Dewey Ballantine has won a major victory in the US Court of Appeals.
The ruling sets a new standard for arbitrators on potential conflicts of interest.
The court held that “when an arbitrator knows of a potential conflict, a failure to either investigate or disclose an intention not to investigate is indicative of evident partiality.”
The issue of arbitrator bias arose in an arbitration between petroleum coke traders Ovalar Makine Ticaret ve Sanayi and Applied Industrial Materials Corporation (Aimcor).
One of the three panel arbitrators, Seacor Holdings president and chief executive Charles Fabrikant, had a commercial interest in Aimcor’s parent group Oxbow Industries.
The arbitration panel decided in favour of Aimcor, leading Ovalar to vacate, claiming a conflict of interest.
The decision will have ramifications beyond the US, resulting in a higher standard for arbitrators across the board.
Partner Jeffrey Kessler led for Dewey, consulting with the firm’s head of international arbitration Robert de By.