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Section 10 of the United States Arbitration Act, 9 U.S.C.S. § 10, does authorize vacation of an award where it was procured by corruption, fraud, or undue means or where there was evident partiality in the arbitrators. These provisions show a desire of Congress to provide not merely for any arbitration but for an impartial one.
Petitioner, a subcontractor, filed suit against the surety to recover money owed by the prime contractor for a painting job. Pursuant to an agreement, the subcontractor appointed an arbitrator, the prime contractor appointed one, and the two arbitrators selected a third, who was supposedly neutral. The third arbitrator had actually served as an engineering consultant for the prime contractor on many projects, including the one in dispute. They did not disclose the relationship until after an award was made. The subcontractor then challenged the award, which the lower courts refused to set aside. Petitioner sought review of the decision.
Under the circumstances, should the arbitral award be vacated?
On certiorari, the United States Supreme Court explained that the United States Arbitration Act, 9 U.S.C.S. § 10, authorized vacation of an award where it was procured by corruption, fraud, or undue means or where there was evident partiality in the arbitrators. In reversing, the Court stated that, in a judicial proceeding, a decision should be set aside where there was the slightest pecuniary interest on the part of the judge and that there was no basis for refusing to follow the concept in the broad statutory language governing the proceeding.