In Scandinavian Reinsurance Co. v St. Paul Fire & Marine Insurance Co., 2010 (S.D.N.Y. Feb. 23, 2010), the District Court for the Southern District of New York vacated an arbitral award on the basis of "evident partiality or corruption in the arbitrators" under section 10(a)(2) of the Federal Arbitration Act (FAA).

The court found that two of the three arbitrators in a dispute over a reinsurance contract failed to disclose that they were concurrently presiding as arbitrators in a dispute involving similar issues with related parties and which featured the testimony of a common key witness. The court held that the undisclosed relationships were material because the arbitrators had placed themselves in a position where they could receive ex parte information about the kind of reinsurance business that was at issue in the arbitration. Further, they could be influenced by their prior determinations as to the credibility of the common witness and could influence each other's thinking on any common issues. The arbitrators' failure to disclose was not excused even if they believed in good faith that they would not be influenced by the information they learned in the concurrent arbitration.

This case confirms that in the Second Circuit an arbitrator's failure to disclose a material conflict of interest constitutes "evident partiality" under the FAA.