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Mr Ahmed Sallam

Senior Associate - Rizkana & Partners

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Disqualification of Arbitrator

I. Definition

1.

One of the primary sources of legitimacy of international arbitration in general is the independence and impartiality of arbitrators.1 Therefore, the existence of challenging mechanisms is crucial to maintain such legitimacy. A successful challenge will lead to the “disqualification” of the arbitrator in question. The disqualification signifies the existence of an event that renders the arbitrator ineligible to assume his/her duties.2 In other words, it is the removal of arbitrators due to the lack of one of the qualities allowing him/her to evaluate the merits of the case open-mindedly, rationally, and objectively3 or due to his/her incapacity to perform the duties of the office.4 These qualities are either required by the rules governing the arbitral proceedings5 or the arbitration agreement.6 The most common grounds to disqualify arbitrators are the lack of independence or the lack of impartiality. Other grounds to disqualify arbitrators in investment arbitration are the nationality and the capacity.7

II. Practice

2.

Up to 1999, there were only three disqualification proposals submitted to the ICSID Secretary General.8 Since the beginning of the new millennium, the number of disqualification proposals increased significantly and reached eighty-nine proposals.9 As for the challenges brought under the PCA auspices, they exceeded thirty challenges filed in investor-State arbitrations.10

III. Procedure of proposal for disqualification

A. Under the ICSID Convention and Rules

3.

Each arbitrator is obliged to provide a declaration of acceptance before assuming office,11 including a disclosure to any circumstances that may give to doubts with regards to his/her independence and impartiality (see further Conflicts of interest). The challenging party will have to file promptly12 its proposal to disqualify the arbitrator(s) with the Secretary-General,13 after the constitution of the arbitral tribunal, who will transmit the proposal to the unchallenged arbitrators or to the Chairman of the Administrative Council, as the case may be.14 The challenged arbitrator is permitted to provide his/her observations promptly.15 The unchallenged arbitrators will decide on any proposal to disqualify one member of the tribunal.16 In case the unchallenged arbitrators are equally divided, the disqualification request will be referred to the Chairman of the ICSID Administrative Council.17

4.

In some instances, a party will challenge the majority18 or the totality19 of members of the tribunal, and the challenge will be referred to the Chairman of the ICSID Administrative Council to decide on the proposal.20 In some rare occasions, the Chairman will seek a non-binding recommendation regarding the challenge from a third party,21 who is usually the Secretary General of the PCA.22 The arbitral proceeding is suspended until the proposal to disqualify the arbitrator(s) is settled.23

B. Under the PCA and UNCITRAL Rules

5.

A party shall send a notice of its challenge within the prescribed time-limit from the date of appointment of the challenged arbitrator(s) or from the date of circumstance give rise to the challenge became known to the challenging party.24 If the challenged arbitrator(s) did not resign and the non-challenging party objected to the challenge within fifteen days from the date of the notice of challenge, the challenging party will have to confirm its intent to pursue the challenge.25

6.

In practice, the challenge process relies on written submissions from the non-challenging party(ies), the challenged arbitrator and, in some occasions, from the non-challenged arbitrator(s).26 

IV. Time limits of proposal for disqualification

A. Under the ICSID Convention and Rules

7.

Under the ICSID auspices, a party who wishes to challenge an arbitrator should submit its disqualification proposal promptly to the Secretary-General prior to the closure of proceedings.27

8.

Even though the ICSID Convention and Rules do not specify a time-limit within which a proposal for disqualification must be filed, tribunals and commentators confirm that the promptness is measured on a case by case basis28 from the date the challenging party knew the facts underlying the challenge.29

9.

The challenge decisions dealt differently with the promptness requirement. For instance, some decisions opted not to address the proposal’s timing and addressed directly the merits of the challenge.30 Other decisions did not shy away from addressing it. There is a consensus amongst these decisions that the promptness requirement should be assessed on a case by case basis,31 and most of these decisions examine the different and various circumstances that may affect the timing of the proposal including, inter alia, the public availability (or lack thereof) of the information giving rise to the challenge,32 and/or the length of the partial decisions adopted by the tribunal giving rise to the challenge.33

10.

The party who fails to fulfill the promptness requirement is considered to have waived its objection pursuant to Arbitration Rule 27.34

B. Under the PCA and UNCITRAL Rules 

11.

Under the PCA Arbitration Rules, the challenging party should file the notice of its challenge within thirty days35 from the date of notification of appointment of the arbitrator or from the date that the facts giving rise to his/her independence and impartiality becomes known. Under the UNCITRAL Rules, the time limit is fifteen days from the same date.36 The appointing authority rules on challenges within 30 days from the date of the notice of challenge.37

12.

Even though the timeliness of challenges is clear, it remains one of the disputed issues in most of the challenges.38 In some instance, the circumstances giving rise to the challenge are not a specific incident, rather they are an “accumulation of circumstances”, hence the relevant date will be the date on which the challenging party became aware of a sufficient number of circumstance to form the basis of the challenge.39 In other instances, identifying the time of the circumstances giving rise to the challenge was a less controversial issue.40

V. Legal standard

13.

Article 14 of the ICSID Convention requires certain qualities in an arbitrator, who should be “persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment”.41 

14.

“Manifest” lack of these qualities is a ground to the challenge and potential disqualification of the arbitrator in question according to Article 57 of the ICSID Convention.42

15.

Commentators agree that Article 14 of the ICSID Convention encompasses qualities such as independence and impartiality, even though there is no express reference to such qualities.43

VI. Grounds for challenge

16.

The investor-State body of awards developed several grounds to challenge an arbitrator, some are more controversial than others.

17.

Conduct alleged to give rise to a challenge includes:

  1. professional relationship of an arbitrator with a party44 or a non-party having an interest in the case;45
  2. professional relationship of an arbitrator with a counsel;46
  3. personal relationship of two arbitrators in parallel arbitrations;47
  4. personal relationship of an arbitrator with a counsel;48
  5. statement by an arbitrator or previous appointment in a previous case with factual or legal issues arising in this case;49
  6. statement of an arbitrator in an academic writing;50
  7. statement of an arbitrator in public51 or during the arbitration proceeding;52
  8. repeated appointments of the arbitrator;53
  9. appointments as arbitrator and counsel in parallel proceedings.54

VII. Evidentiary threshold

A. Under the ICSID Convention and Arbitration Rules

1. Burden of proof

18.

Tribunals consider that Articles 57 and 14(1) of the ICSID Convention require the challenging party to establish the existence of the required fact or facts but do not require proof of actual dependence or bias and that it is sufficient to establish the appearance of dependence or bias.55 

2. Standard of proof

a. The meaning of "manifest"

19.

The ICSID Convention does not clarify the meaning of “manifest” lack of qualities that arbitrators should have according to Article 57,56 which led arbitral tribunals to determine different thresholds.

20.

In Amco Asia (which is the first arbitrator’s challenge under the ICSID Convention) the unchallenged arbitrators concluded that the challenging party must prove, in addition to the facts, that the lack is “manifest”, i.e. “highly probable”.57 Other tribunals followed the same approach and considered that the term “manifest” meant “highly probable” or “obvious” or “evident.”58

21.

In Vivendi, the threshold was to examine whether the circumstances in question were to entertain “reasonable doubts” as to the capacity of the arbitrator to render a decision freely and independently.59 Other tribunals followed the same approach.60

b. An objective standard

22.

Though the standard to assess the independence and impartiality is not defined either in the ICSID Convention or in the ICSID Arbitration Rules, the different challenge decisions have unanimously ruled that it must be established through objective evidence that a reasonable informed third party would uphold, and not based on the subjective perception of the challenging party.61

B. Under the PCA and UNCITRAL Arbitration Rules

1. Burden of proof

23.

Tribunals do not require a proof of actual bias or dependence, but rather the appearance thereof from the perspective of an objective, reasonable and informed third party.62

2. Standard of proof

24.

Under the PCA and UNCITRAL Arbitration Rules,63 the threshold is set by the arbitration rules at justifiable doubts.64 This was confirmed by arbitral tribunals.65

Bibliography

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