In STMicroelectronics, NV v Credit Suisse Securities LLC, (2d Cir. June 2, 2011), Credit Suisse and STMicroelectronics (STM) entered into a contract for STM to invest in auction rate securities. The contract required all disputes to be submitted to Financial Industry Regulatory Authority (FINRA) arbitration. After STM discovered that Credit Suisse was buying other types of securities, STM filed an arbitration claim with FINRA.

FINRA rules provide for a panel of three arbitrators chosen from lists provided by FINRA. The rules stipulate that two of the arbitrators must have no attachment to the securities industry and one must have industry knowledge and experience. Credit Suisse and STM, on their second attempt, agreed to a panel of arbitrators. During the hearings, Credit Suisse objected to John Duval serving as an arbitrator because he allegedly misrepresented that he had equal experience as an expert witness for financial firms and customers. Credit Suisse also claimed that he failed to disclose his testimony on issues similar to those in STM's claim. Duval did not step down and Credit Suisse appealed to FINRA. FINRA did not remove Duval as an arbitrator in this case.

The arbitral panel unanimously ruled in favour of STM. STM petitioned to confirm the arbitral award and Credit Suisse responded that the award should be vacated. Credit Suisse argued, among other claims, that Duval's disclosures about his prior experience were inaccurate because he stated that he worked for both sides when he actually worked "extensively and almost exclusively" as an expert witness for customers. Credit Suisse further argued that Duval should have disclosed that he was an expert witness for a customer in a case that involved an issue similar to one found in STM's claim.

The Second Circuit Court of Appeals rejected Credit Suisse's argument. The court first noted that Credit Suisse was alleging predisposition and not partiality. Thus, the only ground available under the Federal Arbitration Act (FAA) for vacating the award was the provision for "other misbehaviour by which the rights of any party have been prejudiced."

The court stated that Credit Suisse did not provide enough factual support for its claim of improper disclosure to justify vacating the award, and never asked Duval to disclose all of his experience. Credit Suisse also did not cite any cases, and the court was not aware of any, that involved a claim of insufficient disclosure falling under the "other behaviour" standard. The court finally noted that Duval's disclosures did not violate any FINRA rules. Therefore, Credit Suisse did not meet the threshold for vacating an arbitral award under the FAA.

This case demonstrates the high standard and consequential burden on parties seeking to vacate arbitral awards based on an arbitrator's disclosure of their prior experience. Parties wishing to challenge an arbitral award should take note of the court's statement that "[a]lthough we have limited the availability of discovery regarding the completeness of an arbitrator's disclosures, we have not forbidden it altogether."