Gotthelf v. Dow Jones Telerate, Inc.

A-3771-97T2 (N.J. Super. App. Div. 1999) (Unpublished)
  • Opinion Date: May 10, 1999

ARBITRATION—Even though one of three arbitrators is removed for a possible conflict of interest, the ultimate award remains valid if that arbitrator did not participate in the decision of the case.

A commercial dispute was resolved by an arbitration conducted in accordance with the agreement of the parties. Although the agreement did not specify the number of arbitrators, the arbitration authority, which could have assigned the case to one arbitrator, decided to assign it to three. After ten sessions, one arbitrator advised the authority of a development that he perceived as creating a potential conflict of interest. The authority advised the parties of the potential conflict and decided to have the arbitrator withdraw. It did not tell the two remaining arbitrators, whereupon 35 additional sessions were held. At the conclusion of the hearings, awards were issued. The arbitrator withdrew because although never representing either party to the arbitration, he did represent two companies, one which had a relationship with the parent company of one of the litigants in an entirely different business and the other of which was engaged in a business similar to that of the other litigant and had contractual relationships with the first litigant. Based upon this conflict and a claim that the arbitration authority did not follow its own rules, one of the parties sought to have the award set aside. In reviewing the matter, the Court recognized that arbitrators are often attorneys, and the courts have almost uniformly determined that relations between an attorney/arbitrator and other parties did not warrant vacation of an arbitration award. The Court therefore found this aspect of the complaint to be unwarranted because the arbitrator with the alleged conflict was removed early and was not involved in the decision. The Court found that in all cases where arbitration awards had been vacated based on an arbitrator’s conflict of interest, the arbitrator had participated in the decision of the case.

As to the complaint that the arbitration authority should have advised the remaining arbitrators why the third arbitrator had been removed, the Court held that providing this information was solely within the discretion of the arbitration authority. The authority’s determination that the information would not be conveyed to the remaining arbitrators was in accordance with its own rules. Therefore, the Court refused to review the matter further and upheld the arbitration award.