New Federal Court Filing Accuses NY-Based Arbitrator of Concealing Conflict of Interest

AM Editorial Team

Updated on:

Lawyers acting on behalf of majority shareholders of the telecommunications infrastructure firm Continental Towers LATAM Holdings Limited have issued a new filing under public record before the Southern District of New York which raises a number of controversies regarding the misconduct of an arbitration tribunal operating under the American Arbitration Association (AAA).

The case, number number 22-cv-I761, was brought by Terra Towers, Corp. et al. against Telecom Business Solution, LLC et al., the minority shareholders of Continental led by private equity firm Peppertree Capital Management. Terra requested the court to vacate the arbitral award based on a series of shocking claims that the arbitrators allegedly exhibited evident bias against them, refusing evidence, and even ordering them to re-hire two executives currently wanted by law enforcement on corruption charges in Latin America, according to media reports.

Now, in the latest filing, lawyers for Terra reveal that the chair of the arbitration tribunal, Marc Goldstein, concealed a critical conflict of interest in his Arbitrator’s Oath – failing to disclose his contact with a family member who works at the investment bank which is party to the dispute in the context of a bribery allegation.

Previously Arbitration Monitor has covered other filings in this case, including the revelation that the arbitration chair maintained a public blog in which he allegedly criticized and attacked the claimant, threatened him with jail, and gave legal guidance to minority shareholders – without directly referring to names in the blog posts.

In this new reply filed on April 8, 2024, counsel for Terra Towers argues, “the public nature of the Chairman’s blog, coupled with its opinions and advocacy favoring one party in an ongoing arbitration satisfies the standards of a Rule 59 (e) motion that relief is warranted where newly discovered evidence may reasonably have led to a different result. See Morisseau v. DLA Piper, 532 F.Supp.2d 595, 598, 624 (S.D.N.Y., 2008).”

Terra’s filing (download PDF) highlights some explosive claims regarding the tribunal:

First, there was an internet post purporting to report on a whistleblower at Goldman Sachs, an affiliate of Respondents, accusing the Chairman of potentially having accepted a bribe. Second, despite Petitioners attempt to resolve the matter privately with the ICDR, Respondents brought it to the attention of the tribunal and baselessly accused Petitioners of planting the post and tainting the Chairman’s reputation. Third, the tribunal then began its own investigation into the allegation against the Chairman himself, rather than appropriately reserve it for the ICDR. Fourth, only at this point did the Chairman disclose a familial relationship to a former Goldman Sachs partner with whom he admitted to discussing the arbitration and potential conflict of interest implications prior to the commencement of the arbitration. Nevertheless, he still failed to disclose this relationship in his Arbitrator’s Oath.

Thus far the SDNY has declined to vacate the award, however given this newly discovered evidence and the explosive allegations highlighting alleged misconduct of the tribunal – including orders interfering with foreign law enforcement proceedings – it seems probably that the messy dispute could still yet prompt action, either before the federal courts or within the AAA itself.