THE TIMING OF AN ARBITRATOR’S DISCLOSURE OBLIGATIONS
Neutral arbitrators in contractual arbitrations are required, pursuant to Code of Civil Procedure section 1281.9, subd. (a), to disclose, within 10 calendar days of service of their proposed nomination or appointment (section 1281.9, subd. (b)), “all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial.”
C.C.P. section 170.1, subd. (a)(6)(C), and Standard 7 of the California Rules of Court, Appendix, Div. VI, impose additional and more specific disclosures. (See Arbitration Insight no. 2 which discusses those disclosures in detail and also notes that the failure to timely make them is a ground for vacatur of the arbitrator’s award. [CCP §1286.2, subd. (a)(6)(A).].) Jakks Pacific, Inc. v. Superior Court (THQ Inc.) (2008) 160 Cal.App.4th 596 analyzes the timing of such disclosures.
In Jakks Pacific, after parties to an agreement that contained an arbitration clause could not agree on the selection of an arbitrator to resolve their differences, THQ moved both to compel arbitration and for the appointment of an arbitrator. The trial court nominated five candidates from those proposed by the parties, four from THQ’s list of four and one from Jakks’s list of five. Three weeks later, Jakks gave notice that the five nominees were obligated that same day to provide the disclosures required by section 1281.9, subd. (b), “so the parties [could] agree on an arbitrator, or, if the parties [were] unable to agree, the Court [could] make an informed decision regarding the appointment of the arbitrator.” Jakks’s nominee’s disclosures were attached to its notice; there were none by the other four who had not been notified that they were on the court’s list. THQ objected to Jakks’s notice on the ground that disclosure is required at the time of the arbitrator’s selection or appointment and not earlier. Jakks sought a writ of mandate after the trial court struck its notice of disqualification, finding that disclosure is required when the arbitrator is appointed, not earlier, and then appointed one of THQ’s nominees.
The appellate court found that the trial court’s nomination of the initial five arbitrators, as required by C.C.P. section 1281.6, was merely a “proposal” rather than a final selection. In that regard, it held that an arbitrator’s “disclosure obligations are not triggered until (1) a determination is made that he ‘is to serve as a neutral arbitrator’ (§ 1281.9, subd. (a)) and (2) he has received written notice of his ‘proposed nomination [by the parties] or appointment [by the court]” (§ 1281.9, subd. (b).) Quite plainly, the trial court’s proposal (nomination) of possible arbitrators is done without notice to the candidates and before any one of them is selected (nominated) by the parties or appointed by the court.” (Id. at p. 603; emphasis in the original.)
Although the parties in Jakks Pacific had sought the trial court’s intervention in selecting an arbitrator, its holding that the arbitrator’s obligation to make the statutory disclosures is “triggered” only after his selection and the receipt of such written notice, applies whether, as noted above, that selection was made by the parties, a provider or the trial court. (See also “Regardless of the manner in which the arbitrator is selected, he is required by section 1281.9 to make certain disclosures.” [Id. at p. 601; emphasis added.].)
Judge Michael D. Marcus (Ret.)
ADR Services, Inc.
1900 Avenue of the Stars, Suite 250
Los Angeles, California 90067
Copyright Michael D. Marcus, April 2008