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Mme Stephanie Papazoglou

Trainee Lawyer - Université de Paris 1 Panthéon-Sorbonne

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Arbitrator Responsibility

I. Definition

1.

Arbitrator Responsibility is defined as a lawful claim triggered by dissatisfied parties, when they have suffered damages from a breach in arbitrator’s duties and obligations during an Investor-State dispute.1 Arbitrators as private adjudicators are engaged by the parties to the dispute with a judicial mandate to settle the dispute between them. This relationship of trust can be frustrated in course of arbitration proceedings, as arbitrators may negligently disregard their duties or misuse their authority.

II. Different forms of responsibility

2.

There can be different types of liability claims, depending on the nature of arbitrator responsibility. Dissatisfied parties usually recourse to civil responsibility by filing a civil lawsuit action before State courts against an arbitrator, who has breached its civil obligations (i.e. unreasonable resignation, unavailability or unenforceable award). In some jurisdictions, arbitrators may, in addition, face criminal responsibility triggered by a criminal complaint (i.e. fraud, corruption, breach of arbitral confidentiality, forgery and use of forgery).2 3 Finally, arbitrators may face deontological and ethical responsibilities,4 as well as disciplinary responsibility, sanctioned by arbitral institutions or other legal professional bodies.5

III. Origins

3.

Arbitrator responsibility finds its origins from two legal approaches.

A. The legal status based approach

4.

On the one hand, the legal status approach leads to a broad judicial immunity that the arbitrator could or should enjoy, based on its similarities with state judges. Under this approach, an arbitrator’s responsibility cannot in principle be incurred on account of what they have ruled. Nevertheless, arbitrators can be held liable for serious personal misconduct, fraud, gross negligence or denial of justice.6 

5.

By way of inspiration, the drafters of the ICSID Convention have decided to give to arbitrators a so-called “blanket immunity” from legal process with respect to acts performed by them in the exercise of their arbitral functions. According to Article 21 (a) of the ICSID Convention arbitrators “shall enjoy immunity from legal process with respect to acts performed by them in the exercise of their functions, except when the Centre waives this immunity.”7 The concept of waiver can be expressly found in the ICSID Rules and specifically in the Rule 32, under the Title “Waiver of Immunities”. This Rule specifies that “the Secretary-General may waive the immunity of the Centre; (…) and the Chairman of the Council may waive the immunity of the Tribunal”, when immunity impedes the cause of justice and that such waiver would not prejudice the interest of the Centre. This shows that arbitrators do not, in theory or in practice, enjoy absolute immunity, as ICSID may waiver arbitral immunity if an arbitrator is found liable for willful misconduct (e.g., actual bias or corruption).8

B. The contractual based approach

6.

On the other hand, the contractual approach, which recognizes arbitrators as service provider, is based on an agreement concluded with the parties. Arbitrators are employed by the parties in seeking to resolve their dispute and for this he or she is paid a fee. Any breach of the terms of his/her appointment contract (receptum arbitri) should entail liability for wrongful acts causing damages to the parties.9

7.

By way of inspiration, under the ICSID system the arbitrator performs the service of resolving a dispute for a fee. The arbitrators’ fees are fixed in advance either by the parties with the Tribunal or by the Administrative Council after consultation with the Secretary-General.10 This contractual analysis of the role of arbitrators can be found in the terms of his appointment. Accordingly, pursuant to Rule 6 of the ICSID Rules each arbitrator shall sign a declaration, which assert that the arbitrator shall comply with different contractual commitments. As a result, any arbitrator after acceptance of his appointment becomes is bound to fulfill these contractual duties during the entire arbitral process.

IV. Legal grounds for liability

8.

The extent of legal grounds for liability may vary according to the choice of procedural rules governing the arbitral proceedings, the law governing the contract concluded between the parties and the arbitrator, the nationality of the arbitrators of the place where the arbitration is held. Nevertheless, it is generally admitted that the main and common grounds to hold an arbitrator as liable are the lack of impartiality and independence, the unavailability, the unreasonable or unjustified resignation, the lack of disclosure or expeditious and inefficient conduct (due diligence), delays.11 Other grounds may also include corruption, fraud, forgery and breach of arbitral confidentiality, bad faith or misconduct by the arbitrator.

V. Current developments under ICSID and UNCITRAL Rules

9.

The first Draft Code of Conduct for Adjudicators in ISDS system was released on 1 May 2020 and which addresses many key ethical issues and provides policy makers on how to best regulate adjudicator’s behaviour.12 

Bibliography

Ad Hoc Commission, The Arbitrator’s Liability, Le Club des Juristes, 2017

Guzman, A.T., Arbitrator Liability: Reconciling Arbitration and Mandatory Rules, Duke Law Journal, 2000, pp. 1279-1334.

Cremades, B.M., Should Arbitrators be Immune from Liability?, International Financial Law Review, 1991.

Hausmaninger, C., Civil Liability of Arbitrators – Comparative Analysis and Proposals for Reform, Journal of International Arbitration, 1990

Girsbeger, D. and Voser, N., International Arbitration Comparative and Swiss Perspectives, 3rd ed., 2016, pp. 145-206. 

Alessi, D., Enforcing Arbitrator’s Obligations: Rethinking International Commercial Arbitrators’ Liability, Journal of International Arbitration, 2014, pp. 735-784.

Bentolila, D., Arbitrators as Lawmakers, International Arbitration Law Library, 2017, pp. 51-80.

Romero, E.S., Immunity and Liability of Arbitrators: What is the Proper Balance?, in Hanotiau, B. and Mourre, A. (eds.), Player's Interaction in International Arbitration, ICC Institute of Word Business Law, 2012.

Gaillard, E. and Savage, J., Fouchard, Gaillard and Goldman on International Commercial Arbitration, Kluwer Law International, 1999, pp. 557-628.

Truli, E., Liability v. Quasi-Judicial Immunity of the Arbitrator: The Case Against Absolute Arbitral Immunity, The American Review of International Arbitration, Vol. 17, No. 3, 2006.

Born, G.B., International Commercial Arbitration, 2nd ed., 2014, pp. 1962-2050.

Hochstrasser, D. and Bock, A., The Arbitral Tribunal’s Duties to Ensure Fair and Ethical Proceedings, Frankfurt am Main, 2015, p. 193-209.

Lionnet, K., The Arbitrator’s Contract, Arbitration International, 1999, pp. 161-169. 

Rasmussen, M., Overextending Immunity: Arbitral Institutional Liability in the United States, England, and France, Fordham International Law Journal, 2002, pp. 1824-1875.

Henry, M., La Responsabilité de L’Arbitre pour Reddition de la Sentence Tardive, Paris Journal of International Arbitraiton, 2015.

Mullerat, R. and Blanch, J., The Liability of Arbitrators: A Survey of Current Practice, Dispute Resolution International, 2007, pp. 99-123.

Smith, M.L., Contractual Obligations Owed by and to Arbitrators: Model Terms of Appointment, Arbitration International, 1992, pp. 17-40.

Smahi, N., The Arbitrator’s Liability and Immunity under Swiss law, ASA Bulletin, 2017, pp.2-3.

Gautier, P., La responsabilité civile de l'arbitre au regard du temps qui passe, Recueil Dalloz, 2006.

Besson, S. and Poudret, J., Droit comparé de l’arbitrage international (2002), published in English as Comparative Law of International Arbitration, 2007.

Riegler, S. and Platte, M., Chapter II : The Arbitrators’ Liability, Austrian Yearbook on International Arbitration, 2007, pp. 105-124.

Park, W., Chapter 2: The Four Musketeers of Arbitral Duty: Neither One-For-All Nor All-For-One, in Derains, Y. and Lévy, L. (eds.), Is Arbitration Only as Good as the Arbitrator? Status, Powers and Role of the Arbitrator, ICC Institute of Word Business Law, 2015, pp. 25-45

Giorgetti, C., ICSID and UNCITRAL Publish the Anticipated Draft of the Code of Conduct for Adjudicators in Investor-State Dispute Settlement, Kluwer Arbitration Blog, 2 May 2020.

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