In an interesting court decision enforcing an arbitration award, the Court of Appeals of Washington, D.C. affirmed a three person arbitration panel’s decision in favor of a contractor against a subcontractor and rejected the subcontractor’s argument that the decision was not issued by an impartial arbitrator because it was tainted by the fact that one of the arbitrators (an attorney) failed to disclose that he was on the board of directors of the District of Columbia Associated General Contractors (“AGC”) where he served with one of the principals of the contractor who was also a member of that Board. The subcontractor also argued that the attorney failed to disclose that attorneys in his law firm represented the project owner on previous projects. C.R. Calderon Construction, Inc. v. Grunley Construction Company, Inc., 257 A.3d 1046 (2021).
The court analyzed the statute governing arbitration, and it stated that prospective arbitrators must disclose “any known facts that a reasonable person would consider likely to affect the impartiality of the arbitrator in the arbitration proceeding.” One of the types of disclosures required by the statute is “An existing or past relationship with any of the parties to the agreement to arbitrate or the arbitration proceeding, heir counsel or representatives, a witness, or other arbitrators.” The court concluded that a “reasonable person” would not consider the arbitrator’s relationships, “individually or collectively, likely to affect [his] impartiality, so [he] was not required to disclose them. The court also found that the arbitrator did not have “a substantial relationship” with the contractor. The subcontractor failed to establish evident partiality of the arbitrator.
Comment: The court noted that one reason parties choose to arbitrate is because the arbitrators are supposed to be highly knowledgeable in their field. Such knowledgeable individuals, notes the court, often belong to associations where they interact with other people that might become involved in arbitration. This does not disqualify them from serving as arbitrators. But the court notes that it would have been prudent for the arbitrator in this case to have erred on the side of disclosure to the subcontractor in advance of the arbitration. Such disclosure was not, however, legally required in this case. This court decision once again demonstrates how difficult it is to overturn an arbitration decision in court.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 23, No. 8 (December 2021).
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