Occidental Exploration and Production Company v Andes Petroleum Ecuador Limited - US Supreme Court Docket No 23-506 - Brief of Andes Petroleum Ecuador Limited in opposition - 2 February 2024
Country
Year
2024
Summary
QUESTION PRESENTED
Whether the court of appeals correctly held that petitioner made no showing that its party-nominated arbitrator exhibited "evident partiality" and that vacatur under 9 U.S.C. § 10(a)(2) was therefore not warranted.
INTRODUCTION
This case does not warrant review. Petitioner Occidental Exploration and Production Company ("OEPC" or "Petitioner") asks this Court to clarify the meaning of "evident partiality" in 9 U.S.C. § 10(a)(2), which authorizes vacatur of an arbitration award "where there was evident partiality."
This Court has previously denied petitions presenting this general question at least fifteen times.1 There is no reason to treat this petition differently.
What constitutes "evident partiality" is an inherently factbound issue, and every circuit to address the issue analyzes the materiality of the alleged relationship that allegedly gave rise to arbitrator bias. Whatever differences may exist in terminology are academic. Moreover, even assuming the question implicates a substantive split, this case is a poor vehicle because the question presented is not outcome-determinative: Petitioner would have lost in any circuit, because it provided "no evidence" that the arbitrator was partial or had a "material relationship" with an interested party from which "a reasonable person could reasonably infer. . . the possibility of bias." Pet. App. 4-5. Lastly, the Second Circuit's analytical framework is correct. The petition should be denied.
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Petitioner argues that courts have split over the meaning of "evident partiality" in 9 U.S.C.
§ 10(a)(2), as this Court construed that term in Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968). According to Petitioner, while the Ninth and Eleventh Circuits hold that an arbitration award may be vacated under § 10(a)(2) so long as there is an "appearance of bias,"
see Pet. 23-25, the First, Second, Third, Fourth, Fifth, and Sixth Circuits apply a more stringent standard, see Pet. 20-23.
Petitioner is incorrect. The Ninth and Eleventh Circuits agree with the decision below that a mere "appearance of bias" is not "evident partiality." As the Eleventh Circuit puts it, "the mere appearance of bias or partiality is not enough to set aside an arbitration award." Lifecare Int'l, Inc. v. CD Med., Inc., 68 F.3d 429, 433 (11th Cir. 1995). And "[u]nlike the standard for judges," the Ninth Circuit reasoned, "parties must demonstrate more than a mere appearance of bias to disqualify an arbitrator." Employers Ins. of Wausau v. Nat'l Union Fire Ins. Co. of Pittsburgh, 933 F.2d 1481, 1489 (9th Cir. 1991). Therefore, every circuit agrees that a mere "appearance of bias" is not the standard.
Courts also agree that "the `evident partiality' question necessarily entails a fact intensive inquiry," Lifecare Int'l, 68 F.3d at 435, focused on analyzing the materiality of the alleged relationship at issue, see Pet. App. 5. It may be true that the circuit courts, when deciding whether to vacate an arbitration award under § 10(a)(2), have used different words to articulate the standard, but there is no substantive difference in the analysis, which, in every circuit, tracks the reasoning and core holding in Commonwealth Coatings: nondisclosure of a material relationship warrants vacatur, whereas nondisclosure of a trivial or nonmaterial relationship does not.
Given the factbound nature of what constitutes "evident partiality," it is unsurprising that the alleged circuit conflict is overblown. And given the facts--namely Petitioner's failure to show that the arbitrator had a "material relationship" with a party from which "a reasonable person could reasonably infer. . . the possibility of bias," Pet. App. 5--it is also unsurprising that the outcome would have been the same whether Petitioner had moved to vacate in the Second Circuit (as it did here) or the Eleventh Circuit. For instance, the Eleventh Circuit provides that "the alleged partiality must be `direct, definite and capable of demonstration rather than remote, uncertain and speculative." Lifecare Int'l, 68 F.3d at 433. Here, because Petitioner has "no evidence" that the arbitrator was partial, its mere speculation does not suffice. Pet. App. 4. And because the decision below applied an analytical framework that focuses on the materiality of the alleged relationship that allegedly gives rise to bias--the same general framework applied by every other circuit--there is no merit to the assertion, see Pet. 26-33, that the decision below is contrary to Commonwealth Coatings.
The petition should be denied.
Footnotes omitted