Thereafter, the Sun-Statheros arbitration continued with
Proeller as Chairman. Before arbitration began, Sun had
requested damages totalling $211,000. However, Sun's claim
fluctuated from $84,065 at the beginning of the hearings, to
$109,582, and then to a final request of $66,183. Petition to
Vacate Arbitration Award, Exh. A at 3-4 & n. 3; Proeller
Affidavit ¶ 5.
As mentioned, the Sun-Fritzen Group arbitration concluded on
October 2, 1987 and that panel unanimously ordered Sun to pay
Fritzen Group about $2.7 million in damages and interest. By
letter dated September 23, 1988, Proeller reminded Murphy that
the Sun-Fritzen Group arbitration was now complete and
reiterated his intention to be unbiased in the separate
Sun-Statheros hearing. Proeller Affidavit, Exh. 1. Murphy
reiterated his objection. Proeller Affidavit, Exh. 2.
The Sun-Statheros panel deliberated on April 17, 1990 and
rendered its award on September 28, 1990. Dour Affidavit ¶ 1,
12. As noted, Sun's final claim amounted to $66,183. In their
majority decision, Proeller and Arnold awarded Sun damages of
$20,022 and interest of $8,901. Petition to Vacate Arbitration
Award, Exh. A at 26. In particular, the majority disallowed a
portion of Sun's claim relating to 1,280 barrels of crude oil
allegedly lost in transit and also found that Sun failed to
prove that the tanker was unseaworthy. Dour heatedly dissented.
He argued that Sun had proved both its claim for oil lost in
transit and its claim that the ship was unseaworthy; Dour
described the ship as a "real dog." At the end of the dissent,
Dour alluded to what he perceived to be the pro-shipper bias of
Arnold and Proeller,*fn3 but did not accuse Proeller of any
particular bias against Sun. Petition to Vacate Arbitration
Award, Exh. A, Dour dissent.
In addition to a majority and dissenting opinion, the final
award also contained an appendix that detailed the panel's fee
for rendering its award. The appendix fixed total fees of
$19,950, payable to arbitrators Arnold and Proeller in the
amount of $7,625 each, and to the dissenter Dour in the amount
of $4,700. The appendix also directed that Sun pay 60% of the
total fee, Statheros 40%. Petition to Vacate Arbitration Award,
Exh. A, Appendix C. Sun contends that both orders were
"contrary to the usual practice in this type of arbitration."
Sun's Memorandum of Law at 6.
At the time he wrote his dissent, Dour was aware of the
panel's findings with respect to damages, because Proeller had
sent him a draft of the majority opinion on August 24, 1990.
Dour Affidavit ¶ 14. Dour states that a cover letter that
accompanied the draft indicated panel fees would be between
$4,000 and $5,000 per arbitrator. Id. Dour told Proeller that
he agreed with that estimate. Id. There was apparently no
mention in the letter of how the fees would be allocated. On
September 26, 1990, Proeller sent Dour a copy of the award to
be signed. Dour Affidavit ¶ 15. That copy did not contain the
appendix setting forth the Panel's fees. Id. However, Dour
signed the opinion anyway and returned it to Proeller with his
dissent attached. Id. Dour was "greatly surprised and
chagrined" when, upon receiving a
copy of the full decision actually mailed to the parties, he
learned that the appendix contained both an upward adjustment
— to $7,650 — in the fees of the other two arbitrators only,
and a direction that Sun pay 60% of the total fees. Id. Dour
insists that the other two arbitrators failed to inform him
either of the increase in their individual fees or that Sun
would be paying 60%, and that he would not have agreed to
either action had he been consulted. Id. Dour also contends
that Proeller's and Arnold's individual fees were not
"reasonable given the amount of time and effort involved in
deciding this relative [sic] routine claim." Id. Sun contends
that both of the orders with respect to fees were "contrary to
the usual practice in this type of arbitration." Sun's
Memorandum of Law at 6.
In his own affidavit, Proeller alleges that he and Arnold
decided to allocate the panel's fee unequally because Sun had
made the proceedings "more lengthy" by repeatedly revising the
amount of its claims against Statheros. Proeller Affidavit
¶ 5. Proeller also implies that he and Arnold deliberately
failed to inform Dour of their intent to order an unequal fee
allocation when he avers that "[g]iven the tone of Mr. Dour's
dissent, he does not and would not have agreed to this unequal
allocation of arbitrator's fees." Proeller Affidavit ¶ 5.
Proeller does not explain in his affidavit exactly when the
majority decided on the unequal allocation — before or after
receiving Dour's dissenting opinion — nor does he explain when
or why they decided to raise their own fees but not Dour's.
However, Proeller leaves undisputed the claim that Dour was not
told of either the allocation of total fees or the increase in
Proeller's and Arnold's individual fees until after the
decision was actually released on September 28, 1990.
Arnold has submitted a short affidavit which adds little to
the above rendition of facts. He does not specify whether it
was he or Dour who first contacted Proeller. Arnold does aver
that he "observed no instance whatsoever which caused me to
consider that . . . Proeller was biased or predisposed against
Sun. . . ." Arnold Affidavit ¶ 4 (included in Proeller
Affidavit, Exh. 2). He also adds that he has "been involved in
numerous cases over the last 10-15 years in which arbitrators
have assessed their individual fees on an unequal basis. It
would be appropriate to state that this trend has developed
more recently and has become an accepted practice." Id.
Sun has paid the arbitration fees in accordance with the
majority's direction. Proeller Affidavit ¶ 6.
Sun filed its motion to vacate the damage award on December
21, 1990. It seeks to vacate the award solely on the ground of
Proeller's "evident partiality." Petition to Vacate Arbitration
Award ¶ 13.
When parties have selected arbitration, "the role of the
courts is limited to ascertaining whether there exists one of
the specific grounds for the vacation of an award provided in
§ 10 of the Arbitration Act." Saxis Steamship Co. v. Multifacs
Int'l Traders, Inc., 375 F.2d 577, 581 (2d Cir.1967).
Furthermore, the party challenging an arbitral award has the
burden of proving the existence of grounds to vacate. Id. at
582; Hunt v. Mobil Oil Corp., 654 F. Supp. 1487, 1497-98
(S.D.N.Y.1987) (Weinfeld, J.).
Section 10(b) permits a court to vacate an arbitration award
"[w]here there was evident partiality . . . in the arbitrators,
or either [sic] of them." 9 U.S.C. § 10(b) (1990). In
determining whether there is "evident partiality," courts
pragmatically "employ a case-by-case approach in preference
to dogmatic rigidity." Andros Compania Maritima, S.A. v. Marc
Rich & Co., 579 F.2d 691, 700 (2d Cir.1978).
"Courts are reluctant to set aside an award
based on a claim of evident partiality, and will
do so only if bias of the arbitrator is direct and
definite; mere speculation is not enough."
Sofia Shipping Co., Ltd. v. Amoco Transport Co., 628 F. Supp. 116,
119 (S.D.N.Y. 1986) (citations omitted).
In particular, courts have recognized that one of the primary
values of arbitration — the expertise and experience of
arbitrators that comes from involvement in what may be a
relatively small and tight-knit occupation — may also lead to
charges of possible bias. As the Second Circuit stated in
Morelite Const. Corp. v. N.Y. Dist Council Carpenters Benefit
"[P]arties agree to arbitrate precisely because
they prefer a tribunal with expertise regarding
the particular subject matter of their dispute. .
. . Familiarity with a discipline often comes at
the expense of complete impartiality. Some
commercial fields are quite narrow, and a given
expert may be expected to have formed strong views
on certain topics, published articles in the field
and so forth. Moreover, specific areas tend to
breed tightly knit professional communities. Key
members are known to one another, and in fact may
work with, or for, one another, from time to time.
As this Court has noted, '[e]xpertise in an
industry is accompanied by exposure, in ways large
and small, to those engaged in it . . .' . . . .
[T]o disqualify any arbitrator who had
professional dealings with one or of the parties
(to say nothing of a social acquaintanceship)
would make it impossible, in some circumstances,
to find a qualified arbitrator at all."
Morelite, 748 F.2d at 83 (quoting Andros Compania, 579 F.2d at
701 (2d Cir.1978)). See also Commonwealth Coatings Corp. v.
Continental Casualty Co., 393 U.S. 145, 150-51, 89 S.Ct. 337,
340, 21 L.Ed.2d 301 (1968) (White, J., concurring).
Accordingly, under the Arbitration Act, a party must show
something more than "appearance of bias" to vacate an award
because of an arbitrator's alleged "evident partiality."
Morelite, 748 F.2d at 83-84. At the same time, however, federal
courts have an obligation to maintain the integrity of their
own role in the arbitration process when a party makes either a
motion to confirm or award or, as here, to vacate an award
because of "evident partiality." Id. at 84. Therefore, because
it is usually impossible to prove "outright chicanery,"
Commonwealth Coatings, 393 U.S. at 150, 89 S.Ct. at 340 (White,
J., concurring), the challenging party is not required to show
"proof of actual bias." Morelite, 748 F.2d at 84.
To vacate an award because of "evident partiality," the
challenging party has the burden of showing that "a reasonable
person would have to conclude that an arbitrator was partial to
one party to the arbitration." Id. In Morelite, the Second
Circuit vacated an award when there was a father-son
relationship between an arbitrator and an officer of the union
which was a party to the arbitration. Taking a common sense
view of father-son relationships, the Court stated that "[w]e
cannot in good conscious allow the entering [sic] of an award
grounded in what we perceive to be such unfairness." Id. at 84.
Morelite declined to set forth a list of relationships and
circumstances which would constitute per se examples of evident
partiality, and recognized that courts should take a pragmatic
approach "cognizant of peculiar commercial practices and
factual variances." Id.
When evaluating the purported bias of an arbitrator, courts
examine such factors as: (1) the financial interest the
arbitrator may have in the proceeding; (2) the directness and
nature of the alleged relationship between the arbitrator and
a party to the proceeding; and (3) whether the relationship
existed at the same time as the challenged proceeding.
Sanford Home For Adults v. Local 6, IFHP, 665 F. Supp. 312, 320
(S.D.N.Y.1987). In particular, courts are more likely to find
"evident partiality" where the claim of possible bias arises
from a "business relationship" between an arbitrator and a
party rather than from a "professional relationship." Andros
Compania, 579 F.2d at 701.
Sun and Statheros vehemently dispute whether Proeller was
required to make full disclosure of his business relationship
with the parties — particularly his extensive involvement in
the ongoing arbitration against Sun — before accepting an
invitation to be an arbitrator on the Sun-Statheros panel. But
that issue is really beside the point of this case.
Proeller formally disclosed his relationship at the first
arbitration hearing, but refused to step aside because,
according to him, he would be completely unbiased,
notwithstanding his involvement in the ongoing arbitration
between Sun and Fritzen Group. Of course, Sun was already aware
of this involvement because it had asked Proeller to withdraw
even before the first hearing when it learned of his
appointment. Sun argues that the award should be vacated
automatically because Proeller failed to disclose his
relationship with Sun at the time he was invited to sit — when
Arnold and Dour had an opportunity to select a different
arbitrator. Essentially, Sun argues that Proeller's failure to
disclose before joining the panel was the equivalent of failing
to make any disclosure.
Federal common law requires that an arbitrator make full
disclosure to all the parties of any significant business
relationships with any of the parties before appointment as an
arbitrator is final.
"[A]n arbitrator [need not] 'provide the parties
with his complete and unexpurgated business
biography.' . . . But where dealings 'might create
an impression of possible bias,' they must be
disclosed. Indeed, it seems to us that the better
practice is that arbitrators should disclose fully
all their relationships with the parties, whether
these ties be of a direct or indirect nature.
Although some unnecessary disclosure may result,
'if the arbitrators err on the side of disclosure,
. . . it will not be difficult for courts to
identify those undisclosed substantial
relationships which are too insubstantial to
warrant vacating an award.' Moreover, the role of
the judiciary in determining an arbitrator's
impartiality after an award has been made will be
significantly reduced, since the parties will have
the opportunity at the outset of the arbitration
to reject an arbitrator or accept him with full
knowledge of his connections with the other
Sanko, 495 F.2d at 1263-64, supra note 2, (quoting Commonwealth
Coatings, 393 U.S. at 149, 151-52, 89 S.Ct. at 339, 340-41
(White, J., concurring)). If an arbitrator fails to make
required disclosure "at the outset, when the parties are free
to reject the arbitrator or accept him with knowledge of the
relationship," Commonwealth Coatings, 393 U.S. at 151, 89 S.Ct.
at 340, a federal court later may vacate the award under § 10
of the Arbitration Act. See Andros Compania, 579 F.2d at 699
("Disclosure by arbitrators should be encouraged; failure to
make appropriate disclosure will justify setting aside an
award."). Besides giving each of the parties a chance to object
when there are genuine fears of possible bias, advance
disclosure also prevents a losing party from using purported
conflicts as pretexts for invalidating an unfavorable award.
Morelite, 748 F.2d at 84 n. 5; Andros Compania 579 F.2d at 702.
However, a failure to disclose material facts does not in
itself result in vacatur of an award. Id. at 700 ("we have not
been quick to set aside the results of an arbitration because
of an arbitrator's alleged failure to disclose information");
Sanford Home, 665 F. Supp. at 317-319. Rather, when an
arbitrator fails to make the required disclosures, a court will
later examine the entire record to determine if there are
grounds, such as "evident partiality," to vacate the award. See
Andros Compania, 579 F.2d at 701-02 (denying motion to vacate
award because arbitrator only failed to disclose "professional"
relationships that did not create even an "impression of
possible bias."); Sanford Home, 665 F. Supp. at 320-22 (refusing
to vacate award on grounds of "evident partiality" despite
arbitrator's failure to disclose business ties with one party's
law firm). See also Merit Ins. Co. v. Leatherby Ins. Co.,
714 F.2d 673, 681 (7th Cir.) (although non-disclosure of past
business relationship may have "violated current ethical norms
for commercial arbitrators, [it] was at worst a technical
violation that does not justify setting aside an award on the
statutory ground of evident partiality or corruption"), cert.
denied, 464 U.S. 1009, 104 S.Ct. 529, 78 L.Ed.2d 711 (1983).
In this case, it is irrelevant whether Proeller was required
to disclose his relationship with Sun at the moment either
Arnold or Dour asked him to chair the panel, because Sun
actually became aware of the relationship prior to the panel's
first hearing. As was its right, Sun objected to his presence,
and as was his choice, Proeller refused to step aside.
"[A] prime objective of arbitration law is to
achieve a just and expeditious result with a
minimum of judicial interference. . . . this
objective can best be achieved by requiring an
arbitrator . . . to declare any possible
disqualification, and then leave it to his or her
sound judgment to determine whether to withdraw.
The arbitrator must of course be aware that such a
decision would be subject to judicial review after
the award has been made."
Marc Rich & Co. v. Transmarine Seaways Corp., 443 F. Supp. 386,
387 (S.D.N.Y.1978) (Marc Rich I).
The issue in this case is not whether Proeller fully
disclosed his relationship with Sun at the proper time. Rather,
the issue involves the consequence of Proeller's failure to
resign from the panel when Sun entered a prompt and timely
objection. Because he refused to do so, each of the arbitrators
and Statheros ran the risk that Sun might later challenge the
panel's award under § 10 of the Act and that a court might
ultimately grant Sun's motion if it agreed that there was
"evident partiality." Morelite, 748 F.2d at 81-82 & n. 1
(district court refused to disqualify arbitrator before
decision was rendered and then refused to vacate award, but
Second Circuit reversed on grounds of "evident partiality"
because of father-son relationship between arbitrator and
officer of union party); compare Marc Rich I, 443 F. Supp. at
387-88 (declining to examine possible bias of arbitrator before
conclusion of arbitration) with Transmarine Seaways Corp. v.
Marc Rich & Co., 480 F. Supp. 352, 358 (S.D.N.Y.1979) (Marc Rich
II) (after conclusion of arbitration, court found that no one
could "reasonably conclude that [arbitrator] was biased").
Because Sun entered a timely objection to Proeller's presence
and never waived that objection after he refused to step aside,
Sun has properly presented its motion to vacate the award
because of "evident partiality."
After examining the totality of the circumstances, I find
that a reasonable person would have to conclude that Proeller
was partial to Statheros in that he was partial against Sun. I
therefore vacate the award.
In particular, I find quite disturbing Proeller's and
Arnold's decision to allocate arbitration fees unevenly and to
increase their own individual fees without consulting Dour —
the arbitrator selected by Sun. "An arbitrator need not follow
all the niceties observed by the federal courts." Bell
Aerospace Co. v. Local 516, 500 F.2d 921, 923 (2d Cir.1974).
However, he must "grant the parties a fundamentally fair
hearing." Id. Proeller admits intentionally failing to tell
Dour that fees would be allocated 60% to Sun and 40% to
Statheros, thereby preventing Dour from objecting to this
allocation before the final award was rendered. Although
unequal fee allocations are legally permissible, see Konkar
Maritime Enter. v. Compagnie Belge D'Affretement, 668 F. Supp. 267,
274 (S.D.N.Y.1987), this lack of notice is troubling
because it prevented Dour from objecting either orally or as
part of his written dissent. Dour was not given an opportunity
to challenge the reasoning the majority now presents to justify
allocating arbitral fees unequally between the parties.
Neither Proeller nor Arnold even attempts to explain or
justify the decision to raise their own fees without also
raising Dour's, and to do so without notice to Dour. At the
least, a reasonable person would have to conclude that this
unexplained action, which had an adverse financial impact on
both parties — particularly Sun because of the 60/40
allocation — arose from petty vindictiveness directed toward
another arbitrator because of his dissent.
Although both Proeller and Arnold appear to be at fault for
the majority's action, Proeller's role is the more troubling
because he was the member of the panel not appointed directly
by either party, as well
as its chairman. In addition, Proeller's presence on the panel
was disputed from the beginning. That the objectionable conduct
occurred with the participation of another arbitrator — Arnold
— selected by Statheros and never opposed by Sun, does not
change the calculus. The statute does not require a showing of
"evident partiality" in a majority of the arbitral panel,
merely "in the arbitrators, or either [sic] of them." 9 U.S.C. § 10(b)
Entirely separate from the issue of whether the award was
fair, the circumstances of the separate fee decision ordinarily
would invite an evidentiary hearing to consider a possible
motion to overturn the award pursuant to § 10(c) of the
Arbitration Act, which permits a court to vacate an award when
there is "misbehavior by which the rights of any party have
been prejudiced." 9 U.S.C. § 10(c). However, it is unnecessary
to explore further the circumstances surrounding the fee
allocation. The fee may be entirely separate from the damage
award, but the circumstances surrounding the fee allocation
cast lights and shadows backward on Proeller's extensive
involvement with Sun's adversary in another contemporaneous
arbitration, and his failure to disclose that involvement from
the outset. See Sanford Home, 665 F. Supp. at 322 ("When a claim
of partiality is made, courts are obliged to scan the record to
see if it demonstrates 'evident partiality' on the part of the
After reviewing the entire record, I am convinced that a
reasonable person would have to conclude that Proeller was
partial to one party to the arbitration. See also Pitta v.
Hotel Ass'n of New York City, Inc., 806 F.2d 419, 423-24 (2d
Cir.1986) ("The relationship between a party and the arbitrator
may, in some circumstances, create a risk of unfairness so
inconsistent with basic principles of justice that the
arbitration award must be automatically vacated.").
At all times, including now, Proeller has asserted that he
had no ill feelings against Sun and could serve as an impartial
arbitrator in Sun's dispute with Statheros. For example at the
first arbitration hearing on July 12, 1985 Proeller stated:
"At one point it was privately suggested to me
that because of [the Sun-Fritzen Group]
arbitration perhaps I should not take a case in
which Sun Oil was involved. I have publicly and
privately responded that I could see no reason
because I have no ill feelings against Sun, and am
quite convinced I can hear any Sun Oil case as
impartially as anybody else."
Murphy Affidavit, Exh D, Transcript at p. 11. However, as the
late Judge Weinfeld put it: "This self-serving categorical
denial of partiality or bias, of course, is neither controlling
nor dispositive of the issue; nor is it considered by the
court." Hunt, 654 F. Supp. at 1500.
Although there may not have been actual bias in the award
rendered by the panel, Morelite does not require that a
challenging party prove actual bias in order to show "evident
partiality." Rather, as discussed above, a challenging party
must show only that "a reasonable person would have to conclude
that an arbitrator was partial to one party to the
arbitration." 748 F.2d at 84.
Because Proeller's business relationship with Sun involved an
extensive personal involvement in an ongoing arbitration
between Sun and the company which employed him as their New
York Agent, Proeller should have acceded to Sun's timely
request that he step down as an arbitrator. In most cases, a
party seeking to vacate an award alleges that the arbitrator's
relationship with an opposing party in the arbitration has made
that arbitrator partial in favor of that opposing party. This
case is somewhat different, because Sun alleges that Proeller's
relationship with respect to their own company has made him
partial against Sun. Nevertheless, this is a distinction
without a difference. Sun had a right to an arbitrator neither
evidently partial in favor of the other side nor evidently
partial against Sun.
Based on the nature of his business relationship with Sun,
and his behavior in connection
with the fee, a reasonable person would have to conclude that
Proeller was partial to Statheros, or at least against Sun, in
the Sun-Statheros arbitration. Morelite, 748 F.2d at 83.
Proeller was President of the New York agent for Fritzen Group
and was personally and extensively involved in the arbitration
between Sun and Fritzen Group — as demonstrated by the letter
he wrote to Sun with respect to Fritzen Group's damage claim.
Although Proeller may not have had a direct financial interest
in either the arbitration or the underlying contract between
Sun and Fritzen Group, at the least his status as Fritzen
Group's New York agent could only be enhanced to the extent
Fritzen Group succeeded in its arbitration against Sun. Sun was
not unreasonable in fearing that either the conduct or ultimate
outcome, or both, of the arbitration between Sun and Fritzen
Group might color Proeller's judgment in the separate
arbitration between Sun and Statheros.
Proeller's extensive involvement in the Sun-Fritzen Group
arbitration both as a witness and as a representative of Sun's
adversary in the arbitration itself distinguishes this case
from Marc Rich II, 480 F. Supp. at 352. In Marc Rich II, Judge
Haight denied Marc Rich & Co's motion to vacate an award
rendered by a panel in which one of the arbitrators was
President of a company that happened to be the operating
manager and general agent for a corporation involved in a
separate arbitration. Coincidentally, that separate arbitration
had been the subject of the earlier case of Andros Compania
Maritima, S.A. v. Marc Rich & Co., 579 F.2d 691 (2d Cir. 1978).
In Marc Rich II, the court made it quite clear that the
challenged arbitrator was being accused of no more than an
"appearance of bias" because of the fact that his "company
represented another company which in turn asserted [an
unrelated] . . . claim against Rich." 480 F. Supp. at 358. There
is no indication that the challenged arbitrator in that case
was involved in the other arbitration to the same degree as
Proeller was involved in the Sun-Fritzen Group arbitration. In
fact, the Andros Compania court described the challenged
arbitrator's role in that separate proceeding as "attenuated."
579 F.2d at 701.
By contrast, Proeller was not just president of Fritzen
Group's agent; he was intimately involved in the separate
arbitration both as witness and as representative of Sun's
adversary. He negotiated and signed the contract which was the
subject of the separate arbitration, testified as a witness on
behalf of Sun's adversary, and represented that adversary in
the separate arbitration.
I also find it significant that Sun's challenge arises from
Proeller's adversarial business relationship with the company
and not from a professional relationship of the type that are
common in the maritime field — a distinction which the Andros
Compania Court found significant in denying a motion to vacate.
Andros Compania, 579 F.2d at 701 (challenged arbitrator had sat
on other panels with individual employed by a party). Here,
Proeller was intimately involved in a business dispute between
the company he represented and Sun. Additionally, the time
period in which Proeller served as arbitrator overlapped his
involvement in the separate Sun-Fritzen Group proceeding. That
proceeding lasted from March 1982 until October 1987 while the
Sun-Statheros arbitration lasted from July 1985 until September
1985. Significantly, Proeller submitted a damage claim on
behalf of Fritzen Group only two months after agreeing to act
as arbitrator for the Sun-Statheros panel and only four months
before the first hearing of that panel. Thus, the timing of the
two arbitrations adds to the weight of other circumstances
which suggest "evident bias." See Sofia, 628 F. Supp. at 116;
Sanford Home, 665 F. Supp. at 322.
The cases cited by Statheros all involve relationships far
more remote, and suspicions far more speculative, than those
giving rise to the "evident partiality" claim in this case.
See Globe Transport & Trading, Ltd. v. Guthrie Latex, Inc.,
722 F. Supp. 40, 47-48 (S.D.N.Y.1989) (refusing to vacate award
where a lawyer for one of the party's became associated in the
of the arbitration with a law firm formerly associated with one
of the arbitrators); Sofia Shipping, 628 F. Supp. at 119
(refusing to vacate award where challenged arbitrator and an
individual who was an employee and witness for one party was
also an arbitrator in his own right on several panels hearing
disputes involving challenged arbitrator's employer); Sidarma
Societa Italiana v. Holt Marine Industries, 515 F. Supp. 1302,
1307 (S.D.N.Y.) (refusing to vacate award based on losing
party's "speculation" that arbitration decision had been
motivated by a desire of arbitrators to avoid a precedent that
might adversely affect their own firms), aff'd mem.,
681 F.2d 802 (2d Cir.1981).
This is not a "classic example of a losing party seizing upon
'a pretext for invalidating the [arbitration] award.'"
Andros Compania, 579 F.2d at 702 (quoting Commonwealth
Coatings, 393 U.S. at 151, 89 S.Ct. at 340 (White, J.,
concurring)) (brackets in original). Sun objected to Proeller's
presence almost as soon as the company became aware of his
selection to the panel and before the arbitration began. It
reiterated its objection at the first hearing and went so far
as to seek a judicial determination of the matter, albeit
I do not have to find that Proeller was actually biased
against Sun, nor do I. However, the fee episode rings like the
13th chime on the mantel clock: Not only is it utterly
unreasonable in its own right, but it also generates
substantial doubts about the validity of what preceded it. When
what preceded it is scrutinized closely, and in conjunction
with the fee episode, the result is "such that reasonable
people would have to believe that it provides strong evidence
of partiality by the arbitrator." See Morelite, 748 F.2d at 85.
Accordingly, the arbitration award is vacated.