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Code of Conduct

INTRODUCTION

ARIAS·U.S. is a not-for-profit corporation organized principally as an educational society dedicated to promoting the integrity of the arbitration process in insurance and reinsurance disputes. Through seminars and publications, ARIAS·U.S. trains knowledgeable and reputable professionals for service as panel members in industry arbitrations. The ARIAS·U.S. Board of Directors certifies as arbitrators, individual members who are qualified in accordance with criteria and procedures established by the Board.

The continued viability of arbitration to resolve industry disputes largely depends on the quality of the arbitrators, their understanding of complex issues, their experience, their good judgment and their personal and professional integrity. In order to properly serve the parties and the process, arbitrators must observe high standards of ethical conduct and must render decisions fairly. The provisions of the Code of Conduct should be construed to advance these objectives.

This version of the Code of Conduct was revised and became effective as of January 1, 2019, for conduct taking place after that date. It is an integration, with significant updates and amendments, of the original Guidelines and the Additional Ethics Guidelines adopted by ARIAS·U.S.  in 2010. The date on the PDF version of the Code reflects subsequent amendments to the Code as approved by the Board.

Revisers note to Canon I, Comment 5

Comment 5 is intended to cover situations where the mandatory prohibitions of Comment 3 almost apply. Typically, this occurs where the candidate has a relationship described in Comment 3 with an entity that is related to a party to the current arbitration, but where the Code’s definition of affiliate or party is not met. Comment 5 establishes a rebuttable presumption that a candidate will decline to serve in such situations unless the relationship is remote.

Following are three examples covered by Comment 5:

Example 1. Assume there is an entity that is related to a party to the current arbitration, although not “affiliated” as the Code of Conduct defines affiliated because the related entity owns only 49 percent (not 50.1 percent) of the party to the arbitration. Assume the same individuals manage both entities’ reinsurance disputes (those of the related entity and the party to the current arbitration).

A candidate is solicited to serve as the party-appointed arbitrator in the current arbitration by the party that is 49 percent owned by the related entity, while already serving as the umpire in an arbitration involving the related entity. Under the Code of Conduct, the definition of affiliate isn’t met, and Comment 3’s mandatory prohibitions (here Comment 3(f)) are not triggered. Under Comment 5, the candidate must not serve in this circumstance because the relationship is not remote (49 percent ownership and the same people managing the two disputes).

Example 2. Similarly, assume a candidate currently serves as the lawyer for an entity that owns 49 percent of the party to the current arbitration. Assume the same individuals manage both entities’ reinsurance disputes (those of the entity that owns 49 percent of the party to the current arbitration and the party). The candidate is solicited to serve as the party appointed arbitrator for the party that is 49 percent owned by the entity for which the candidate serves as a lawyer. Under the Code, the definition of party is not met, and Comment 3(c)’s mandatory prohibitions are not triggered. Under Comment 5, the candidate must not serve in this circumstance because the relationships are not remote.

Example 3. In a third example, assume there are two entities that are separately owned, but whose losses are entirely reinsured by the same entity. Assume also that the two separate entities’ reinsurance disputes are managed by the same individuals who are employed by the common reinsurer. A candidate is solicited by one of the two reinsured entities to serve as its party-appointed arbitrator in the current arbitration while already serving as the umpire in an arbitration involving the second of the two reinsured entities.

Under the Code, the definition of affiliate isn’t met (the two reinsured entities are separately owned, even if reinsured by the same entity) and Comment 3(f)’s mandatory prohibitions are not triggered. Under Comment 5, the candidate must not serve, because the relationship is not remote (there is a common reinsurer at risk for all losses, and the same individuals are managing both disputes).

These examples are not meant to be exhaustive, but illustrative. Admittedly, Comment 5 requires candidates to exercise judgment rather than follow a black-and-white rule. Nevertheless, Comment 5 serves an important purpose: it is intended to advance the general principle that in upholding the integrity of the arbitration process, a candidate should not get too close to the edge on issues of ethics.

PURPOSE

The purpose of the Code of Conduct is to provide guidance to arbitrators in the conduct of insurance and reinsurance arbitrations in the United States, whether conducted by a single arbitrator or a panel of arbitrators, whether or not certified by ARIAS•U.S. and regardless of how appointed. Comments accompanying the Canons explain and illustrate the meaning and purpose of each Canon. These Canons are, however, not intended to override the agreement between the parties in respect to arbitration and do not displace applicable laws or arbitration procedures. Though these Canons set forth considerations and behavioral standards only for arbitrators, the parties and their counsel are expected to conform their own behavior to the Canons and avoid placing arbitrators in positions where they are unable to sit or are otherwise at risk of contravening the Canons.  Parties and counsel should provide prospective arbitrators and umpires with sufficient information concerning the dispute and all of its potential participants so that they may fairly consider whether to serve.

 

DEFINITIONS

  1. Affiliate:  an entity whose ultimate parent owns a majority of both the entity and the party to the arbitration and whose insurance and/or reinsurance disputes, as applicable, are managed by the same individuals that manage the party’s insurance and/or reinsurance disputes;
  2. Arbitrator:  a person responsible to adjudicate a dispute by way of arbitration, including the umpire on a three (or more) person panel of arbitrators;
  3. Party:  the individual or entity that is named as the petitioner or respondent in an arbitration, as well as the affiliates of the named party;
  4. Umpire:  a person chosen by the party-appointed arbitrators, by an agreed-upon procedure, or by an independent institution to serve in a neutral capacity as chair of the panel.

Code of Conduct Canons

Download the full Code of Conduct Canons or download the individual Canons below:

In 2015, the ARIAS·U.S. Ethics Committee (the “Ethics Committee”) conducted a membership survey. Certain themes emerged from the responses. The responses are grounded in the ARIAS·U.S. Code of Conduct (the “Code”) and are focused on the ethical responsibilities of party-appointed arbitrators and umpires and not the specific facts and circumstances that might arise in a dispute. Click here to review the Ethics Committee Responses to Member Survey Questions.