On Petition for Review from the Court of Appeals for the Fifth District of Texas
The instant case concerned an arbitration provision that allowed each party to appoint one arbitrator to a panel, subject to certain requirements. At issue was whether the petitioner company waived its objection to the removal of the arbitrator it selected. The underlying dispute concerned the financing mechanism for the petitioner’s purchase of several insurance companies from the respondent. Pursuant to the financing agreement, the petitioner and the respondent submitted their dispute to arbitration under American Arbitration Association (AAA) rules. The arbitrators found in favor of the respondent, and the petitioner filed a motion to vacate the award. The trial court granted the motion. It held that the petitioner was entitled to any arbitrator that met the requirements set forth in the financing agreement and that the arbitrator removed by the AAA met those requirements. The appellate court reversed, holding that the petitioner had waived those arguments by not presenting them to the AAA. The Texas Supreme Court noted that the appellate court was correct that the petitioner did not expressly state that arbitrators were not required to be neutral. However, the petitioner argued that the AAA requirements did not apply, that the only applicable requirements were that they be knowledgeable and independent businesspersons or professionals, and that the petitioner's selected arbitrator met those qualifications. The petitioner properly preserved that argument. Accordingly, the appellate court's judgment was reversed and remanded.