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Dr Obioma Ofoego

Associate in International Arbitration - Quinn Emanuel Urquhart & Sullivan LLP

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Appointment of Arbitrators

I. Definition

1.

The appointment of arbitrators comprises the process whereby arbitrators are appointed to adjudicate over a legal dispute. The composition of the arbitral tribunal is perhaps the most fundamental point in international arbitration procedure.1 This Note focuses principally on arbitration proceedings under the ICSID Convention and the UNCITRAL Arbitration Rules.

II. Related Wiki Notes

III. Constitution of the arbitral tribunal

A. Principles of freedom of choice and non-frustration

3.

The composition of ICSID tribunals is governed by two complementary principles: (i) the principle of freedom of choice by the parties; and (ii) the principle of non-frustration. Under the first principle, the parties are generally free to agree on the size, composition and method of appointment of the arbitral tribunal. The second principle acts as an important check on the parties’ freedom. It prevents a party from obstructing the proceedings by refusing to cooperate in the tribunal’s constitution. In ICSID proceedings, the principle of non-frustration is reflected (in this context) in Article 38 of the Convention, which addresses the situation in which the parties fail to appoint any arbitrator within ninety days of the registration of the request.2

B. Timing of appointment

4.

An ICSID tribunal is required to be constituted as soon as possible after the registration of a request for arbitration.3

5.

In the event that the parties have failed to appoint any arbitrator(s) within ninety days of the registration of the request, the Chairman shall appoint the arbitrator(s). In the present context, that power is subject to two qualifications. First, the parties may extend the ninety-day period by agreement. Second, the Chairman may only act upon the request of either party (and must consult both parties as far as possible).4

6.

He or she is to use his or her best efforts to make the appointment within 30 days of the request of either party.5 The parties are typically invited to state whether they wish ICSID to first conduct a ballot or list process to assist them in selecting a mutually agreeable candidate. In practice (and perhaps inevitably), the actual time taken for the constitution of ICSID tribunals varies considerably.

C. Number of arbitrators

7.

By one of the few mandatory provisions concerning the constitution and composition of ICSID tribunals, ICSID tribunals are required to consist of a sole arbitrator or any uneven number of arbitrators.6 The default position under the UNCITRAL Rules 2013 is that three arbitrators will be appointed if the parties have not previously agreed on the number of arbitrators.7 In principle, however, the parties may agree on a tribunal being composed of any number of members (including a sole arbitrator or an even number of members).8

D. Method of appointment

1. Parties' agreement

8.

The main principle governing the method of constitution of the tribunal – whether in investment arbitration or international commercial arbitration – is the parties’ agreement. That agreement may exist prior to the institution of proceedings, most commonly in the instrument providing consent (for example, in ICSID arbitration, a treaty or investment agreement). If the parties have agreed upon a tribunal of three arbitrators, one arbitrator will ordinarily be appointed by each party. The third (and invariably9 presiding) arbitrator may be appointed by the parties – but also by the party-nominated arbitrators or by an appointing authority or neutral official (be it as the primary method or otherwise in default of agreement).

2. In the absence of the parties' agreement

9.

Where there is no prior agreement, the parties may, for example, stipulate their agreement on appointment in an ad hoc agreement following the registration of the request.10 Under Article 37(2)(b) of the Convention, a fallback provision, where the parties do not agree upon the number of arbitrators and the method of their appointment, the tribunal will consist of three arbitrators, one arbitrator appointed by each party and the third (and presiding) arbitrator appointed by agreement of the parties.11 The UNCITRAL Rules 2013 contain similar fall-back provisions: if three arbitrators are to be appointed (including as a result of the parties’ lack of previous agreement on the number of arbitrators), each party appoints one arbitrator and the two arbitrators thus appointed then choose the third (and presiding) arbitrator – failing which, the presiding arbitrator will be appointed by the appointing authority.12

E. Nationality of arbitrators

10.

The majority of the arbitrators on an ICSID tribunal are required to be nationals of States other than the Contracting State party to the dispute and the Contracting State whose national is a party to the dispute – unless the sole arbitrator or each (and every) individual member of the tribunal has been appointed by the agreement of the parties.13

11.

In this context, the agreement of the parties refers to the actual appointment of individual arbitrators, identified by name (rather than a general agreement on the composition of the tribunal and method of its appointment).

12.

Where the tribunal is to consist of three arbitrators (and unless otherwise agreed by the parties), a national or co-national of one of the parties to the dispute may only be appointed by a party if the other party so agrees (whether or not the party making the first appointment has appointed a national of a third State, or whether or not there was a general prior or ad hoc agreement on the composition of the tribunal and method of appointment).14

13.

Arbitrators appointed by the Chairman pursuant to Article 38 are not permitted to be nationals of the Contracting Party to the dispute or of the Contracting State whose national is a party to the dispute – unlike where the Chairman is acting as appointing authority under an agreement of the parties. While the UNCITRAL Rules 2013 do not contain analogous nationality restrictions, where an appointing authority is requested to make an appointment, it is required to take into account the advisability of appointing an arbitrator of a nationality other than the nationalities of the parties.15

F. Qualities of arbitrators

14.

Consistent with the principle of freedom of choice, ICSID arbitrators in original proceedings may be appointed from outside the Panel of Arbitrators, except in the case of appointments by the Chairman pursuant to Article 38.16 However, arbitrators appointed from outside the Panel of Arbitrators must still possess the general qualities that a person must have in order to be eligible to serve on that panel: namely, high moral character; recognized competence in the fields of law, commerce, industry or finance; and reliability to exercise independent judgment.17 Arbitrators appointed under the UNCITRAL Rules 2013 are required to be independent and impartial. It may also, in the UNCITRAL context, be necessary to consider those requirements in light of any applicable rules at the place of arbitration.18

G. Acceptance and date of constitution of arbitral tribunal

15.

The appointment of an arbitrator is subject to that arbitrator’s acceptance of the appointment. The process of constituting an ICSID tribunal is completed once every arbitrator has accepted his or her appointment. ICSID proceedings are deemed to have begun on the date the Secretary-General notifies the parties that all the arbitrators have accepted their appointment (and, until that time, the composition of the tribunal is not fixed).19 From the date of the constitution of the arbitral tribunal, and subject to the procedure governing the replacement and disqualification of arbitrators, the tribunal’s composition shall remain unchanged.20

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