California Ethics Standards for Neutral Arbitrators in Contractual Arbitration

The Enabling Legislation

The Resulting Rules



from the

California Health and Safety Code

HSC Section 1281.85

Beginning July 1, 2002, a person serving as a neutral arbitrator pursuant to an arbitration agreement shall comply with the ethics standards for arbitrators adopted by the Judicial Council pursuant to this section.
The Judicial Council shall adopt ethical standards for all neutral arbitrators effective July 1, 2002.
These standards shall be consistent with the standards established for arbitrators in the judicial arbitration program and may expand but may not limit the disclosure and disqualification requirements established by this chapter.
The standards shall address the disclosure of interests, relationships, or affiliations that may constitute conflicts of interest, including prior service as an arbitrator or other dispute resolution neutral entity, disqualifications, acceptance of gifts, and establishment of future professional relationships.

HSC Section 1281.9

(a) In any arbitration pursuant to an arbitration agreement, when a person is to serve as a neutral arbitrator, the proposed neutral arbitrator shall disclose 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, including all of the following: (b) Subject only to the disclosure requirements of law, the proposed neutral arbitrator shall disclose all matters required to be disclosed pursuant to this section to all parties in writing within 10 calendar days of service of notice of the proposed nomination or appointment.

(c) For purposes of this section, "lawyer for a party" includes any lawyer or law firm currently associated in the practice of law with the lawyer hired to represent a party.

(d) For purposes of this section, "prior cases" means noncollective bargaining cases in which an arbitration award was rendered within five years prior to the date of the proposed nomination or appointment.

(e) For purposes of this section, "any arbitration" does not include an arbitration conducted pursuant to the terms of a public or private sector collective bargaining agreement.

HSC Section 1281.91

(a) A proposed neutral arbitrator shall be disqualified if he or she fails to comply with Section 1281.9 and any party entitled to receive the disclosure serves a notice of disqualification within 15 calendar days after the proposed nominee or appointee fails to comply with Section 1281.9.

(b)

(c) The right of a party to disqualify a proposed neutral arbitrator pursuant to this section shall be waived if the party fails to serve the notice pursuant to the times set forth in this section, unless the proposed nominee or appointee makes a material omission or material misrepresentation in his or her disclosure.
Except as provided in subdivision (d), in no event may a notice of disqualification be given after a hearing of any contested issue of fact relating to the merits of the claim or after any ruling by the arbitrator regarding any contested matter.
Nothing in this subdivision shall limit the right of a party to vacate an award pursuant to Section 1286.2, or to disqualify an arbitrator pursuant to any other law or statute.

(d) If any ground specified in Section 170.1 exists, a neutral arbitrator shall disqualify himself or herself upon the demand of any party made before the conclusion of the arbitration proceeding.
However, this subdivision does not apply to arbitration proceedings conducted under a collective bargaining agreement between employers and employees or their respective representatives.

HSC Section 1286.2

(a) Subject to Section 1286.4, the court shall vacate the award if the court determines any of the following: (b) Petitions to vacate an arbitration award pursuant to Section 1285 are subject to the provisions of Section 128.7.

Code of Civil Procedure Section 170.1.

(a) A judge shall be disqualified if any one or more of the following is true: (b) A judge before whom a proceeding was tried or heard shall be disqualified from participating in any appellate review of that proceeding.

(c) At the request of a party or on its own motion an appellate court shall consider whether in the interests of justice it should direct that further proceedings be heard before a trial judge other than the judge whose judgment or order was reviewed by the appellate court.



Original Document

CALIFORNIA RULES OF COURT
APPENDIX, DIVISION VI.
Ethics Standards for Neutral Arbitrators
in Contractual Arbitration


Standard 1. Purpose, intent, and construction
Standard 2. Definitions
Standard 3. Application and effective date
Standard 4. Duration of duty
Standard 5. General duty
Standard 6. Duty to refuse appointment
Standard 7. Disclosure
Standard 8. Disqualification
Standard 9. Duty to refuse gift, bequest, or favor
Standard 10. Duties and limitations regarding future professional relationships or employment
Standard 11. Conduct of proceeding
Standard 12. Ex parte communications
Standard 13. Confidentiality
Standard 14. Compensation
Standard 15. Marketing

Standard 1. Purpose, intent, and construction

(a) These standards are adopted under the authority of Code of Civil Procedure section 1281.85 and establish the minimum standards of conduct for neutral arbitrators. They are intended to guide the conduct of arbitrators, to inform and protect participants in arbitration, and to promote public confidence in the arbitration process.

(b) For arbitration to be effective there must be broad public confidence in the integrity and fairness of the process. Arbitrators are responsible to the parties, the other participants, and the public for conducting themselves in accordance with these standards so as to merit that confidence.

(c) These standards are to be construed and applied to further the purpose and intent expressed in subdivisions (a) and (b) and in conformance with all applicable law.

Comment to Standard 1

Code of Civil Procedure section 1281.85 provides that, beginning July 1, 2002, a person serving as a neutral arbitrator pursuant to an arbitration agreement shall comply with the ethics standards for arbitrators adopted by the Judicial Council pursuant to that section.

While the grounds for vacating an arbitration award are established by statute, not these standards, an arbitrator's violation of these standards may, under some circumstances, fall within one of those statutory grounds. (See Code Civ. Proc., 1286.2.) A failure to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware is a ground for vacatur of the arbitrator's award. (See Code Civ. Proc., 1286.2( a)( 6)( A).) Violations of other obligations under these standards may also constitute grounds for vacating an arbitration award under section 1286.2( a)( 3) if "the rights of the party were substantially prejudiced" by the violation.

These standards are not intended to establish a ceiling on what is considered good practice in arbitration or to discourage efforts to educate arbitrators about best practices.

Standard 2. Definitions

As used in these standards:

(a) [Arbitrator and neutral arbitrator]

(b) "Applicable law" means constitutional provisions, statutes, decisional law, California Rules of Court, and other statewide rules or regulations that apply to arbitrators who are subject to these standards.

(c) "Conclusion of the arbitration" means the following:

(d) "Consumer arbitration" means an arbitration conducted under a predispute arbitration provision contained in a contract that meets the criteria listed in paragraphs (1) through (3) below. "Consumer arbitration" excludes arbitration proceedings conducted under or arising out of public or private sector labor-relations laws, regulations, charter provisions, ordinances, statutes, or agreements. (e) "Consumer party" is a party to an arbitration agreement who, in the context of that arbitration agreement, is any of the following: (f) "Dispute resolution neutral" means a temporary judge appointed under article VI, section 21 of the California Constitution, a referee appointed under Code of Civil Procedure section 638 or 639, an arbitrator, a neutral evaluator, a special master, a mediator, a settlement officer, or a settlement facilitator.

(g) "Dispute resolution provider organization" and "provider organization" mean any entity that, or individual who, coordinates, administers, or provides the services of two or more dispute resolution neutrals. "Provider organization" does not include a court.

(h) "Financial interest" means a financial interest within the meaning of Code of Civil Procedure section 170.5.

(i) "Gift" means a gift as defined in Code of Civil Procedure section 170.9( l).

(j) "Honoraria" means honoraria as defined in Code of Civil Procedure section 170.9( h) and (i).

(k) "Lawyer in the arbitration" includes any lawyer present at the arbitration hearing or who is identified in any arbitration brief or other papers submitted to the arbitrator as representing a party for purposes of the arbitration.

(l) "Lawyer for a party" includes any lawyer representing a party and any lawyer currently associated in the practice of law with a lawyer hired to represent a party.

(m) "Member of the arbitrator's immediate family" includes the arbitrator's spouse or domestic partner (as defined in Family Code section 297) and a minor child living in the arbitrator's household.

(n) "Member of the arbitrator's extended family" includes the members of the arbitrator's immediate family and the parents, grandparents, great-grandparents, children, grandchildren, great-grandchildren, siblings, uncles, aunts, nephews, or nieces of the arbitrator or the arbitrator's spouse or domestic partner (as defined in Family Code section 297) or the spouse of such person.

(o) [Party]

(p) "Party-arbitrator" means an arbitrator selected unilaterally by a party and who is not expected to serve in an impartial manner.

(q) "Significant personal relationship" includes a close personal friendship.

Comment to Standard 2

Subdivision (a). The definition of "arbitrator" and "neutral arbitrator" in this standard is intended to include all arbitrators who are to serve in a neutral and impartial manner and to exclude unilaterally selected arbitrators who are to serve as advocates or in a partisan role.

Other terms that may be pertinent to these standards are defined in Code of Civil Procedure section 1280.

Standard 3. Application and effective date

(a) Except as provided in this standard and subdivision (b)(12) of standard 7, these standards apply to all persons who are appointed to serve as neutral arbitrators on or after July 1, 2002, in any arbitration under an arbitration agreement, if:

(b) These standards do not apply to: (c) [Inability to conduct or timely complete proceedings] In addition to the matters that must be disclosed under subdivision (b), an arbitrator must also disclose: (d) [General provisions] For purposes of this standard: (e) [Continuing duty] An arbitrator's duty to inform himself or herself of and to disclose the matters described in subdivisions (b) and (c) of this standard, except those matters described in subdivision (b)( 12) of this standard, is a continuing duty, applying from service of the notice of the arbitrator's proposed nomination or appointment until the conclusion of the arbitration proceeding. With regard to matters enumerated in subdivision (b)( 12) of this standard, after making the initial disclosure required by subdivision (f) of this standard in an arbitration, an arbitrator does not have a continuing duty to inform himself or herself of or to disclose these matters in that arbitration.

(f) [Time of disclosure] Within the time specified in Code of Civil Procedure section 1281.9( b), a proposed neutral arbitrator must disclose all matters in subdivisions (b) and (c) of this standard of which the arbitrator is then aware. Except for matters described in subdivision (b)(12) of this standard, if an arbitrator subsequently becomes aware of a matter that must be disclosed under either subdivision (b) or (c) of this standard, the arbitrator must disclose that matter to the parties as soon as practicable, but in no event more than 10 calendar days after the arbitrator becomes aware of the matter.

Comment to Standard 7


Timely disclosure to the parties is the primary means of ensuring the impartiality of a neutral arbitrator. It provides the parties with the necessary information to make an informed selection of a neutral arbitrator by disqualifying or ratifying the proposed arbitrator following disclosure. See also standard 10, concerning disclosure and disqualification requirements relating to concurrent and subsequent employment or professional relationships between an arbitrator and a party or attorney in the arbitration. A party may disqualify an arbitrator for failure to comply with statutory disclosure obligations (see Code Civ. Proc., 1281.91(a)). Failure to disclose, within the time required for disclosure, a ground for disqualification of which the arbitrator was then aware is a ground for vacatur of the arbitrator's award (see Code Civ. Proc., 1286.2(a)(6)(A)).

The neutral arbitrator's overarching duty under this standard, which mirrors the duty set forth in Code of Civil Procedure section 1281.9, is to inform parties about 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. While the remaining subparagraphs of (b) require the disclosure of specific interests, relationships, or affiliations, these are only examples of common matters that could cause a person aware of the facts to reasonably entertain a doubt that the arbitrator would be able to be impartial. The absence of particular interests, relationships, or affiliations listed in the subparagraphs does not necessarily mean that there is no matter that could reasonably raise a question about the arbitrator's ability to be impartial and that therefore must be disclosed. An arbitrator must make determinations concerning disclosure on a case-by-case basis, applying the general criteria for disclosure under paragraph (b).

Code of Civil Procedure section 1281.85 specifically requires that the ethical standards adopted by the Judicial Council address the disclosure of interests, relationships, or affiliations that may constitute conflicts of interest, including prior service as an arbitrator or other dispute resolution neutral entity. Section 1281.85 further provides that the standards "shall be consistent with the standards established for arbitrators in the judicial arbitration program and may expand but may not limit the disclosure and disqualification requirements established by this chapter [chapter 2 of title 9 of part III, Code of Civil Procedure, sections 1281 1281.95]."

Code of Civil Procedure section 1281.9 already establishes detailed requirements concerning disclosures by arbitrators, including a specific requirement that arbitrators disclose the existence of any ground specified in Code of Civil Procedure section 170.1 for disqualification of a judge. This standard does not eliminate or otherwise limit those requirements; in large part, it simply consolidates and integrates those existing statutory disclosure requirements by topic area. This standard does, however, expand upon or clarify the existing statutory disclosure requirements in the following ways:

Expanding the existing duty of reasonable inquiry that applies with respect to financial interests under Code of Civil Procedure section 170.1(a)(3), to require arbitrators to make a reasonable effort to inform themselves about all matters that must be disclosed (subdivision (b)). The standards also clarify what constitutes a reasonable effort by an arbitrator to inform himself or herself about relationships of his or her extended family. Expanding required disclosures about the relationships or affiliations of an arbitrator's family members to include those of an arbitrator's domestic partner (subdivisions (b)( 1) and (2); see also definitions of immediate and extended family in standard 2).

Requiring arbitrators, in addition to making statutorily required disclosures regarding prior service as an arbitrator for a party or attorney for a party, to disclose prior services both as neutral arbitrator selected by a party arbitrator in the current arbitration and as any other type of dispute resolution neutral for a party or attorney in the arbitration (e. g., temporary judge, mediator, or referee) (subdivisions (b)(4)(C) and (5)).

Requiring the arbitrator to disclose if he or she or a member of his or her immediate family is or was an employee, expert witness, or consultant for a party or a lawyer in the arbitration (subdivisions (b)(7)(A) and (B)).

Requiring the arbitrator to disclose if he or she or a member of his or her immediate family has an interest that could be substantially affected by the outcome of the arbitration (subdivision (b)(10)).

In consumer arbitrations, requiring arbitrators to disclose their relationship with the dispute resolution provider organization that is administering the arbitration and any financial or professional relationship between the provider organization and any party, attorney, or law firm in the arbitration (subdivision (b)(12)).

If a disclosure includes information about five or more cases, requiring arbitrators to provide a summary of that information (subdivisions (b)(4), (5), and (12).

Requiring arbitrators to disclose membership in organizations that practice invidious discrimination on the basis of race, sex, religion, national origin, or sexual orientation (subdivision (b)(13)).

Requiring the arbitrator to disclose any constraints on his or her availability known to the arbitrator that will interfere with his or her ability to commence or complete the arbitration in a timely manner (subdivision (c)).

Clarifying that the duty to make disclosures is a continuing obligation, requiring disclosure of matters that were not known at the time of nomination or appointment but that become known afterward (subdivision (e)).

Requiring arbitrators to disclose to the parties as soon as practicable after its discovery any matter about which they become aware after the time for making an initial disclosure has expired, but in no event more than 10 calendar days after the arbitrator becomes aware of the matter (subdivision (f)).

Subdivision (b). Currently expected relationships or affiliations that must be disclosed include all relationships or affiliations that the arbitrator, at the time the disclosure is made, expects will be formed. For example, if the arbitrator knows that the administering provider organization has agreed in concept to enter into a business relationship with a party, but they have not yet signed a written agreement formalizing that relationship, this would be a "currently expected" relationship that the arbitrator would be required to disclose. It is good practice for an arbitrator to ask each participant to make an effort to disclose any matters that may affect the arbitrator's ability to be impartial.

Standard 8. Disqualification

(a) An arbitrator is disqualified if:

(b) For purposes of this standard, "required disclosure" means a disclosure required under standard 7 or Code of Civil Procedure section 1281.9.

(c) Notwithstanding any contrary request, consent, or waiver by the parties, an arbitrator must disqualify himself or herself if he or she concludes at any time during the arbitration that he or she is not able to conduct the arbitration impartially.

Comment to Standard 8

Code of Civil Procedure section 1281.91 already establishes requirements concerning disqualification of arbitrators. This standard does not eliminate or otherwise limit those requirements or change existing authority or procedures for challenging an arbitrator's failure to disqualify himself or herself. The provisions of subdivisions (a)( 1) and (2) restate existing disqualification procedures under section 1281.91( a) and (b) when an arbitrator makes, or fails to make, initial disclosures. The provisions of subdivisions (a)( 3) and (4) clarify the requirements relating to disqualification based on disclosure made by the neutral arbitrator after appointment or based on the discovery by the party of a material omission or misrepresentation in the arbitrator's disclosure.

Standard 9. Duty to refuse gift, bequest, or favor

(a) An arbitrator must not, under any circumstances, accept a gift, bequest, favor, or honoraria from a party or any other person or entity whose interests are reasonably likely to come before the arbitrator in the arbitration.

(b) From service of notice of appointment or appointment until two years after the conclusion of the arbitration, an arbitrator must not, under any circumstances, accept a gift, bequest, favor, or honoraria from a party or any other person or entity whose interests have come before the arbitrator in the arbitration.

(c) An arbitrator must discourage members of his or her family residing in his or her household from accepting a gift, bequest, favor, or honoraria that the arbitrator would be prohibited from accepting under subdivisions (a) or (b).

(d) This standard does not prohibit an arbitrator from demanding or receiving a fee for services or expenses.

Comment to Standard 9

Gifts and favors do not include any rebate or discount made available in the regular course of business to members of the public.

Standard 10. Duties and limitations regarding future professional relationships or employment

(a) [Offers as lawyer, expert witness, or consultant] From the time of appointment until the conclusion of the arbitration, an arbitrator must not entertain or accept any offers of employment or new professional relationships as a lawyer, an expert witness, or a consultant from a party or a lawyer in the pending arbitration or a lawyer or law firm that is currently associated in the private practice of law with a lawyer in the arbitration.

(b) [Offers for other employment or professional relationships] In addition to the disclosures required by standard 7, within the time specified in subdivision (b) of Code of Civil Procedure section 1281.9, a proposed arbitrator must disclose whether or not he or she will entertain offers of employment or new professional relationships in any capacity other than as a lawyer, expert witness, or consultant from a party, a lawyer in the arbitration, or a lawyer or law firm that is currently associated in the private practice of law with a lawyer in the arbitration while that arbitration is pending, including offers to serve as a dispute resolution neutral in another case. A party may disqualify the arbitrator based on this disclosure by serving a notice of disqualification in the manner and within the time specified in Code of Civil Procedure section 1281.91( b).

(c) [Acceptance of offers prohibited unless intent disclosed] If an arbitrator fails to make the disclosure required by subdivision (b) of this standard or if, in the disclosure made pursuant to subdivision (b), the arbitrator states that he or she will not entertain offers of employment or new professional relationships from the time of appointment until the conclusion of the arbitration, the arbitrator must not entertain or accept any such offers, including offers to serve as a dispute resolution neutral.

(d) [Informed consent required in consumer arbitrations] If, in the disclosure made under subdivision (b), the arbitrator states that he or she will entertain offers of employment or new professional relationships, the arbitrator may entertain such offers. However, in consumer arbitrations, from the time of appointment until the conclusion of the arbitration, the arbitrator must not accept any such offers without the informed consent of all parties to the current arbitration.

(e) [Relationships and use of confidential information related to the arbitrated case] An arbitrator must not at any time,

Standard 11. Conduct of proceeding

(a) An arbitrator must conduct the arbitration fairly, promptly, and diligently and in accordance with the applicable law relating to the conduct of arbitration proceedings.

(b) In making the decision, an arbitrator must not be swayed by partisan interests, public clamor, or fear of criticism.

Comment to Standard 11

Subdivision (a). The arbitrator's duty to dispose of matters promptly and diligently must not take precedence over the arbitrator's duty to dispose of matters fairly.

Conducting the arbitration in a procedurally fair manner includes conducting a balanced process in which each party is given an opportunity to participate. When one but not all parties are unrepresented, an arbitrator must ensure that the party appearing without counsel has an adequate opportunity to be heard and involved. Conducting the arbitration promptly and diligently requires expeditious management of all stages of the proceeding and concluding the case as promptly as the circumstances reasonably permit. During an arbitration, an arbitrator may discuss the issues, arguments, and evidence with the parties or their counsel, to make interim rulings, and otherwise to control or direct the arbitration. This standard is not intended to restrict these activities.

The arbitrator's duty to uphold the integrity and fairness of the arbitration process includes an obligation to make reasonable efforts to prevent delaying tactics, harassment of any participant, or other abuse of the arbitration process. It is recognized, however, that the arbitrator's reasonable efforts may not successfully control all conduct of the participants.

For the general law relating to the conduct of arbitration proceedings, see chapter 3 of title 9 of part III of the Code of Civil Procedure, sections 1282 1284.2, relating to the conduct of arbitration proceedings. See also Code of Civil Procedure section 1286.2 concerning an arbitrator's unreasonable refusal to grant a continuance as grounds for vacatur of the award.

Standard 12. Ex parte communications

(a) An arbitrator must not initiate, permit, or consider any ex parte communications or consider other communications made to the arbitrator outside the presence of all of the parties concerning a pending or impending arbitration, except as permitted by this standard, by agreement of the parties, or by applicable law.

(b) An arbitrator may communicate with a party in the absence of other parties about administrative matters, such as setting the time and place of hearings or making other arrangements for the conduct of the proceedings, as long as the arbitrator reasonably believes that the communication will not result in a procedural or tactical advantage for any party. When such a discussion occurs, the arbitrator must promptly inform the other parties of the communication and must give the other parties an opportunity to respond before making any final determination concerning the matter discussed.

(c) An arbitrator may obtain the advice of a disinterested expert on the subject matter of the arbitration if the arbitrator notifies the parties of the person consulted and the substance of the advice and affords the parties a reasonable opportunity to respond.

Comment to Standard 12

See also Code of Civil Procedure sections 1282.2(e) regarding the arbitrator's authority to hear a matter when a party fails to appear and 1282.2(g) regarding the procedures that must be followed if an arbitrator intends to base an award on information not obtained at the hearing.

Standard 13. Confidentiality

(a) An arbitrator must not use or disclose information that he or she received in confidence by reason of serving as an arbitrator in a case to gain personal advantage. This duty applies from acceptance of appointment and continues after the conclusion of the arbitration.

(b) An arbitrator must not inform anyone of the award in advance of the time that the award is given to all parties. This standard does not prohibit an arbitrator from providing all parties with a tentative or draft decision for review or from providing an award to an assistant or to the provider organization that is coordinating, administering, or providing the arbitration services in the case for purposes of copying and distributing the award to all parties.

Standard 14. Compensation

(a) An arbitrator must not charge any fee for services or expenses that is in any way contingent on the result or outcome of the arbitration.

(b) Before accepting appointment, an arbitrator, a dispute resolution provider organization, or another person or entity acting on the arbitrator's behalf must inform all parties in writing of the terms and conditions of the arbitrator's compensation. This information must include any basis to be used in determining fees and any special fees for cancellation, research and preparation time, or other purposes.

Standard 15. Marketing

(a) An arbitrator must be truthful and accurate in marketing his or her services and must not make any representation that directly or indirectly implies favoritism or a specific outcome. An arbitrator must ensure that his or her personal marketing activities and any activities carried out on his or her behalf, including any activities of a provider organization with which the arbitrator is affiliated, comply with this requirement.

(b) An arbitrator must not solicit business from a participant in the arbitration while the arbitration is pending.

Comment to Standard 15

Subdivision (b). This provision is not intended to prohibit an arbitrator from accepting another arbitration from a party or attorney in the arbitration while the first matter is pending, as long as the arbitrator complies with the provisions of standard 10 and there was no express solicitation of this business by the arbitrator.

Drafter's Notes

Standards 1 15 implement Code of Civil Procedure section 1281.85, which requires the Judicial Council to adopt ethics standards for all neutral arbitrators serving in arbitrations pursuant to an arbitration agreement. Among other things, they address the disclosure of interests, relationships, or affiliations that may constitute conflicts of interest, the acceptance of gifts, the establishment of future professional relationships, ex-parte communication, fees, and marketing.