New York Court Rejects Challenge To Arbitral Award Claiming Bias and Manifest Disregard of Law

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In the Matter of the Arbitration of Certain Controversies Between Seaside Heights Ltd., et al. against RHS Ventures (GP) CA, Ltd., et al., Index No. 600899/2010 (N.Y. Sup. Ct. 2011), addresses issues facing the international dispute practitioner seeking to avoid an arbitral award under New York law. 

The grounds for vacatur included 1) bias by reason of allegedly material nondisclosures in the disclosures made by the arbitrators concerning relationships with the parties, 2) manifest disregard of law, and 3) newly discovered evidence.  The Court rejected all three grounds.

As a general matter, the Court held that the challenging petitioners needed to establish that an appearance of partiality existed, was unknown to respondents due to an undisclosed relationship, and prejudiced them.  “[W]here relationships or prior contacts are undisclosed by the arbitrator, there is no ‘per se rule requiring vacatur’ of the award” .  Peripheral, superficial or insignificant relationships or contacts are not sufficient.

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