Worldwide: Full Disclosure: How Much Information Do We Require of Our Arbitrators?

The disclosure of information required of arbitrators is becoming increasingly onerous.  But how far must arbitrators go in disclosing their agendas, mandates and lists of acquaintances?

The ICC Rules of Arbitration

The International Chamber of Commerce (the "ICC"), one of the leading institutions for administering international commercial arbitration, has been paying particular attention to this issue.  Like almost all arbitral institutions, the ICC requires arbitrators to be both independent and impartial.1  Article 7(2) of the ICC Rules of Arbitration requires that all prospective arbitrators "sign a statement of independence and disclose in writing to the Secretariat any facts or circumstances which might be of such a nature as to call into question the arbitrator's independence in the eyes of the parties."2  The Secretariat then provides this information directly to the parties for comments.3

The IBA Guidelines

Most national lex arbitri and institutional rules of arbitration require that arbitrators be independent of the parties and their representatives, and impartial vis-à-vis the issue in dispute, that is, free of prejudice or prejudgment.4  While these are, properly speaking, "states of mind", which may be difficult to define with precision, the practice that has evolved internationally reflects a certain level of consistency.5  This practice was skilfully collated by a working group of international arbitration experts into the IBA Guidelines on Conflicts of Interest in International Arbitration (the "IBA Guidelines").6  Part I of the IBA Guidelines provides seven principal "General Standards" on independence and impartiality.  Part II sets out the "Application Lists", which are three colour-coded "lists of specific situations that, in the view of the Working Group, do or do not warrant disclosure or disqualification of an arbitrator."7

Nevertheless, much continues to be written about the increasing number of challenges to the independence and impartiality of arbitrators.  Whereas the sanctity and legitimacy of alternative dispute resolution rests, at least in part, on the independence and impartiality of its decision makers, many practitioners have come to view this aspect of international arbitration as a headache, even a migraine.  Those practising in the field as counsel may find that such challenges have become nothing more than bad faith attempts to invalidate unfavourable results, while those acting as arbitrators resent the scrutiny of their current agendas and past affairs, professional and otherwise.

The Statement of Independence Required for ICC Arbitrations

The ICC, for one, issued a new "Statement of Acceptance, Availability and Independence" in August 2009 which dramatically broadened - or at least explicitly specified - the nature and amount of information prospective arbitrators must disclose.  In particular, prospective arbitrators are asked to relate "any past or present relationship, direct or indirect, between [them] and any of the parties, their related entities or their lawyers or other representatives, whether financial, professional or of any other kind."8  The form also states that "[a]ny doubt must be resolved in favour of disclosure. Any disclosure should be complete and specific, identifying inter alia relevant dates (both start and end dates), financial arrangements, details of companies and individuals, and all other relevant information."9  The 2009 form even introduces a section on the availability of prospective arbitrators, and asks them to confirm that they are able to "devote the time necessary" to properly conduct the arbitration, and to list "any other professional engagements or activities likely to require a substantial time commitment [.] in the next 12-18 months."10 

A recent publication by Jason Fry and Simon Greenbery, respectively Secretary General and Deputy Secretary General of the ICC International Court of Arbitration, reveals the seriousness with which the ICC scrutinizes and even cross-checks the information disclosed:

The Secretariat spot-checks its electronic database to ascertain whether arbitrators have made proper disclosure about prior or pending ICC arbitrations. The Secretariat has access to all information about an arbitrator's prior roles in ICC arbitrations, whether as counsel or arbitrator, including how the arbitrator was appointed. There have been several recent instances where undisclosed information was discovered by the Secretariat through this process.11

Alpha Projektholding GmbH v. Ukraine

It was thus with great interest that practitioners in international arbitration learned of a recent decision on a challenge to an arbitrator under the auspices of another arbitral institution, the International Centre for Settlement of Investment Disputes ("ICSID").  In Alpha Projektholding GmbH v. Ukraine,12 a challenge was raised by Ukraine against arbitrator Dr. Yoram Turbowicz because he and counsel for Claimant had attended Harvard Law School together some twenty years ago, a fact that had not been disclosed by Dr. Turbowicz.  In further support of its challenge, Ukraine alleged that counsel for Claimant had had a "brief phone call" with Dr. Turbowicz regarding his availability to serve on the Tribunal, and that his lack of arbitration experience suggested that his selection was motivated by his lack of independence and impartiality.13

The Decision on Respondent's Proposal to Disqualify Arbitrator Dr. Yoram Turbowicz dated 19 March 2010 (the "Decision"),14 makes extensive reference to the IBA Guidelines.  The other two members of the Tribunal in this case, deciding pursuant to Article 58 of the ICSID Convention,15 found that the shared educational experience of a counsel member and an arbitrator did not constitute either a "relationship" as contemplated by Article 6(2) of the Rules of Procedure for Arbitration Proceedings,16 or a contravention of the principles of independence and impartiality, as reflected in the IBA Guidelines, capable of influencing the arbitrator's freedom of decision-making.

The Decision compares the challenged relationship with two often cited situations included in the IBA Guidelines' "green list" of acceptable situations that do not require any disclosure: "(i) membership in the same professional association or social organization and (ii) previous service together as arbitrators or as co-counsel."17  In this respect, the Decision concludes: "In this proceeding, there is no evidence of even this minimal level of connection between Dr. Turbowicz and Dr. Specht. Long-ago acquaintanceship at school, [.] has neither the currency of co-membership in some professional or social group nor the professional intimacy of prior service as co-arbitrator or as co-counsel."18  As such, an "acquaintanceship at an educational institution was not perceived by the drafters of the IBA Guidelines as the kind of relationship that was deemed worthy of any mention even in the "green list" of fact patterns, much less the "orange list" or the "red list"."19

Also of interest are the additional, perhaps even obiter remarks in the Decision with respect to limiting the expansive understanding of circumstances requiring disclosure.  The Decision notes "that a requirement to disclose trivial or superficial facts will prove burdensome to parties and arbitrators, will unnecessarily circumscribe the freedom of choice in the selection of party-appointed arbitrators and will encourage frivolous challenges."20  This may be encouraging news for practitioners in international arbitration tired of having the focus of arbitral proceedings displaced from the dispute itself to the lives of its decision-makers.

Footnotes

1. See the ICC Rules of Arbitration, in force as from 1 January 1998, Article 7, available online at: http://www.iccwbo.org/court/arbitration/id4093/index.html

2. Article 7(2) of the ICC Rules of Arbitration provides as follows:

Before appointment or confirmation, a prospective arbitrator shall sign a statement of independence and disclose in writing to the Secretariat any facts or circumstances which might be of such a nature as to call into question the arbitrator's independence in the eyes of the parties. The Secretariat shall provide such information to the parties in writing and fix a time limit for any comments from them.

3. ICC Rules of Arbitration, in force as from 1 January 1998, Article 7(2).

4. See, "Selection, Challenge and Replacement of Arbitrators in International Arbitration - Independence and Impartiality of Arbitrators" in Gary B. Born, International Commercial Arbitration (Kluwer Law International 2009) 1461; and Benedikt Spiegelfeld, Susanne Wurzer and Heidrun E. Preidt, "Chapter II: The Arbitrator and the Arbitration Procedure - Challenge of Arbitrators: Procedural Requirements" in Christian Kausegger, Peter Klein, et al. (eds), Austrian Arbitration Yearbook 2010 (C.H. Beck, Stampfi & Manz 2010), 45.

5. See Benedikt Spiegelfeld, Susanne Wurzer and Heidrun E. Preidt, "Chapter II: The Arbitrator and the Arbitration Procedure - Challenge of Arbitrators: Procedural Requirements" in Christian Kausegger, Peter Klein, et al. (eds), Austrian Arbitration Yearbook 2010 (C.H. Beck, Stampfi & Manz 2010), 45; William W. Park, "Part III Chapter 9: Arbitrator Integrity" in Michael Waibel, Asha Kaushal, et al. (eds), The Backlash against Investment Arbitration (2010), 189; and Simon Greenberg and José Ricardo Feris, Appendix: References to the IBA Guidelines on Conflicts of Interest in International Arbitration ("IBA Guidelines") when Deciding on Arbitrator Independence in ICC Cases, in ICC International Court of Arbitration Bulletin, Volume 20, No. 2, (2009), 33.

6. IBA Guidelines on Conflicts of Interest in International Arbitration, Approved on 22 May 2004 by the Council of the International Bar Association, available online at: http://www.int-bar.org/images/downloads/guidelines%20text.pdf .

7. Introduction to the IBA Guidelines on Conflicts of Interest in International Arbitration, Approved on 22 May 2004 by the Council of the International Bar Association, at 4.

8. ICC Arbitration News, in ICC International Court of Arbitration Bulletin, Volume 20, No. 2, (2009) 7, at 11 (emphasis in original).

9. Ibid (emphasis in original).

10. ICC Arbitration News, in ICC International Court of Arbitration Bulletin, Volume 20, No. 2, (2009) 7, at 10.

11. Jason Fry and Simon Greenbery, The Arbitral Tribunal: Applications of Articles 7-12 of the ICC Rules in Recent Cases, in ICC International Court of Arbitration Bulletin, Volume 20, No. 2, (2009) 12, at 16.

12. ICSID Case No. ARB/07/16.

13. Alpha Projektholding GmbH v. Ukraine, ICSID Case No. ARB/07/16, Decision on Respondent's Proposal to Disqualify Arbitrator Dr. Yoram Turbowicz dated 19 March 2010, at 13-14.

14. Alpha Projektholding GmbH v. Ukraine, ICSID Case No. ARB/07/16, Decision on Respondent's Proposal to Disqualify Arbitrator Dr. Yoram Turbowicz dated 19 March 2010, available online at : http://icsid.worldbank.org/ICSID/FrontServlet.

15. Article 58 of the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, provides as follows:

The decision on any proposal to disqualify a conciliator or arbitrator shall be taken by the other members of the Commission or Tribunal as the case may be, provided that where those members are equally divided, or in the case of a proposal to disqualify a sole conciliator or arbitrator, or a majority of the conciliators or arbitrators, the Chairman shall take that decision. If it is decided that the proposal is well-founded the conciliator or arbitrator to whom the decision relates shall be replaced in accordance with the provisions of Section 2 of Chapter III or Section 2 of Chapter IV.

16. Article 6(2) of The Rules of Procedure for Arbitration Proceedings of ICSIDprovides as follows:

(2) Before or at the first session of the Tribunal, each arbitrator shall sign a declaration in the following form:

"To the best of my knowledge there is no reason why I should not serve on the Arbitral Tribunal constituted by the International Centre for Settlement of Investment Disputes with respect to a dispute between ___________________and___________________.

"I shall keep confidential all information coming to my knowledge as a result of my participation in this proceeding, as well as the contents of any award made by the Tribunal.

"I shall judge fairly as between the parties, according to the applicable law, and shall not accept any instruction or compensation with regard to the proceeding from any source except as provided in the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and in the Regulations and Rules made pursuant thereto.

"Attached is a statement of (a) my past and present professional, business and other relationships (if any) with the parties and (b) any other circumstance that might cause my reliability for independent judgment to be questioned by a party. I acknowledge that by signing this declaration, I assume a continuing obligation promptly to notify the Secretary-General of the Centre of any such relationship or circumstance that subsequently arises during this proceeding."

Any arbitrator failing to sign a declaration by the end of the first session of the Tribunal shall be deemed to have resigned.

17. Alpha Projektholding GmbH v. Ukraine, ICSID Case No. ARB/07/16, Decision on Respondent's Proposal to Disqualify Arbitrator Dr. Yoram Turbowicz dated 19 March 2010, at para. 61.

18. Ibid, at para. 61.

19. Ibid, at para. 61.

20. Ibid, at para. 66.

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