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Mr Vitali Hiarlouski

Legal assistant - Energy Charter Treaty Secretariat

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Arbitrator's Impartiality and Independence

I. Definition

1.

Arbitrators may have specific duties imposed on them by (i) terms of appointment in case of ad hoc arbitration, (ii) by the procedural rules of the designated institution in case of institutional arbitration, or (iii) eventually, by relevant rules concerning arbitration applicable at the seat of arbitration.

2.

A common requirement in most arbitration rules and national laws is that an arbitrator shall act impartially and independently and has a duty to disclose relevant circumstances to maintain the required perception of independence and impartiality.1 (See further Arbitrator Disclosure)

3.

The lack of independence or impartiality may constitute a ground for a challenge of an arbitrator2 or the award of the tribunal.3 The importance and relevance of these qualities is amplified due to the fact that arbitrators may serve as counsel in different cases and counsels may serve as arbitrators.

4.

However, standards of impartiality and independence may differ from one arbitration institution to another4 and from one seat of arbitration to another. English courts, for instance, tend to apply “the real danger of bias” test.5 Under US law, the principle is that an arbitrator must avoid “evident partiality.”6

II. The difference between independence and impartiality

5.

Independence refers to objective and external manifestation of the relationship between the parties, counsels and co-arbitrators.7 An arbitrator shall not only be independent8 but he shall also be perceived as independent by third parties.9

6.

Impartiality of an arbitrator refers generally to the state of mind, subjective and abstract concept which is difficult to measure10 and can be deducted from his/her external conduct. It entails an “absence of external control” as well as any “bias and predisposition towards a party.”11 Some arbitration rules did not explicitly list impartiality as a ground for challenging an arbitrator but were amended to include impartiality.12 ICSID tribunals reviewing arbitrator challenges have explicitly recognised that independence and impartiality are the two "key qualifications of arbitrators"13 and manifest lack of such qualifications constitute a valid ground for an arbitrator challenge.14

III. “Justifiable doubts” approach to the duties of independence and impartiality

7.

The UNCITRAL Arbitration Rules refer to the standard of “justifiable doubts” in relation to independence and impartiality.15 Doubts as to independence or impartiality of an arbitrator are justifiable if they give rise to an apprehension of bias in the eyes of an objective, reasonable observer.16

8.

Similarly, the SCC Arbitration Rules refer to the justifiable doubts standard.17 The reasoning of the SCC Board of Directors in its disqualification decisions is not disclosed. It is therefore difficult to ascertain the interpretation given to the justifiable doubts standard. It appears, however, that the SCC Arbitration Institute seeks inspiration from the IBA Guidelines on Conflicts of Interest in International Arbitration (“IBA Guidelines”) when deciding challenges under SCC Rules.18

9.

In turn, the ICSID Convention requires arbitrators to be relied upon to “exercise independent judgment”19 and allows a party to propose the disqualification of any member of the tribunal taking into account “any fact indicating a manifest lack of the qualities required by paragraph (1) of Article 14.”20 The wording of the standard referred to in ICSID Convention seems to be more difficult to meet than the standard of justifiable doubts, because of the reference to “any fact indicating” and the interpretation of the word "manifest."21

10.

In Suez, Sociedad General de Aguas de Barcelona, S.A. and Interagua Servicios Integrales de Agua, S.A. v. Argentine Republic, the tribunal commented that the ICSID Convention “places a heavy burden of proof (…) to establish facts that make it obvious and highly probably, not just possible, that (the challenged arbitrator) is a person who may not be relied upon to exercise independent and impartial judgment” and the standard to be applied is the “objective standard.”22 Some tribunals have followed this approach23 while others have not.24

11.

Despite differences between independence and impartiality, it is natural to asses them together as the guarantee of the common end. In that perspective, the IBA Guidelines in particular state that “[e]very arbitrator shall be impartial and independent of the parties at the time of accepting an appointment to serve and shall remain so until the final award has been rendered or the proceedings have otherwise finally terminated.”25 The IBA Guidelines are not legally binding but contain widely recognized good practices to avoid conflicts of interest in arbitration.26 They are an example of a broader initiative aiming at the harmonisation of the standards of independence and impartiality in international arbitration to strengthen the confidence in arbitration as a means of dispute resolution and to increase foreseeability. 

Bibliography

Schreuer, Ch., The ICSID Convention: A commentary, Cambridge: Cambridge University Press, 2009.

Born, G., The Different Meanings of an Arbitrator’s “Evident Partiality” Under U.S. Law, 20 March 2013.

Jung, H., The standard of Independence and impartiality for arbitrators in International Arbitration: a comparative study between standards of the SCC, the ICC, the LCIA and the AAA, Uppsala University, 2008.

Malintoppi, L., Independence, Impartiality and duty of disclosure of arbitrators, in Muchlinski, P., Ortino, F. and Shreuer, Ch. (eds.), The Oxford Handbook of international Investment Law, 2008.

Rubins, N. and Lauterburg, B., Independence, Impartiality and Duty of Disclosure in Investment Arbitration, in Knahr, C., Koller, Ch., Rechberger, W. and Reinisch, A. (eds.), Investment Arbitration – Similarities and Divergences, 2010.

Bishop, D. and Reed, L., Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in Interational Commercial Arbitration, 1998.

Keutgen, G., Propos sur le statut de l’arbitre, in Mélanges offerts à Pierre Van Ommeslaghe, 136, 2000.

Matray, D. and van den Berg, A.J., L’Independence et L’Impartialité de l’Arbitre, 2008.

Yu, H.L. and Shore, L., Independence, Impartiality, and Immunity of Arbitrators – US and English Perspectives, International & Comparative Law Quarterly, 2003. 

Stanic, A., Challenging Arbitrators and the Importance of Disclosure: recent cases and reflections, Transnational Dispute Management, 2011. 

Park, W.W., Arbitrator Bias, Transnational Dispute Management, 2015.

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