The London Court of International Arbitration (LCIA) has recently published 24 anonymised decisions illustrating its approach to applications challenging arbitrators.
This latest release is the third tranche of decisions issued by the LCIA, following earlier batches covering a period up to 2017. The latest cache includes decisions made by the LCIA Court in arbitrations it administered (both under LCIA rules and UNCITRAL rules) between 22 July 2017 and 31 December 2022. The LCIA has now published 84 decisions in total, spanning the period October 2010 – December 2022. More recent decisions are not yet available as they may relate to arbitrations which are ongoing.
The LCIA says publishing these decisions in full (with such redactions as necessary to preserve confidentiality) is part of its ongoing commitment to transparency, and that they form an invaluable resource for users, counsel, and arbitrators by creating greater understanding of the reasoning applied by the LCIA Court and providing guidance in relation to standards of conduct for future cases.
Successful challenges remain rare
Of the 24 decisions in the latest release, challenges were upheld in only two cases – a reduction even from the relatively low proportion of successful challenges in the existing challenges database. As the LCIA notes, the latest release covers the period in which the UK Supreme Court handed down its decision on the English law test for apparent bias in Halliburton v Chubb.
While this recent judicial scrutiny and increased discussion could have prompted more arbitrator challenges to be brought, it has also arguably led to better understanding and attention to standards of conduct in the years since, which may well have fed into a reduction in successful challenges. For more information on the Halliburton decision, see our article Apparent bias in arbitration – avoiding and challenging it.
In tandem with the full text of the decisions themselves, the LCIA has published an accompanying commentary setting out key themes from the decisions. Of particular interest is the commentary on the categories of challenges being brought, and their relative success rates.
Party dissatisfaction
In the majority of challenges under LCIA Rules, the party's challenge was based on their dissatisfaction with the tribunal's procedural decisions - for example, where parties alleged that the tribunal's decisions on applications for security for costs, admission of evidence or extensions of time evidenced bias on the part of the tribunal. The LCIA Court's decisions in such cases demonstrate that challenges based on procedural decisions, where the tribunal has wide discretion, will typically fail.
Likewise, the decisions show that parties who attempt to have a "second bite at the cherry" by presenting what is effectively an appeal on the merits as a challenge to an arbitrator's independence and impartiality are unlikely to succeed.
Arbitrator connections
A handful of the latest decisions relate to challenges to an arbitrator's impartiality, based on direct or indirect 'connections' with a co-arbitrator, expert or law firm involved in the reference. While noting that its own arbitrator selection process minimises such challenges in arbitrations under the LCIA Rules, the LCIA further cautions that challenges based on tenuous or remote links are likely to be rejected - "the mere fact a connection exists is unlikely of itself to suffice to remove an arbitrator".
However, the latest batch of decisions does include a successful challenge where it was likely that two LCIA-appointed arbitrators (although unaware of this at the time of their appointment) would need to rule on the conduct of a law firm with which they were connected.
It also includes successful impartiality challenges in UNCITRAL arbitrations (where the LCIA does not appoint the tribunal) where arbitrators variously had been employed by a party for 20 years; had a pending lawsuit against a party; and had three ongoing research projects with a member of a party's legal team.
Overlapping subject matter
Arbitrations with overlapping subject matter, and multiple appointments of the same arbitrators, formed the backdrop to the Supreme Court's judgment on apparent bias in Halliburton, and these latest additions to the LCIA challenges database include some similar challenges. However, in its latest decisions, the LCIA Court has found that where parties to related arbitrations involving overlapping issues agree to appoint the same tribunal in all references, they agree or are aware of the risk of overlap and so cannot challenge the tribunal's impartiality on those grounds.
The Court also rejected a challenge to a party-nominated arbitrator in overlapping references, finding they should be able to approach the evidence in the second arbitration with an open mind.
A high threshold
As LCIA says, this growing repository of decisions is an invaluable resource for those involved in arbitrations administered by the institution, which aids understanding of when a challenge to an arbitrator is likely to be appropriate and justified.
The continuing low rate of successful applications demonstrates though that arbitrator challenges in the LCIA Court (in common with those in the English courts) face a high hurdle, and that parties should avoid using these processes as a proxy form of challenging an order on its merits.
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