Originally from Dispute Resolution Journal

LANDLORD/TENANT—AWARD—ARBITRATOR PARTIALITY—PARTY-APPOINTED ARBITRATOR—TIMELINESS

The court affirmed the lower court's vacatur of an award where a party-appointed arbitrator had been a paid negotiator in connection with the contract out of which the dispute arose. The dispute concerned a lease for the rental of commercial properly for a 2()-year period. The rental for the first 10 years was set, but the rent for the second 10 year-- was to he agreed upon in writing by the parties, or failing agreement, then by arbitration. At the end of the first 10-year period, the parties began negotiations concerning rent for the second 10-year period. The tenant retained a Mr. Carter to act as its negotiator, and in the event negotiations failed, as its party-appointed arbitrator. When negotiations failed, the arbitration panel was constituted. The sole purpose of arbitration was to establish the fair monthly rent for the second 10-year period. In January 1975 the neutral arbitrator and the tenant's arbitrator drafted a memorandum wherein they interpreted the language of the lease to permit the rent for the second 10 years to be the same as for the previous 10 years. In May 1975 the arbitrators issued a formal award. The court ruled that the landlord's motion to vacate the award was not barred by HRS Sec. 658-11, which requires that a notice to vacate must be given within 10 days after the award is made and served. In this regard the court concluded that the formally acknowledged arbitration award, and not the memorandum of award, constituted the final award. Also, the arbitrators exceeded the powers in that they failed to decide the question submitted to them—that is what was the fair monthly rental. Lastly, the award was vacated on the basis that the party-appointed arbitrator was not neutral. The court noted that "where an arbitrator, though appointed by the party, identifies himself personally with his party and with his party's prejudice and needs, as herein, the conclusion is unavoidable, that the arbitrator has lost sight of his duty as an arbitrator, and is unable lo act as an arbitrator."

Brennan v. Stuarts' Pharmacies, Ltd., 579 P.2d 673 (Hawaii 1978).