship with Barcón at the outset of the arbitration proceedings.” Post at 203. What we find most objectionable is the existence of these relationships where the opposing party has raised a timely objection. Since there was no disclosure in this case, Tri-County’s objection after the ad*198verse award was timely. In the future, the disclosure requirement will allow the same kind of objection to be brought prior to the arbitration proceedings. However, it will still be the responsibility of the parties, as in other forms of litigation, to bring the matter before the courts by making a timely objection.
The dissent also assumes that including a waiver of the disclosure requirement in the arbitration agreement will have the same effect as failing to object after disclosure. This opinion does not address that question, nor do we see the dissent’s assumption as necessarily following from our procedural waiver rule.
Nevertheless, this assumption leads the dissent to state, “The worst possible bias in fact is to be permitted, if waived, and the forbidden appearances are equally permitted.” Post at 209. A careful reading of our opinion belies this statement. Since “bias in fact” could normally be demonstrated only by reference to actions of the arbitrator after proceedings have begun, failure to object at the time of disclosure could not constitute waiver of objection to actual bias which becomes known only later. If the dissent’s point, however, is that the parties could knowingly allow a biased arbitrator to sit on the panel, our response is that the same could happen if after the arbitration award a party fails to object although it is aware of actual bias in the panel. We repeat that a court can act only when the parties ask it to act and when they comply with its procedural rules.
The dissent notes that an arbitrator’s “interest in the proceedings” which existed at the outset of arbitration “would not dissipate upon the disclosure of the relationship,” and therefore wonders how disclosure maintains the integrity of arbitration. Post at 208. The purpose of disclosure, of course, is to provide parties to arbitration with the information necessary to object to the designation of a particular arbitrator. The disclosure ameliorates to some extent any appearances of bias for it places the relationships of the parties and the arbitrators out in the open and allows the parties to determine knowledgeably what degree *199of contact between a party and its designated arbitrator will not, in their view, prejudice the proceedings.
The existing relationships in this case were not placed out in the open. Since arbitrator Spatz was owed such a substantial sum by one of the parties and received payments throughout the pendency of the arbitration, it is difficult to understand how the dissent can claim that the “appearance of bias” created by these substantial business dealings was “at best .. . speculation without substance,” post at 203, quoting International Produce, Inc. v. A/S Rosshavet, 638 F.2d 548, 551 (2d Cir. 1981).9
Finally, we note the inability of the dissent to state affirmatively why the practice of designating a biased arbitrator does not amount to “evident partiality ... in the arbitrators, or any thereof.” N.J.S.A. 2A:24-8(b). It is worth repeating that the statute does not make a distinction between neutral and party-designated arbitrators. Yet the dissent would hold the “evident partiality” language of the statute inapplicable to party-designated arbitrators.
If the dissent’s views were the law, each party could designate its own president as its chosen arbitrator. But not even the parties in this case would suggest that such was their intent. After all, neither nominated one of its own officers or employees. Perhaps they recognized, unlike our dissenting brethren, that arbitration should be conducted by arbitrators, not by the parties themselves or their legal advocates.
VI
In accordance with the foregoing, we affirm the judgment of the Appellate Division vacating the arbitration award.

 Gray testified that his firm had used Tri-County as a subcontractor during 1971-1974 but had not done business with Tri-County for three or four years when arbitration commenced in 1977.
*184These past dealings between Tri-County and the employer of its designated arbitrator are not at issue in this case.

N.J.S.A. 2A:24-7 provides in relevant part:
A party to the arbitration may, within 3 months after the award is delivered to him, unless the parties shall extend the time in writing, commence a summary action in the court ... for the confirmation of the award or for its vacation, modification or correction. Such confirmation shall be granted unless the award is vacated, modified or corrected.

This work was done at Chester Springs Shopping Center, also the site of the disputed work which Tri-County had sub-contracted to do for Barcón.

N.J.S.A. 2A:24-8(b) provides:
The court shall vacate the award in any of the following cases: .... b. Where there was either evident partiality or corruption in the arbitrators, or any thereof ....

We realize that this rule may conflict with the old case of Central Union Stock Yards Co. v. Uvalde Asphalt Paving Co., 82 N.J.Eq. 246 (Ch.1913), *190which appears to require vacation of an award only when actual partiality of an arbitrator is shown. To the extent that what we say today conflicts with Uvalde, that case is overruled.

A letter submitted to each of the parties should be sufficient for this purpose. We note that this is the procedure for disclosure followed by the American Arbitration Association. G. Goldberg, A Lawyer’s Guide to Commercial Arbitration 40 (1977).

The dissent objects that our opinion is “mistakenly based on decisional law ‘concerning the alleged bias or partiality of neutral, not party-appointed arbitrators.’ ” Post at 204.
Not only is this objection inaccurate, but even if true, it would in no way detract from our analysis. The issue here is not, as the dissent suggests, “standards of impartiality,” but rather the best way to assure adherence to those standards. These authorities are cited as support for our decision to apply a disclosure requirement to arbitrators and, appropriately enough, each authority supports imposition of such a requirement. That some involve the application of this requirement to neutral arbitrators is irrelevant; the point is that many other courts believe, as do we, that the best way to ensure that appropriate standards of impartiality will be maintained in arbitration proceedings, while minimizing disruption of the arbitration process, is to require arbitrators to make full disclosure to the parties at the outset.
Thus, the dissent’s lengthy disquisition on why our citation of the AAA Commercial Arbitration Rules § 19 is “inapposite” and “of no relevance,” post at 204, is simply incorrect.

Nor, as to a minor point, do we understand the reasoning behind the dissent’s statement that a creditor is the last person who might be biased in favor of the party that selected him. Post at 208. Creditors do not necessarily want to see their debtors lose a financial dispute and be indebted to competing creditors.

It may also be noted that the facts of Rosshavet, cited and relied upon by the dissent in its opinion, are easily distinguishable from, and far less egregious than, the facts of this case. In Rosshavet, the contacts in question were between an arbitrator and the law firms representing the parties, and had been fully disclosed to the parties. Id. at 549-50.