part iii procedural issues, ch.20 independence,...

From: Investment Claims (http://oxia.ouplaw.com). (c) Oxford University Press, 2013. All Rights Reserved. Subscriber: Arnold &Porter LLP; date: 28 January 2015

Contenttype: BookContentSeries: OxfordHandbooksinLawISBN: 9780199231386

Product: InvestmentClaims[IC]—InvestmentClaims[IC]Publishedinprint: 26June2008

PartIIIProceduralIssues,Ch.20Independence,Impartiality,andDutyofDisclosureofArbitratorsLorettaMalintoppi

From:TheOxfordHandbookofInternationalInvestmentLawEditedBy:PeterMuchlinski,FedericoOrtino,ChristophSchreuer

Subject(s):Arbitrators—InternationalCentrefortheSettlementofInvestmentDisputes(ICSID)—InternationalCentreforSettlementofInvestmentDisputes—UNCITRALArbitrationRules—UNCITRALModelLaw—InternationalCourtofArbitration(ICC)—ICSIDAdditionalFacilityarbitration—WorldTradeOrganization(WTO)—InternationalCourtofJustice(ICJ)—NAFTA(NorthAmericanFreeTradeAgreement)—ECT(EnergyCharterTreaty)


(p.789)Chapter20Independence,Impartiality,andDutyofDisclosureofArbitrators

(1)TheStateofPlay:HowistheIssueCurrentlyTreatedinInvestmentArbitration?792

(a)RelevantICSIDProvisions793

(b)ICSIDPrecedents794

(c)OtherInvestmentArbitrationPrecedents800

(2)ReviewofSelectedArbitrationRulesonIndependence,Impartiality,andtheDutytoDisclose807

(a)UNCITRAL807

(b)ICC808

(c)LCIA810

(3)ThePracticeoftheInternationalCourtofJustice(‘ICJ’orthe‘Court’)811(4)NAFTA'sandWTO'sCodesofConduct813

(a)NAFTA814

(b)WTO815

(p.790)(5)SummaryReviewofNationalLaws816

(a)France816

(b)EnglandandWales818

(c)Switzerland819

(d)USA820

(6)TheContributionofProfessionalAssociations821

(a)TheIBAGuidelinesonConflictsofInterestinInternationalArbitration821

(b)TheAAA/ABACodeofEthicsforArbitratorsinCommercialDisputes822

(7)CantheExistingRulesProvideaModelforInvestmentArbitration?823ConcludingRemarksandRecommendations824

Muchhasbeenwrittenonthesubjectoftheindependenceandimpartialityofarbitratorsininternationalcommercialarbitration.Conferencesanddoctrinalcontributionsanalysetheissueatlength,andprofessionalassociationshaveissuedguidelinesandnon-bindingregulationsaimedatprovidingspecificcodesofconductforinternationalarbitrators.Similarly,certainpermanentcourtsandtribunalshaveadoptedinternalrulesandcodesofconductinthisrespect.Theissuehasbecomemorepressingwiththeglobalizationofinternationallawfirmsandtheproliferationofdisputesettlementproceedings.IntheabsenceofauniversalcodeofethicsapplicabletotheinternationalBar,thenewchallengesoftheevolvingworldofinternationallitigationhaveengenderedtheneedforpromptdisclosureincasesofconflictofinterest.

ThedebatehasmovedfromthegeneralcontextofinternationalcommercialarbitrationtothespecializedfieldofinvestmentarbitrationastherecentamendmentstotheICSIDArbitrationRules.In2004,theICSIDSecretariatpublishedaDiscussionPaperentitled‘PossibleImprovementsoftheFrameworkforICSIDArbitration’, inwhichitidentifiedthedisclosurerequirementsforICSID

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arbitratorsasoneoftheareaswherechangescouldbemade. ThePaperdevotedtwoparagraphstotheissueandmadethreeproposalsinthisrespect:(i)toexpandthedisclosurerequirementsunderICSIDArbitrationRule6(2)andArticle13(2)oftheAdditionalFacilityRules,toinclude‘anycircumstanceslikelytogiverisetojustifiabledoubtsastothearbitrator'sreliabilityforindependentjudgment’;(ii)toamendthesameprovisionsbyextendingthedutytodisclosetotheentiredurationofthearbitralproceedings;and(iii)toelaborateacodeofconductforICSIDarbitratorssimilartothe‘codeselaboratedinotherintergovernmentalsettings’.TheICSID(p.791)SecretariatsenttheDiscussionPapertomembersoftheAdministrativeCouncilandcirculateditamongstarbitrationexpertsandinstitutionsaswellasbusinessandcivilsocietygroups.TheresultsofthisconsultationprocesswerefinallyincorporatedintoaWorkingPaperwhichwasissuedon12May2005.WithrespecttotheimprovementsoriginallysuggestedintheDiscussionPaperinrelationtothedisclosurerequirementsofICSIDarbitrators,theWorkingPaperendorsedtheproposaltoamendArbitrationRule6byextendingthedutytodisclosetoanycircumstanceslikelytogiverisetojustifiabledoubtsastothearbitrator'sreliabilityforindependentjudgment.TheWorkingPaperalsosuggestedmodifyingthesameprovisionbycreatingacontinuousobligationtodisclose.

Asaresultofthisprocess,severalamendmentstotheICSIDRuleshavebeenapproved—byanoverwhelmingmajority—bytheICSIDAdministrativeCouncilandhavecomeintoeffecton10April2006. FurtherdiscussionoftheamendmentsiscontainedinSection3below.Aswillbeexplainedbelow,thereisgeneralagreement(amongstthosewhoprovidedcommentsontheICSIDinitiative)onmodifyingorsupplementingtheexistingsysteminordertofacethenewchallengespresentedbythegrowingbodyofinvestmentdisputes.The2006AmendmentsindeedprovideafirstresponsetotheincreaseinpotentialconflictsofinterestfollowingtheextraordinarygrowthofICSIDarbitrationsinthelasttenyears.

Thepurposeofthischapteristoprovideanoverviewoftheissuesofindependenceandimpartialityofmembersofinvestmenttribunalsandtooffersomefurtherreflectionsonthissubject.InSection1below,Sub-section(a)willreviewICSIDprovisionsonthemethodologyofappointmentofarbitratorsandtheirindependenceandimpartiality.Sub-sections(b)and(c)willprovideasummaryreviewofsomeavailableprecedentsininvestmentarbitrations(underICSID,UNCITRAL,andadhocproceedings).Section(2)willexaminehowthequestionistreatedbyreferencetoasampleofinstitutionalrules,modellaws,andprofessionalguidelines.Section(3)willanalysetheapproachadoptedunderthepracticedirectionsoftheInternationalCourtofJusticeandSection(4)willprovideanoverviewoftheNAFTAandWTOcodesofconduct.Section(5)containsasummaryreviewofnationallawsonthesubject,whileSection(6)looksatthecontributionofprofessionalassociations.Intheconcludingsection,Section7,theserulesarecomparedtoassesstowhatextenttheycanprovideamodelforinvestmentarbitration.Finally,somepreliminaryconclusionsandrecommendationsareputforward.

(p.792)(1)TheStateofPlay:HowistheIssueCurrentlyTreatedinInvestmentArbitration?Whileitcannotbesaidthattheruleoflegalprecedent(staredecisis)appliesininternationalarbitrationingeneral,investmentarbitrationhaswitnessedagrowthinreportedjurisprudence.Litigationpartiesfrequentlyrelyonthisjurisprudencetosupporttheirlegalargumentsandtribunalsoftenapplytheseprecedentsasgroundsfortheirfindings. Thisisduetoanumberofreasons.

Awardsarefrequentlypublishedandtendtohaveacertaindegreeofhomogeneity,particularlywhentheyarerenderedwithinaninstitutionalframeworksuchasICSIDorNAFTA.Furthermore,arbitrationbasedoninvestmentlawhastheuniquecharacteristicofcombiningelementsofpublicinternationallawwithrulesofprivatelaw.Inthejurisdictionalphase,thishasledarbitraltribunalstofocusatlengthonthedistinctionbetweentreatyviolationsandcontractualbreaches.Asaresult,thelegalissuestobedecidedbydifferentpanelssittingindifferentdisputesinthefieldofinvestmentlawtendtobesimilar.ThisisnotsurprisinggiventhatthetermsofBilateralInvestmentTreaties(BITs)andthecontentsofthevariousdisputesettlementmechanismsoftenbearaclose

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resemblance.

Theparadoxofthissituationisthat,althoughinvestmentdisputesarenotadjudicatedbyapermanentcourtortribunal,but,rather,beforetribunalsappointedunderinstitutionalrulessuchasthoseofICSID,UNCITRALandtheICC,theawardsofthesepanelsaresystematicallyrelieduponasformingpartofthebodyofinvestmentcase-lawnotunlikethedecisionsofpermanentjudicialorgans,suchastheInternationalCourtofJustice.

Thishasledtoobjectionsbeingfiledovertheappointmentofarbitratorsininvestmentarbitrations,ortochallengesbeingraisedinthecourseofthearbitration,whenthearbitratorsinquestionarealsoinvolvedascounselandadvocateinotherpendingcases.Suchcasesmayinvolvedifferentparties,buttheyfrequentlydealwithsimilarlegalissues.Therationaleofanobjectionorchallengeinthesecircumstancesisthat,totheextentthatanominatedarbitratoractsascounselinadisputeofasimilarcharacterandadoptsinthatcontextcertainpositionsregardingissueswhicharecommontobothdisputes,heorshemaynotbeabletomaintainan(p.793)entirelyunbiasedapproachtothesameissuesinthecasewhereheorsheiscalledtoactasanarbitrator.

Similartypesofchallengesareoftenraisedinthecontextofinternationalcommercialarbitrationingeneralandthesolutionsadoptedmayvary.Generallyspeaking,thesolefactthatanarbitratormayhaverepresentedapartyascounselinadifferentdisputeinvolvingdifferentpartiesbutdealingwithrelatedlegalissuesdoesnotprovidesufficientgroundsforthenon-confirmationorchallengeofthatindividual.Whenotherfactorscomeintoplay,however,particularlytheprincipleofequalityoftreatmentbetweenthepartiesandgeneralprinciplesofdueprocess,theoutcomemaybedifferent.Aswillbeseenbelow,thesuccessofanon-confirmationorchallengelargelydependsonthestandardsappliedtothedefinitionofindependenceandimpartiality,assumingthatthesetwoconceptscanbegroupedunderacommonheading.

(a)RelevantICSIDProvisionsProvisionsrelatingtodisclosurerequirementsbyarbitratorsandtheirindependenceandimpartialityarefoundintheICSIDConvention,theICSIDArbitrationRules,andtheAdditionalFacilityArbitrationRules.Article14(1)oftheConventionspeaksofthe‘highmoralcharacter’and‘recognisedcompetenceinthefieldsoflaw,commerce,industryorfinance’ofmembersofpanels,andemphasizesthelegalcompetenceexpectedofmembersofallarbitraltribunals.Thisprovisionfurtherstressesthatnomineesshouldbe‘personsthatmaybereliedupontoexerciseindependentjudgment’,thusincludinganimplicitdutyofimpartialityandindependencefromtheparties.PursuanttoArticle40(2)oftheConvention,arbitratorsappointedoutsidethePanelofArbitratorsmustpossessthesamequalitiesdescribedinArticle14(1). Moreover,underArticle57oftheConvention,anarbitratormaybedisqualifiedifheorshemanifestlylacksthecapacitieslistedunderArticle14(1).

Issuesofpotentialbiascanalsobeavoidedbystipulatingstrictnationalityrequirements.Withthisinmind,Articles38and39oftheICSIDConventionstatethatarbitratorsappointedbytheChairmanoftheWorldBankcannotbenationalsofeitherpartytothedisputeandthatthemajorityofarbitratorsshallbenationalsofStatesotherthanthoseofthepartiestothedispute.Thenationalityrequirementcancreateinequalitiesbetweenthepartiestotheextentthatitallowsthepartymakingitsappointmentfirstthepossibilityofnaminganationalwhileexcludingthispossibilityfortheotherparty.However,thisproblemhasbeensolvedbyArbitrationRule1(3),(p.794)whichrequiresthatanationalofeitherpartymaynotbeappointedasanarbitratorbyapartywithouttheagreementoftheotherpartytothedispute.

Attheoutsetoftheproceedings,nomineesmustsigndeclarationsattestingthattheyshallact‘fairlyasbetweentheparties’and‘notacceptanyinstructionorcompensationwithregardtotheproceedingfromanysource’exceptasprovidedintheConvention,RegulationsandRules.Whereapplicable,astatementofthearbitrator's‘pastandpresent,professionalandotherrelationship(ifany)withtheparties’mayalsobeattachedtothedeclaration(ArbitrationRule6(2)andAdditionalFacilityArbitrationRules,Art13(2)). ICSIDprovisionscontainnodefinitionofthekindof

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relationshipthatshouldbedisclosedbyarbitratorsorconsideredasabartoappointment.InhiscommentaryontheICSIDConvention,ProfessorSchreuerprovidessomeexamplesofthetypesofrelationshipswhichshouldbedisclosed:

apermanentattorney/clientrelationship,anyotherpermanentorrecurrentbusinessrelationship,employmentbyaparty,includingcivilserviceinaStatethatisaparty,substantialparticipationorshareholdinginacompanythatisapartyandanyformofrelationshipinwhichthearbitratorstandstoprofitdirectlyorindirectlyfromthefinancialgainofaparty.

Thisnon-exclusivelistshowsthatpersonalorprofessionalcontactswithapartymustrisetoacertainlevelinordertopreventapersonfromactingasarbitrator.GuidanceinthisrespectisprovidedbytheICSIDdecisionstodatewherechallengestoarbitratorshavebeenaddressed.

(b)ICSIDPrecedentsInAmcoAsiaCorpvIndonesia,thechallengedarbitratorhadgiventaxadvicetotheindividualwhocontrolledtheclaimantsinthearbitration.Inaddition,thearbitrator'slawfirmandclaimants'counselinthearbitrationhadaprofit-sharingarrangementandajointoffice.Atthetimeofthechallenge,theprofit-sharingarrangementshadended,butthetwofirmscontinuedtoshareofficesandadministrativeservicesuntilafewmonthsbeforethebeginningofthearbitralproceedings.ThechallengewasdecidedbytheunchallengedarbitratorsonthebasisoftheICSIDConventionandtheexistingrulesandregulationswhich,intheviewofthenon-challengedmembersofthetribunalembodied‘generalprinciplesgoverninginternationalarbitration’.

(p.795)Theclaimantsarguedthattherelationshipbetweenthearbitratorandclaimants'counselwasdeminimisandcontendedthatitwastobeexpectedthat,incasesofaparty-appointedarbitrator,theappointingpartywouldalreadyknowthearbitratorinquestion.Inresponsetothosearguments,theunchallengedarbitratorsheldthattherecouldbenodistinctionamongstthearbitrators,whateverthemethodofappointment,withregardtothestandardsofimpartialityapplicabletothem.However,thetwoarbitratorsagreedthataparty-appointedarbitratorinevitablymayhavesomedegreeofacquaintancewiththepartyinquestion,andnotedthatthearbitratorinsuchcasescannotbedisqualifiedsimplyonthebasisofthatacquaintanceunlessthereisa‘manifest’or‘highlyprobable’lackofimpartiality,somethingwhichdidnotexistintheparticularcase.

Precedentsalsoexistwithregardtosituationswherearbitratorsdisclosedfactscastingdoubtontheirindependenceandimpartialitywhicharoseaftertheirappointment.InHolidayInnsvMorocco,forexample,thearbitratorappointedbytheclaimantsrevealedthatinthecourseofthearbitrationhehadbecomeadirectoroftheclaimantsandsubsequentlyresignedpursuanttoArticle56(3).

AlackofthequalitiesrequiredunderArticle14(1)oftheConventionmayleadtoaproposaltodisqualifyanarbitratorpursuanttoArticle57oftheConvention(andRule9oftheArbitrationRules). Article57stipulatesthataproposaltodisqualifymaybeadvanced‘onaccountofanyfactindicatingamanifestlackofthequalitiesrequiredbyparagraph(1)ofArticle14’.PursuanttoArticle58,aproposaltodisqualifyanarbitratororaconciliatoristobedecided‘bytheothermembersoftheCommissionorTribunal…providedthatwherethosemembersareequallydivided,orinthecaseofaproposaltodisqualifyasoleconciliatororarbitrator,oramajorityoftheconciliatorsorarbitrators,theChairmanshalltakethatdecision’.Similarly,Rule9(4)readsasfollows:‘Unlesstheproposal[todisqualify]relatestoamajorityofthemembersoftheTribunal,theothermembersshallpromptlyconsiderandvoteontheproposalintheabsenceofthearbitratorconcerned’.Ifitisdecidedthattheproposalfordisqualificationiswell-qualified,thereplacementofthearbitratoriscarriedoutfollowingthesameproceduresfortheconstitutionofthetribunal(s2ofChIIIors2ofChIVoftheConvention).

Itshouldbenotedthat,undertheICSIDsystem,unlikeotherarbitralinstitutions,therearenostricttemporalrequirementsfortheadmissibilityofarequestfordisqualification.PursuanttoRule9(1),a

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proposalfordisqualificationofanarbitratormustbemade‘promptly,andinanyeventbeforetheproceedingisdeclaredclosed’.Althoughtheterm‘promptly’isnotdefined,itsplainandordinarymeaning(p.796)istolerablyclear:adisqualificationproposalwillbeadmissibleonlyiffiledinatimelymanner.Astothedefinitionofthegroundsfordisqualification,ProfessorSchreuer,inhiscommentaryontheICSIDConvention,recallsthat,duringthetravauxpréparatoiresoftheConvention,discussiononthatsubjectwasfinallyresolvedbymeansofarenvoitothetermsusedinArticle14(1). SchreuerobservesthatArticle57stipulatesthatthelackofimpartialitymustbe‘manifest’,andthusthisprovision‘imposesarelativelyheavyburdenonthepartymakingtheproposal’.

IntheirDecisionconcerningaproposaltodisqualifythepresidentoftheadhoccommitteeintheICSIDcase,CompañíadeAguasdelAconquijaSA&VivendiUniversalvArgentineRepublic,thetwounchallengedmembersoftheadhoccommitteeexaminedtherequirementsetforthbyArticle57oftheConventionof‘amanifestlackofthequalitiesrequiredbyArticle14’. ThepresidentoftheadhoccommitteehadqualifiedhisdeclarationunderRule6oftheArbitrationRulesinonerespect,andtherespondentsubsequentlychallengedhim.TheRespondent—whilenotquestioningthelegalcompetenceormoralcharacterofthedesignatedpresidentofthetribunal—arguedthatlegalworkcarriedoutbyapartnerofthepresident'slawfirmforVivendi'spredecessor,CompagnieGénéraledesEaux,affectedthepresident'sabilitytoexerciseindependentjudgment.Itshouldbenotedthatthedesignatedpresidenthadnotbeeninvolvedinthematterinquestion,andthatmostoftheworkhadbeencarriedoutbeforethearbitrationcommencedandwascompletedundertheinstructionsoftheUSlawfirmwhichactedasleadcounselinthecase.Furthermore,thepresident'spartnerhadundertakennottoacceptanyfurtherinstructionsfromVivendi.Thecommitteemembersrejectedtheproposaltodisqualifyand,indoingso,stressedthefollowingfactsasbeingparticularlyrelevant:(1)thattherelationshipwaspromptlyandfullydisclosed,(2)thatthechallengedpresidenthadnopersonalrelationshipwiththepartyforwhichtheworkwascarriedoutbyhisfirm,(3)thattheworkconcernedaspecifictransactionandnotgenerallegaladvice,andthatthepresident'sfirmwasnotleadcounsel,and(4)thattherelationshipwouldsooncometoanend. Inthesecircumstances,thecommitteemembersheldthatthePresident'sindependencecouldnotberegardedasbeingimpaired.Astheystated:

[T]hemereexistenceofsomeprofessionalrelationshipwithapartyisnotanautomaticbasisfordisqualificationofanarbitratororCommitteemember.Allthecircumstancesneedtobeconsideredinordertodeterminewhethertherelationshipissignificantenoughtojustifyentertainingreasonabledoubtsastothecapacityofthearbitratorormembertorenderadecisionfreelyandindependently.

(p.797)Anotherexampleisprovidedbytheclaimant'sproposaltodisqualifythearbitratorappointedbytherespondentintheSGSvPakistanarbitration. Thedisqualificationproposalwasbasedonthedisclosuremadebythearbitratorthathehadprovidedlegaladvicetotherespondentinanother,unrelated,ICSIDarbitration,GAMIvUnitedMexicanStates,whereoneofthemembersoftherespondent'slegalteaminSGSvPakistanhadbeennominatedpresidentofthetribunal,withtheparties’agreement.Accordingtotheclaimant,thissituationraised‘somereasonabledoubts’astothearbitrator'simpartiality.Theclaimant'sconcernswerereinforcedbythedisclosuremadebythearbitratorinhisCVthathehadrepresentedthesamerespondentStateinaNAFTAarbitration(RobertAzinianandOthersvUnitedMexicanStates),wherethesameindividualwhoactedascounselfortherespondentinSGSvPakistanpresidedoverthetribunal.Theclaimantwasconcernedthatthearbitratormight‘feelindebted’tothatindividualbecausethetribunalhepresidedoverinAzinianhadissuedanawardfavourabletotherespondent.

Indismissingtheproposalfordisqualification,thepresidentofthetribunalandtheotherco-arbitratornotedthattheclaimanthadfailedtoshowwhatitasserted,forexample,thattherewas‘aclearrelationshipofdependency’betweenthearbitratorandcounselfortherespondent.Intheabsenceofsuchshowing,thechallengecouldnotbesustainedbecausethefactsofthecasedidnotshowthata‘realrisk’existedthatthechallengedarbitratorcouldnotbereliedupontoactwith

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independenceandimpartiality.

InSaliniCostruttoriSPAandItalstradeSpAvTheHashemiteKingdomofJordan,theclaimantsobjectedtotheappointmentofthearbitratorchosenbytherespondentandnotedthattheappointmentwouldbechallengedifthenomineeacceptedtheappointment. Oneofthereasonsfortheobjectionincludedtheappointeehavingactedasopposingcounselinothercasesinvolvingoneoftheclaimants.Thearbitratoracceptedhisappointment. Onemonthbeforethefirstsessionofthetribunalwasscheduledtotakeplace,theclaimantsfiledaproposalforthedisqualificationofthearbitrator,pursuanttoArticle57oftheICSIDConvention.Theproceedingwassuspendedpendingadecisionontheproposal,pursuanttoICSIDArbitrationRule9(6).However,nodecisionwaseventuallynecessarysincethechallengedarbitratorresigned.

IntworecentICSIDcasessubmittedagainstthegovernmentofArgentina,AzurixCorpvArgentineRepublicandSiemensAGvArgentineRepublic,Argentina(p.798)challengedthepresidentofthetribunal(thesameindividualinbothcases)onthebasisofanallegedconnectionwithcounselfortheclaimants.Althoughthedecisionsinthesetwocasesarenotinthepublicdomain,someofthefactualaspectshavebeensummarizedinaninternetnewsletter. Bothchallengesinvolvedconcernsaboutthearbitrator'sprofessionalrelationshipwiththelawfirmrepresentinganotherinvestorinaseparateICSIDarbitration.Argentinabaseditschallengesonthefactthatthelawfirminquestionhadappointedasarbitrator,inadifferentandunrelatedcase, thesamelawyerwhorepresentedtheclaimantsascounselinboththeAzurixandSiemensarbitrations.

Inbothcases,theproceedingsweresuspendedinDecember2004,pendingtherespectivetribunals’dealingswithArgentina'schallenges.However,thesubsequentoutcomespresentsomedifferences.InAzurixvArgentina,thetwoparty-appointedarbitratorsrejectedArgentina'schallengeofthetribunal'spresidentinadecisionon11March2005.Itshouldbenoted,incidentally,thatinthiscasethechallengehadbeenraisedafterthetribunalhadissuedadecisiononjurisdictionandheldhearingsonthemeritsofthecase.InSiemensvArgentina,theunchallengedmembersofthetribunalcouldnotreachadecisiononaproposaltodisqualifythepresident,whohadbeenastaffmemberoftheWorldBank.Asseenabove,Article58oftheICSIDConventionprovidesthatifthemembersofthetribunalaredividedonaproposaltodisqualifyanarbitrator,thedecisionshallbemadebythechairman,thatis,thePresidentoftheWorldBank.However,inthiscasethePresidenthadbeenastaffmemberoftheWorldBank,therefore,inordertoavoidanyconflictofinterest,theSecretary-GeneralofICSIDinformedthepartiesthattheissuewouldbesubmittedtotheSecretary-GeneralofthePermanentCourtofArbitration(PCA)forhisrecommendation.Byaletterof14April2005,theSecretary-GeneralofthePCArecommendedthattheproposaltodisqualifythepresidentofthetribunalberejectedandtheSecretary-GeneralofICSIDaccordinglyinformedthepartiesthatthedisqualificationproposalcouldnotbesustained.

AproposalfordisqualificationwastriggeredintheICSIDcaseSaipemSPAvThePeoples'RepublicofBangladesh bythearbitrator'sdisclosurethathehadentertainedon-goingprofessionalcontactswiththelegalcounselrepresentingtheclaimant(iethepartythathadnominatedthearbitrator).Thearbitratorfurtherindicatedthattheprofessionalcontactswiththeclaimant'scounselwerelikelytocontinueinthefuture.

Therespondentobjectedtothearbitrator'sappointment,contendingthattheexistingprofessionalrelationshipbetweenthearbitratorandtheclaimant's(p.799)counselmightinvolvepersonalcontactsandleadtothediscussionoftheissuesrelatingtothependingarbitration.Therespondentfurthersustainedthatthearbitratorhadafinancialandeconomicrelationshipwiththeclaimant'slawyerssincetheyhadpaidfeesforhisprofessionalservices.Intherespondent'sview,thisfactualsituationwouldcreateasubconsciousbiasinfavouroftheclaimantinthearbitrator'smind.Anadditionalgroundonwhichtheproposalfordisqualificationwasbasedwasthefactthatthearbitrator—anauthoritativefigureinthefieldofinvestmentarbitration—hadexpressedopinionsinhiswritingswhich,intherespondent'sview,showedpreconceivedpositionswithregardtosomeofthecentralissuesofthearbitration.Therespondentinsistedthat,inthecircumstances,therewasa‘reallikelihoodthathe[thearbitrator]willbebiasedinfavouroftheClaimant’.

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Theclaimantrepliedthatthearbitrator'srelationshipwiththeclaimant'scounselwaslimitedtoprovidingexpertadviceintwodifferentICSIDarbitrationsonspecificlegalmatterswhichborenoconnectionwiththependingproceedings.Inaddition,theclaimantspecifiedthatthearbitratorhadbeenpaiddirectlybytheclientandnotbycounselandthushadnocontractualorfinancialrelationshipwiththelatter.Withrespecttotheopinionsexpressedbythearbitratorinhiswritings,theclaimantarguedthattheycouldnotbeinterpretedasanindicationoflackofindependenceandevenlessofbiasinfavouroftheclaimantinthearbitration.Onthecontrary,intheclaimant'sopinion,thearbitrator'sreputationandhisknowledgeofinvestmentlawmadehimparticularlyqualifiedtoactasanarbitratorinICSIDproceedings.

IntheirDecisionof11October2005, theunchallengedarbitratorsdismissedthedisqualificationproposalonthefollowinggrounds:(i)thearbitratorhadnoconnectionwithanyofthepartiesinthearbitration;(ii)therespondent'sallegationsthatthearbitratormighthavehadexpartecommunicationswithclaimant'scounselandthathemightbebiasedtotherespondent'sdetrimentwerebasedonpurespeculationsincenoevidenceofimproprietyhadbeenadducedorproven;and(iii)thearbitrator'sdoctrinalopinions‘expressedintheabstractwithoutreferencetoanyparticularcasedonotaffectthearbitrator'simpartialityandindependence’.Interestingly,theDecisionoftheunchallengedarbitratorsexpresslyreferredtotheIBAGuidelinestotheextentthattheseprovidedsupportfortheirconclusions.

ThesituationwasquitedifferentintheVíctorPeyCasadoandPresidentAllendeFoundationvRepublicofChilecase where,inAugust2005,therespondentStateinitiatedaproposaltodisqualifytheentiretribunal,includingitsownnominee.SubsequenttoChile'schallenge,thearbitratornominatedbyChileresigned,whiletheremainingco-arbitratorandthepresidentofthetribunaldidnotstepdown.(p.800)Afterlengthysubmissionsbytheparties,thequestionwassubmittedbytheActingSecretary-GeneralofICSIDtotheSecretary-GeneralofthePCAforhisdecision.

Althoughthereasonsunderlyingthedisqualificationproposalarenotknown,somethinghastranspiredinthesameinvestmentnewsletterreportingonthevariousArgentinechallengesrecountedabove.Accordingtothissource,therespondent—inadditiontogeneralclaimsoflackofimpartialityandbias—arguedthattheremainingco-arbitratorshouldbedisqualifiedinlightofhisrecentappointmentasForeignMinisterofhiscountry.Chilearguedthatthearbitrator'scontinuingserviceinthetribunalwouldviolatethelawofhiscountryandraisediplomaticproblemsintherelationbetweenhiscountryandtherespondentState.Thearbitratorrejectedalltheaccusationsmovedagainsthim.On17February2006,thePCA'sSecretary-Generalrejectedtheproposaltodisqualifythepresidentofthearbitraltribunalandacceptedtheproposaltodisqualifytheco-arbitrator,albeit—asitiscustomary—withoutgivinganyreasonsforthisconclusion.Consequently,itisnotpossibletoestablishwhetherthearbitrator'spoliticalfunctionsmayhaveplayedaroleinthePCA'sdecision.

(c)OtherInvestmentArbitrationPrecedentsInthemajorityofcases,non-ICSIDinvestmentarbitrationsremainconfidentialandtheresultingawardsareoftennotpublished.Itisthusmoredifficulttoprovideanaccurateoverviewofhowchallengestoarbitratorsandrelatedissuesaredealtwithinthistypeofcase.However,althoughlimited,someexamplesdoexist,andthesemayprovideadegreeofguidanceontheparticularcharacteristicsofinvestmentarbitrationswhenitcomestotheindependenceofarbitratorsandtherequirementfordisclosure.

InaNAFTAarbitrationconductedundertheUNCITRALRulesbroughtbyaUScompanyagainstthegovernmentofCanada,SDMyersvCanada,theclaimantobjectedtotheparticipationofthearbitratorappointedbytherespondentbecausehewasaregisteredlobbyistinconnectionwiththesoftwoodLumberAgreementbetweentheUnitedStatesandCanada. Thedecisiononthechallenge,whichhadnotallegedactualbiasbut,rather,lackofindependence,wasmadebytheSecretary-GeneralofICSIDunderArticle12.1oftheUNCITRALRules.

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TheSecretary-GeneralofICSIDinformedthepartiesthathewouldupholdthechallengeofthearbitratorunlesshediscontinuedhislobbyingactivities.Thefollowingday,thearbitratortenderedhisresignationfromthearbitraltribunal.

(p.801)Certainfeaturesofthiscasedeservebriefcomment.First,itshouldbenotedthat,attheoutsetoftheproceedings,theGovernmentofCanadarequestedthetribunal'sconsenttoitsconstitutionandmembershipbeingmadepublic. Thetribunalagreedthatthisinformationbeputinthepublicdomain.Theessentialelementsofthechallengearerecalledinthepartialawardof13November2000.However,thelimitedbackgroundprovidedinthatawarddoesnotmakeitpossibletoascertainwhetherthearbitratorhaddisclosedtheinformationwhichformedthebasisofthechallengeorwhetherthishadbeendiscoveredthroughtheclaimant'sindependentinvestigations.Assumingthattherelevantcircumstanceshadnotbeendisclosedbythechallengedarbitrator,theappointingauthorityclearlyadoptedtherightcourseofaction,sincethearbitrator'slobbyingactivitiesconcerninganagreementbetweenoneofthepartiesandthecountryofwhichtheotherwasanationalrepresentedamatterwhichshouldhavebeendisclosed.Thearbitrator'sfailuretodiscloseinthisinstance—assumingthattherehadindeedbeenfailuretodisclose—underminedhisappearanceofimpartiality.

AsimilarsituationaroseinthearbitrationCanforCorp.vUnitedStates.Inthatcase,theclaimant,aCanadiansoftwoodlumberproducer,arguedthatcertainmeasuresadoptedbytheUSDepartmentofCommerceandtheUSInternationalTradeCommissionimposinganti-dumpingandcountervailingdutiesonsoftwoodimportedfromCanada,violatedtheNAFTA'sinvestmentchapter. ThecasewassubmittedtoarbitrationundertheUNCITRALRulesinNovember2002andtheclaimantappointeditsarbitratorwitheffectasofthatdate.BycontrastwiththesituationintheSDMyerschallengereviewedabove,thearbitratordisclosedthat—priortohisappointment,thatis,inMay2001—hehadgivenaspeechtoaCanadiangovernmentcouncilwherehecommentedonapreliminarydeterminationoftheUSInternationalTradeCommissionthattheUSsoftwoodlumberindustrywasthreatenedwithmaterialinjurybyimportsfromCanadaofsoftwoodlumber.BoththisdeterminationandanearlieronebytheUSDepartmentofCommercewereallegedbytheclaimanttorepresentviolationsoftheUSobligationsundertheNAFTAinvestmentchapterandwerethuscentraltotheclaimant'scase.Inhisspeech,thearbitratorappointedbyCanforhadstated,inrelationtothelumberdispute:

Asidefromagriculturalsubsidies,thereareotherissuesthatwehavewiththeUS.Takethesoftwoodlumberdispute,forexample.Thiswillbethefourthtimewehavebeenchallenged.Wehavewoneverysinglechallengeonsoftwoodlumber,andyettheycontinuetochallengeuswithrespecttothoseissues.Becausetheyknowtheharassmentisjustasbadastheprocess.

(p.802)TheUSAchallengedthearbitrator,arguingthathiscommentsrevealedthathisjudgmentwasbiasedinfavouroftheclaimantand,accordingly,thathewasnotinapositiontodecidethecaseindependentlyandimpartially.FollowingCanfor'srefusaltoagreewiththechallengeandthearbitrator'sdecisionnottoresign,theUSArequestedthatthechallengebedecidedbytheSecretary-GeneralofICSID,whichistheappointingauthorityunderNAFTA,Article1124(1).Bothpartiesfiledremarksandthechallengedarbitratorexpressedhispositiononthechallenge.AccordingtoacommentarybyBartonLegum,theUSAcontendedthatthearbitrator'scomments‘reflectedaprejudgmentoftwoofthemeasuresallegedbyCanfortoconstituteabreachoftheNAFTA—andthatCanfor,aspartofitsclaim,characterisedthosemeasuresinmuchthesamewayasthearbitratorhad’. AstoCanfor,theyarguedthatthearbitrator'sremarksweregeneralstatementswhichdidnotaddressthedisputebetweenCanforandtheUSAperse.Threemonthsafterthechallengewasintroduced,inMarch2003,theSecretary-GeneralofICSIDannouncedhisintentiontoissueadecisionupholdingthechallengeifthearbitratordidnotwishtowithdraw.ThearbitratorresignedshortlythereafterandsubsequentlynoformaldecisionwasissuedbyICSID.

EvenintheabsenceofadecisionbyICSID,thiscaseshowsthatpublicpositionstakenbyan

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arbitratorregardingmeasureswhichformthesubject-matterofthedisputemaybeasufficientbasisforasuccessfuldisqualificationproposal.Havingsaidthat,inthecircumstancesofthiscase,thetoneofthearbitrator'sremarksappearedtoendorseCanada'spositionwithrespecttoakeyissueinthedisputeinfairlyclearterms.Itremainstobeseenwhethertheoutcomeofthedisqualificationwouldhavebeenthesamehadthearbitrator'swordsbeenmorecarefullychosen.

ThethirdexamplediscussedbelowconcernsUNCITRALproceedingsrelatingtotheBilateralInvestmentTreatybetweenGhanaandMalaysia.Thiscasehasattractedtheattentionofthearbitrationcommunitybecauseitinvolvedthecentralissuestobedecidedbytherelevantdomesticjurisdictioninrelationtothearbitrator'schallenge:thatis,thevexataquaestioofsomeoneservingasanarbitratorinoneinvestor-Statearbitrationwhileactingascounselinanother.

InOctober2004,theDutchDistrictCourtinTheHaguewascalledupontodecideonthechallengeofaparty-appointedarbitratorintheUNCITRALarbitrationTelekomMalaysiaBerhardvRepublicofGhana(‘TMB/Ghana’). Inthatcase,thearbitratorappointedbytheClaimanthaddisclosed,afterhisappointmentandafterithadbecomeapparentduringtheproceedingsthattherespondentbaseditsallegationsonanawardinanunrelatedICSIDcase,theRFCCvMoroccoarbitration, (p.803)thathehadbeeninstructedtorepresentoneofthepartiesascounselinarequestforannulmentoftheawardreliedonbytherespondentinTMB/Ghana.Therespondentchallengedthearbitratoronthebasisofhisdisclosure,andthechallengewasheardbythearbitraltribunal,whichdecidedthattheproceedingsshouldcontinue.TherespondentsubsequentlyfiledachallengewiththeSecretary-GeneralofthePermanentCourtofArbitration,asrequiredbytheapplicablerules,andthechallengewasrejected.Dissatisfiedwiththisresult,therespondentfiledachallengewiththecompetentjudicialauthorityoftheplaceofarbitration,theProvisionalMeasuresJudgeoftheDistrictCourtinTheHague.

Therespondentarguedthatthechallengedarbitrator'sroleascounselintheannulmentproceedingsinRFCCvMoroccowasincompatiblewithhisroleasanimpartialarbitratorintheUNCITRALproceedingsbecausethetwodisputeshadcommonfeatures.IntheTMB/Ghanaarbitration,GhanawasreproachedforhavingexpropriatedTMB'srightsinviolationoftherelevantBIT.ThesameissueswerepresentinRFCCvMorocco,wherethetribunalheldthatanexpropriationprovisionintheItaly/Moroccotreatyrepresentedan‘actedepuissancepublique’.Therespondentwasconcernedthat,intheannulmentproceedingsofRFCCvMorocco,thechallengedarbitrator—actingascounsel—mightargueinfavourofacertaininterpretationoforapproachtoexpropriation,andthusthathecouldnotmaintainanunbiasedviewofthatissueinacasewhereheactedasarbitrator.

Theclaimantarguedfirstthattherespondenthadforfeiteditsrighttochallengethearbitratorbecause,althoughitwasawarethatthelatterhadrepresentedpartiesintwootherunrelatedcaseswhichtouchedonsimilarlegalissues,itdidnotchallengethearbitratorthen.Furthermore,theclaimantcontendedthatthefactualbackgroundofthetwocaseswasdifferentandthat,inanyevent,anyofthelegalandfactualissueswouldnotbeconsideredintheannulmentproceedings,giventhelimitedgroundslistedunderArticle52oftheICSIDConventiongoverningappointments.Thechallengedarbitratorstatedthathisindependenceandimpartialitywouldnotbeaffectedinanywaybythefactthathehadbeenaskedtoactascounselforanunrelatedpartyinanunrelatedcase.Asreportedinthejudgmentof18October2004,thechallengedarbitratornotedthat:

[E]xperienceshowsthateachcaseisdifferentandthat,inBITarbitrations,thearbitrators'primarytaskistoapplytherelevantrulesoflaw,firstandforemostthetreatyonthebasisofwhichthearbitrationisinitiated—herethebilateraltreatybetweenMalaysiaandGhana—tothefactsofthecaseathand.

TheCourtfirstdismissedTMB'sargumentthattherighttochallengewaslostbecauseGhanahadnotchallengedthearbitrator'simpartialityonthebasisofhisinvolvementintwopreviouscases.As

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theCourtnoted,ifitweretobeassumedthatthearbitrator'sactionsdidindeedjustifyachallenge,‘themerecircumstanceof(p.804)GhananothavingreliedthereondoesnotautomaticallymeanthatasaresultthereofGhanashouldhavelostitsrighttostillchallenge…atalaterstageofthearbitrationproceedings,asaresultofhis(future)roleinanotherarbitrationaction’.TheCourtthenlookedatthemeritsofthechallengeinthelightofthelexfori,Dutchlaw,andconcludedthatanallegationoflackofimpartialityorindependencehadtobeassessedfromanobjectivepointofview.Thus,theCourtobserved,accountshouldalsobetakenofthe‘outwardappearance’ofthesituation,thatis,notonlywhetherthearbitratorcoulddistancehimselfintheprincipalcasefromthefactualandlegalissuesintheothercase,butalsowhetheritappearedthathecouldnotobservesuchacondition.InresponsetotheargumentthatannulmentproceedingsundertheICSIDRulesdonotnecessarilyentailafullreviewofallthelegalandfactualissuesconsideredatthemeritsstage,theCourtresortedtoitsownpracticeasareferenceandobservedthat,initsexperienceofreversalproceedings,allobjectionsagainstthejudgmentwhoseannulmentisrequestedareadvancedandthereforethechallengedarbitratorinhiscapacityascounselwillputforwardallpossibleargumentsagainsttheaward.Onthosegrounds,theCourtfoundthattherewerejustifieddoubtsastothearbitrator'simpartiality,sincehecouldnotatthesametime:

beunbiasedandopentoallthemeritsoftheRFCC/Moroccanawardandtobeunbiasedwhenexaminingtheseinthepresentcaseandconsultingthereoninchamberswithhisfellowarbitrators.EvenifthisarbitratorwereabletosufficientlydistancehimselfinchambersfromhisroleasattorneyinthereversalproceedingsagainsttheRFCCv.Moroccoaward,accountshouldinanyeventbetakenoftheappearanceofhisnotbeingabletoobservesaiddistance.Sincehehastoplaythesetwoparts,itisinanycaseimpossibleforhimtoavoidtheappearanceofnotbeingabletokeepthesetwopartsstrictlyseparated.

Consequently,theDutchCourtinvitedthechallengedarbitratortoresignwithintendayseitherascounselintheRFCCvMoroccocaseorasarbitratorintheTMB/Ghanacase.

FollowingthejudgmentoftheDutchCourt,thechallengedarbitratorresignedascounselinRFCCvMorocco.However,therespondentchallengedhimagain,becauseinitsviewtheDutchCourt'srulingimpliedthatthearbitrator'sdualrolewouldnottainthisroleasanarbitrator(providedthearbitratorresignedascounselintheannulmentproceedings)becausethechallengedarbitratorhadnotyetparticipatedinthetribunal'sdecisionsintheGhana/TMBcase.Therespondentarguedthatdecisionshadbeenmadebythetribunalinthatcasewherethechallengedarbitratormusthaveplayedaroleandthat,consequently,heshouldresignfromthetribunalaswell.TheDutchCourtseizedofthenewchallengefoundthatthearbitraltribunal'sdecisionsadopteduntilthenwerepurelyproceduralincharacterandcouldnothavehadanadverseeffectontherespondent'scase.TheCourtthereforestatedthatitsawnofurthergroundsforthechallengeandadded,inrelevantpart:(p.805)

Afterall,itisgenerallyknownthatin(international)arbitrations,lawyersfrequentlyactasarbitrators.Therefore,itcouldeasilyhappeninarbitrationsthatanarbitratorhastodecideaquestionpertainingtowhichhehaspreviously,inanothercase,defendedapointofview.Saveinexceptionalcircumstances,thereisnoreasontoassumehoweverthatsuchanarbitratorwoulddecidesuchaquestionlessopen-mindedthanifhehadnotdefendedsuchapointofviewbefore.Therefore,insuchasituation,thereis,inouropinion,noautomaticappearanceofpartialityvis-à-visthepartythatarguestheoppositeinthearbitration.

TheDutchCourt'sconclusionscallforsomebriefremarks.Firstofall,thechallengedarbitrator'sconductinthecaseappearstohavebeenbeyondreproach.FromwhatcanbeascertainedfromtheDutchCourt'sdecision,thearbitratordisclosedhisinvolvementintheRFCCvMoroccocaseassoonasitbecameapparentthatoneofthepartiesreliedonitinitslegalarguments.Inplayingthedevil'sadvocate,onecouldarguethatthismighthavebeenanticipatedandastatementtothat

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effectcouldhavebeenincludedinthedeclarationofindependencebeforetheproceedingsbegan.Butthatpositionsuggeststhatanarbitratorhasadutytoanticipatethelegalargumentsthatapartymightmakeinagivencasebeforesuchargumentsareactuallymade.Canarbitratorsgenerallybeexpectedtodivineinadvancethelegalsubmissionsofaparty?Thatisperhapstoomuchtoask.Thefactremainsthatdisclosurewasmadeandthatitwasmadeinatimelymanner.

AstothedecisionoftheDutchCourt,whileadifferenceofviewsmayexist,itishardtoquarrelwithitsconclusions.Eachchallengeshouldbeassessedonitsmeritsandinlightofitsfactualcontext.Inthisinstance,thetwoarbitrationsappearedtohavetoomanycommonelementstoallowthechallengedarbitratortomaintainhisdualrolewithouttheriskoftaintingatleasttheappearanceofindependence,asnotedbytheCourt.ThefactthatthearbitratorhimselffelttheneedtodisclosehisinvolvementascounselintheRFCCvMoroccocasemayhavebeenasignofhisgrowingdiscomfortatpreservingbothadvocate'sandarbitrator's‘hats’.

Thisbeingsaid,twoaspectsofthiscasestillleaveonewithquestions.Thefirstisthecontrastbetweenthedecisionofthearbitralinstitutionwhichwasinitiallydesignatedtodecidethechallengeandthedecisionofthenationalcourt.Itisobviousthatuniformityofdecisionsbetweensuchdifferentbodiescannotnecessarilybeexpected.However,thedecisionofthePermanentCourtofArbitrationtorejectthechallengemayhavetheresultofconfirmingthepublic'sperceptionthattheworldofinternationalarbitrationisanexclusiveclubwheretheinterestsofmemberstakepriorityovertheparties'interests.Althoughthismaybenomorethanaperception,itshouldnotbetakenlightly,sincearbitralinstitutionsneedtosetanexampleastheyaretheultimateguardiansofthesanctityofthearbitralprocess.

ThesecondcriticismconcernsacertainparochialismshownbyTheHagueCourt.Althoughitsconclusionsmaybevalid,thefactthattheywerebasedsolelyonprovisionsofnationallawandthattheCourtreferredtoitsownpracticetodecide(p.806)questionswhichshould,arguably,havebeenansweredinthelightoftheICSIDRulesandpractice,isproblematic.Thischapter,forone,representsasmallcontributiontowardsshowingthatthereisnoshortageinthepracticeofinternationalarbitrationofcase-lawandrulesontheindependenceandimpartialityofarbitratorsandthereappearstobenoreasonwhytheDutchCourtshouldnothavetakenthemintoaccount.ItispossiblethattheDutchCourtfoundcomfortinapplyingitsownlawandpracticewhenconfrontedwithateamofinternationalexpertsarguingthecaseonthebasisofinternationallawprinciplesandwithoutmuchreferencetothelexfori.Nonetheless,theDutchCourt'sattitudeisalarmingtotheextentthatitmaybeconsideredrepresentativeofthereluctanceofnationalcourtstofullyembracearbitrationpracticesatatimewhenarbitrationisgenerallytabledasapreferredmethodfortheresolutionofinternationaldisputes.

ItshouldalsobementionedthatathirdchallengeagainstthesamearbitratorasintheAzurixandSiemensICSIDarbitrationswasinitiatedbyArgentinainanarbitrationundertheUNCITRALRules:NationalGridTranscoPLCvArgentina.ThechallengewasreferredbythePCA—whichwasrequestedbytherespondentstatetodesignateanappointingauthorityinthecase—totheICCInternationalCourtofArbitration.Onceagain,Argentina'sattemptstohavethisarbitratorremovedfromanarbitralpanelfailedwhentheICCCourtrejectedthechallengeinDecember2005.InconformitywithArticle7(4)oftheICCRules,nomotivationfortheCourt'sdecisionwasgiven.

ThelastcasethatdeservestobementionedisanadhocarbitrationbetweenaDutchinvestorandthegovernmentofPoland,theEurekovPolandcase,withBrusselsastheplaceofarbitration.InOctober2005,PolandfiledachallengeagainstthearbitratorappointedbytheinvestorbeforetheCourtofFirstInstanceofBrussels.Beforethechallengewasfiled,themajorityofthetribunalhadissuedaPartialAwardonliabilityagainstthehostStateon19August2005. Poland'sobjectionsincludedthefactthatthechallengedarbitratorhadnotdisclosedthatheworkedincollaborationwiththelawfirmrepresentingtheclaimant.Polandaddedthatthearbitratorhadalsonotrevealedthathe—togetherwiththesamelawfirms—hadallegedlyrepresentedthecompanyCargillIncinanotherarbitrationagainstPolandwhichpresentedclosesimilaritieswiththatcase.

Inarulingof22December2006,theCourtofFirstInstanceofBrusselsheldthatthelinkbetween

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thechallengedarbitratorandthelawfirmwastootenuoustojustifydoubtsastothearbitrator'simpartialityandindependenceandrejectedthechallenge. Therespondentappealedthedecisionand,intheappeal,therespondentincludedasanadditionalgroundforchallengethefactthatthechallengedarbitratoractedasco-counselfortheclaimantwiththesamelawfirmintheVivendivArgentinaICSIDarbitration.Polandarguedthatthefactthatinthelegal(p.807)argumentsadvancedinVivendithechallengedarbitratorreliedontheawardinEurekovPolandsupportedtherespondent'sdoubtsastothecapacityofthearbitratortoactinanindependentandimpartialmanner.

(2)ReviewofSelectedArbitrationRulesonIndependence,Impartiality,andtheDutytoDiscloseTheterms‘independence’and‘impartiality’areoftenusedinterchangeably,butoughttobedistinguished.Independence,thenotionmostfrequentlyemployedinnationallawsandarbitrationrulessuggeststheabsenceofanyconnection,financialorotherwise,withapartytotheproceedings.Impartialitysuggeststheabsenceofprejudiceorbias.AccordingtoadefinitionprovidedbytheEuropeanCourtofHumanRightsinarecentcase:

[I]nordertoestablishwhetheratribunalcanbeconsideredas‘independent’,regardmustbehad,interalia,tothemannerofappointmentofitsmembersandtheirtermofoffice,theexistenceofguaranteesagainstoutsidepressuresandthequestionwhetherthebodypresentsanappearanceofindependence….Astothequestionof‘impartiality’,therearetwoaspectstothisrequirement.First,thetribunalmustbesubjectivelyfreeofpersonalprejudiceorbias.Secondly,itmustalsobeimpartialfromanobjectiveviewpoint,thatis,itmustoffersufficientguaranteestoexcludeanylegitimatedoubtinthisrespect….

(a)UNCITRALTheUNCITRALRulesandModelLawmentionboththeindependenceandimpartialityrequirements.Bothinstrumentsallowachallengewhen‘circumstancesexistthatgiverisetojustifiabledoubtsastothearbitrator'simpartialityorindependence’(p.808)(Art10oftheRulesandArticle12(2)oftheModelLaw).Theyalsospecifytheneedforthearbitratortodiscloseanysuchcircumstancestotheparties(Art9oftheRulesandArt12(1)oftheModelLaw).TheModelLawfurtherstipulatesthatthedutytodiscloseexists‘fromthetimeofhisappointmentandthroughoutthearbitralproceedings’andthatitshallbeexercised‘withoutdelay’.

UnderArticle12(1)oftheUNCITRALRules,thedecisiononachallengeismadebytheinstitutionchosenastheappointingauthority.Intheabsenceofaspecificchoicebytheparties,theSecretary-GeneralofthePCAwilldesignateanauthoritytodecidethechallenge.

(b)ICCNotallarbitrationrulesinsistonboththeindependenceandimpartialityrequirements.Forinstance,theICCRulesdonotexpresslyincludeimpartialityinthegeneralprovisionaddressingthequalitiesofanarbitrator.Article7oftheICCRulessimplyrequiresthat‘everyarbitratormustbeandremainindependentofthepartiesinvolvedinthearbitration’.TheimpartialityrequirementcanhoweverbeconsideredtobeencompassedinArticle11totheextentthatthisprovisionstipulatesthatachallengemaybemade‘forlackofindependenceorotherwise’.Inaddition,Article15(2)expresslyprovidesthat‘Inallcases,theArbitralTribunalshallactfairlyandimpartially’.

IntheICCsystem,theCourtofArbitrationconsidersissuesofindependenceandimpartialityattwostagesoftheproceedings:attheoutset(ieatthetimeofconfirmationorappointmentofanarbitrator)andduringthecourseofthearbitration.Inbothinstances,thestandardappliedfordisclosureisthesame:aprospectivearbitratorhastodisclose‘anyfactsorcircumstanceswhichmightbeofsuchanatureastocallintoquestionthearbitrator'sindependenceintheeyesofthe

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parties’,asstatedinthestatementofindependenceformthatallprospectiveICCarbitratorsmustsign.

UnderArticle7(4)oftheICCRules,thedecisionsoftheICCCourtofArbitrationonconfirmations,appointments,challenges,andreplacementsofarbitratorsareconfidentialandtheirmotivationsarenotcommunicated.ThemainreasonforthisistoavoidsubsequentdisputesorproceedingsbeforenationaltribunalsconcerningtheCourt'sdecisions.Presumably,thereisalsotheneedtodispelanyconfusionastotheroleoftheICCCourt,whichremainsanadministrativebodywithoutthe(p.809)powertorenderjudicialdecisions. Ifanarbitratordisclosesinformationinhis/herstatementofindependence,theSecretariatinvitesthepartiestocomment.Usually,theCourtattachesgreaterweighttoobjectionsraisedatthisinitialstage,apracticewhichmayhavetheeffectofdiscouragingthechallengesinitiatedsubsequenttoanarbitrator'sappointment.

Althoughthedisclosurerequirementsimposedatthetimeofappointmentworkasaneffectivemeasuretominimizechallenges,thesestilloccur.TheICCCourtexamineseachcaseonitsownmeritsandwillconsiderinparticularwhethertheparties’confidenceinthearbitratorandhis/herabilitytoconductthearbitralprocessinanunprejudicedmannerhasbeenaffected.Allthingsbeingequal,anotherimportantelementtheCourttakesintoaccountisthetimingofthechallenge.Whenquestionsariseastothequalitiesofanarbitratortowardstheendofthearbitralproceedings,theCourtwillfactorintoitsdecisiontheinevitabledisruptionthatthereplacementofanarbitratorwouldentailtotheorderlyconductofthearbitration.Latechallengesmaywellcausethepartiesanunnecessaryincreaseinlegalandarbitrators'fees.

ThedisclosureobligationundertheICCRulescontinuesfortheentiredurationofthearbitralproceedings.Article7(3)specifiesthat‘AnarbitratorshallimmediatelydiscloseinwritingtotheSecretariatandtothepartiesanyfactsorcircumstancesofasimilarnaturewhichmayariseduringthearbitration’.

TheICCCourtmaybeconfrontedwithavarietyofsituationsrelatedtoindependence.Someofthesemeritbriefmention,giventheirrelevanceforpurposesofthepresentreport. Thefirstcategoryconcernsrelationshipsbetweenthearbitratorandthepartythatappointedhim/heroritscounsel.Socialandpersonalrelationships—totheextentthattheyarenottooclose—areusuallynotconsideredassufficientgroundsforchallenge.However,inthepresenceofanobjectiontotheappointmentofanarbitratorwhohadabusinessrelationshipwithoneofthepartiesortheircounselcreatingafinanciallink,theCourtmayrefuseconfirmationoftheappointment.

AninterestingsituationwhichmayariseundertheICCRules,andwhichmayberelevantforpresentpurposes,concernssituationswheretwoormorerelatedcaseshaveatleastonecommonparty,representedbythesamecounsel,andthatpartyappointsthesamearbitratorineachcase. Althoughthereareobviouspractical(p.810)benefitstothispractice,theremayalsobeanegativeimpactontheequalityofthepartiesandthearbitrator'simpartiality.Thearbitrationmaylackbalancesinceoneofthearbitratorsandthepartythatappointedhim/herwillhavethebenefitofhavingfullknowledgeofthelegalandproceduraldevelopmentsoftheotherpendingcase.Thispotentiallackofequalfootingofthepartiestothearbitration—whichmaynotonlybecontrarytoArticle15(2)oftheRulesbutmayalsorepresentaviolationofpublicpolicyprinciplesinmostcountries—hasledtheICCCourttoacceptchallengesand/orrefuseconfirmationsinthistypeofsituation.

AnothertypeofchallengethatmayariseinboththeICCandinvestmentarbitrationcontextsconcernstheappointmentofcivilservantsorindividualsthathavegovernmentalconnectionsincaseswhereoneofthepartiesisaStateorgovernmentalentity.TheICCCourt'spracticevariesdependingonthedegreeoftherelevantconnectionseeninthelightofthefactualbackgroundofthecase.Whentherelationshipiscontinuousandsignificant,adegreeofdependencehasbeenfound,eveniftherelationshipwasthatofanexternalconsultant.

Otherinstanceswhichoftengiverisetochallengesrelatetotheprofessionalrelationshipthatmayexistbetweentheprospectivearbitrator'slawfirmandthelawfirmrepresentingoneoftheparties.Inthisdayandage,whengloballawfirmsareexpanding,lawyersmaycooperateinavarietyof

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ways,settingupdifferentdegreesoffinancialintegrationandinvolvementintheirmutualbusinesses.Clearly,thesesituationsneedtobedisclosedand,oncetheyare,mustbeevaluatedintheirfullcontext.ButitistobeexpectedthatadecisivefactorfortheICCCourtwillbethedegreeoffinancialconnectionbetweentherelevantlawfirms.

Lastly,thepublicationoflegalarticlesbyanarbitratorisnotnecessarilyupheldasabasisforchallengingthearbitrator.Again,thishingesonthefactsofthecasebut,asageneralrule,aprospectivearbitratorshouldnotbedisqualifiedmerelybecauseoftheideasheorshehasexpressedinadoctrinalcontribution.Atmost,partiesmaywishtocarryouttheirownduediligenceinordertoverifywhataprospectivearbitratormayhavewrittenpriortohisorherappointment.

(c)LCIATheLCIARulesimposedutiesofbothimpartialityandindependenceonarbitrators(Arts5–12).BeforeanyappointmentismadebytheLCIA,arbitratorsmustproviderecordsofpastandpresentprofessionalpositionsandsigndeclarationsofindependence.AchallengecanberaisedbyapartyalongthelinesrequiredbytheUNCITRALRules,thatis,‘ifcircumstancesexistthatgiverisetojustifiabledoubtsastothearbitrator'simpartialityorindependence’(Art10.3).Thislattersituationincludesthecaseofanarbitratorwhoisamemberofalargemultinationallawfirm.Asnotedabove,thepossibilitythataconflictofinterestmightariseinthatcontext(p.811)isreal,andexperienceshowsthatfactsrelatingtosuchrelationshipsshouldbedisclosedevenwhentheyariseinthecourseofthearbitrationandnotatthetimeofappointment.

UndertheLCIARules,arbitratorsmustremainatalltimesimpartialandindependentoftheparties(Art5.2),andsigndeclarationstothateffectatthetimeofappointment(Art5.3).Challengesmayberaised‘ifcircumstancesgiverisetodoubtsasto’thearbitrator'simpartialityorindependencealongthelinesofwhatisrequiredundertheUNCITRALRules.Article11oftheLCIARulesallowstheLCIAtodecidewhethertofollowtheoriginalnominatingprocessintheeventthatanomineeisnotsuitableorindependentorimpartialorifanappointedarbitratorhastobereplacedforanyreason.

PursuanttoArticle29oftheLCIARules,theLCIA'sdecisions,includingdecisionsonchallenges,areadministrativeinnatureandtheCourtis‘notrequiredtogivereasonsforitsdecisions’.Withitsannouncementin2006thatitwillpublishitsdecisionsonchallengestoarbitrators,theLCIAhasalsomadeknownthatnothinginitsRulespreventsthepublicationofdecisionsonchallengesandthat—inanyevent—confidentialityandtransparencyarenotirreconcilable. TheLCIAhasaccordinglydecidedtopublishabstractsofallofitsdecisions,andnotjustaselectionofthem.

(3)ThePracticeoftheInternationalCourtofJustice(‘ICJ’orthe‘Court’)Althoughtheissueofindependenceoftheinternationaljudiciary,thatis,ofmembersofpermanentinternationaltribunals,doesnotfallwithinthescopeofthischapter,andchallengestopermanentjudgesremainarareoccurrence,onerecentchallengetoaMemberoftheICJisworthyofmention.

InitsOrderof30January2004intheLegalConsequencesoftheConstructionofaWallintheOccupiedPalestinianTerritorycase(‘theWallcase’), theCourtdecidedachallengebroughttoitsattentionbythegovernmentofIsraelagainstJudgeElaraby.IsraelcontendedthatJudgeElarabyhad,bothinhisprofessionalcapacitywhenactingaslegaladvisertotheEgyptiangovernmentandinvariousnegotiations(p.812)involvingtheWestBankandGazaStrip,andinhispersonalcapacityinstatementsmadetotheEgyptianpress,‘beenactivelyengagedinoppositiontoIsraelincludingonmatterswhichgodirectlytoaspectsofthequestionnowbeforetheCourt’.

TheCourtfoundthattheviewsofJudgeElaraby—expressedmanyyearsbeforethecasewasbroughttotheCourt—didnotreallyconcernthequestionbeforetheCourt,thatis,thelegalityoftheconstructionofawallbyIsraelinPalestinianterritory,anddismissedthechallengemainlyonthatbasis.Asithadpreviouslydoneinachallengeagainstthreeofitsmembersinthe1970South

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WestAfricacase,theCourtheldthat,whenajudgehasmadepreviousstatementswhileactingonbehalfofhisorhergovernmentconcerningissueswhicharelaterbeforehimorherasamemberoftheCourt,thejudgeinquestioncannotbesaidtohavepreviouslyactedinthecase‘asagent,counseloradvocateforoneoftheparties,orasamemberofanationalorinternationalcourt,orofacommissionofenquiry,orinanyothercapacity’(Art17(2)oftheCourt'sStatute).Accordingly,heorsheshouldnotbeexcludedfromsittinginthecase.FortheCourt,alegaladviserordiplomaticrepresentativeactsonbehalfofhisorhercountryandexecutesthelatter'sinstructions.Theinevitableconclusion,althoughnotstatedbytheCourtinsomanywords,isthatinthiskindofsituationtherecanbenobiasorthreattothejudge'simpartiality.

JudgeBürgenthaldisagreedwiththemajoritytotheextentthat,inhisview,thestatementsmadebyJudgeElarabytothepressdidcreateanappearanceofbias.Inhisdissentingopinion,JudgeBürgenthalnotedthatArticle17(2)oftheStatutehadtobeinterpretedasreflectingbroadnotionsofjusticeandfairness.Onepassageofhisdissentisparticularlyworthyofmention:‘Judicialethicsarenotmattersstrictlyofhardandfastrules.Idoubtthattheycaneverbeexhaustivelydefined—theyaremattersofperceptionandofsensibilitytoappearancesthatcourtsmustcontinuouslykeepinmindtopreservetheirlegitimacy.’

AnotherissuethatisinterestingtonoteinthiscontextistherecentadoptionbytheInternationalCourtofJusticeofnewmeasuresadopted‘intheinterestofthesoundadministrationofjustice’.Thesituationsaddressedbythesemeasuresmayhavesomesimilaritieswithconflictsthatmayariseininvestmentarbitrations.TheICJembarkedonanewprocesstoimproveitsproceduresbyissuinginOctober2001,February2002,andJuly2004aseriesoftwelvePracticeDirections,twoofwhich,PracticeDirectionsVIIandVIII,havesomerelevanceforthepresentchapter.InPracticeDirectionVII,theCourthasdirectedthatpartiesshouldrefrainfromappointingasjudgesadhocpersonswhoareactingasagents,counsel,oradvocatesinanothercasebeforetheCourtorhaveactedinthatcapacityduringthethreeyearsprecedingthedateofthenomination.Similarly,partiesshouldrefrainfromappointingasagent,counsel,oradvocateinacasebeforetheCourtapersonsittingasajudgeadhocinanothercasebeforetheCourt.PracticeDirectionVIIIprovidesthatapersonwhohasbeenamemberoftheCourt,ajudgeadhoc,registrar,deputy-registrar,orhigh(p.813)officialoftheCourtcannot,foraperiodofthreeyearsafterleavinghisorherposition,bedesignatedasagent,counsel,oradvocateinacasebeforetheCourt.

Themainconsequenceofthesedevelopmentsisobvious:theprofessionaldistinctionexistingonanationallevelbetweenBenchandBarhasbeenelevatedtotheinternationalplane,albeitinasomewhatinformalmanner. Moreover,giventheuniqueroleofjudgesadhocintheCourt,whichhasnodirectcounterpartindomesticjurisdictions,coupledwiththelengthofICJproceedings,thePracticeDirectionswillhavetheinevitableeffectofreducingthenumber—alreadylimitedinsomepractitioners’view—ofthosewhocanbeselectedasjudgesadhocinICJcases.Asnotedbyawell-respectedpractitioner:

Inpractice,anyregularpractitionerbeforetheCourtisunlikelytobeabletoorwillingtoserveasajudgeadhoc,unlessheorsheiswillingtogiveuppracticealtogether.Whereasthisoptionmightmakesensewhereapractitionergivesuppracticeinordertobecomeafull-timeMemberoftheBench,itislessclearthatitdoessowherewhatisatstakeisatemporaryappointmentasajudgeadhoc.Thereisaseriousquestionwhetherthisvirtualexclusionofcurrentpractitionersfromtheranksofthosefromwhomjudgesadhocmaybeselectedisofreallong-termadvantagefortheCourt.

Thesimilaritieswithinternationalarbitrationsdealingwithinvestmentdisputesareobvious.Inasystem,suchasthatofinvestmentarbitration,wherejudicialprecedentscanplayanimportantrolenotdissimilarfromtherolethattheICJjurisprudenceplays,itisnotimpossibletoimaginethatasimilarpracticemaysoonerorlaterbeadoptedaswell.Inpractice,thismayalreadyhaveoccurred,atleastinformally,since—inordertopreventissuesofconflictsofinterest—anumberofwell-knowninternationalpractitionershavemadeitknownthattheywillrefrainfromactingas

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counselininvestmentarbitrationssolongastheycontinuetoacceptappointmentsasarbitratorsinsuchcases.Othershavepreferredtoturndownarbitrators’appointmentsandlimittheirpracticetotherepresentationofparties.

(4)NAFTA'sandWTO'sCodesofConductBoththeNAFTAandWTOdisputesettlementmechanismscontainspecificrequirementsforthequalificationsofmembersofpanelsandtheirappointmentandhaveadoptedcompulsorycodesorrulesofconductinthisarea.

(p.814)(a)NAFTATheNAFTAsystemcontainsaspecificdisputesettlementprocessforinvestmentdisputeswhichrevolvesaroundtheprovisionsofChapter11(‘SettlementofDisputesbetweenaPartyandanInvestorofAnotherParty’).UnderChapter11,aNAFTAinvestorallegingabreachbythehostgovernmentofitsinvestmentobligationscanhaverecoursetothemechanismsofferedbytheICSIDorUNCITRALRules.Inthiscase,obviouslytherelevantprovisionsoftheapplicableruleswillapply.Inaddition,itisinterestingtonote,althoughthisdoesnotstrictlyspeakingconcerndisputesarisingoutofaninvestment,thatChapter19Article1909ofNAFTAcontainsacodeofconductforarbitratorswhichisintendedtoensurerespectfortheprinciplesoftheintegrityandimpartialityofproceedingsconductedpursuanttoNAFTAChapters19(‘ReviewofFinalAntidumpingandCountervailingDutyDeterminations’),and20(‘InstitutionalArrangementsandDisputeSettlementProcedures’).

Annex1901.2toNAFTAimposescertainrequirementsonmembersofbi-nationalpanels,whoshallinanyeventbe‘lawyersingoodstanding’(para2)andbesubjecttothecodeofconductestablishedpursuanttoArticle1909(para6).Ifapartybelievesthatamemberofthepanelviolatesthecodeofconduct,thepartiesmayconsultandagreetoremovethepanelistandappointanewone.Panelistsarerequiredtosignprotectiveordersforconfidentialinformationsuppliedbythepartiesandmaybedisqualifiediftheyfailtodoso.Totheextentthatitdoesnotinterferewiththeperformanceofhisorherdutiesanddoesnotruncontrarytothecodeofconduct,apanelistcanengageinotherbusinessduringhisorhertermasapanelist(para10).Annex1901.2specificallyprovidesthat‘whileactingasapanelist,apanelistmaynotappearascounselbeforeanotherpanel’(para11).

TheExtraordinaryChallengeProcedureestablishedunderAnnex1904.13deservesseparatemention.Thisprocedurecanbeusedinexceptionalsituationstochallengeadecisionofabi-nationalpanel,thatis,aUS-CanadapanelestablishedundertheFreeTradeAgreement,whichhasbeeneffectivesince1January1989forthepurposeoffinaldeterminationsinrelationtocountervailingdutyandanti-dumpinginvestigations.AlthoughadiscussionoftheExtraordinaryChallengeProcedurefallsbeyondthescopeofthischapter,itwarrantsmentiontotheextentthatitsraisond'êtreisthepreservationoftheintegrityofthepanelprocess.

Apaneldecisioncanbesubjecttoreviewfollowingtheextraordinarychallengeprocedureifapartyalleges,interalia,that‘amemberofthepanelwasguiltyofgrossmisconduct,bias,oraseriousconflictofinterest,orotherwisemateriallyviolatedtherulesofconduct’(Art1904.13).Ifanyoftheactionslistedinthisprovisionhave‘materiallyaffectedthepanel'sdecisionandthreatenstheintegrityofthebinationalpanelreviewprocess’,thepartycanavailitselfoftheExtraordinaryChallengeProcedure.Thefactthatthisprocedureisadoptedonlyinexceptionalcircumstancesisevidentfromtheuseofthetermscharacterizingtheconductofthe(p.815)panelmembers:‘grossmisconduct’,‘seriousconflictofinterest’,‘materiallyviolatedtherulesofconduct’.

(b)WTOWithrespecttotheWTOsystem,thereisageneralrequirementthatWTODisputeSettlement


Panelsbecomposedofwell-qualifiedindividualswhomay(butdonothaveto)beselectedfromanon-compulsorylistmaintainedbytheWTOSecretariat.PursuanttoArticle8.3ofthe1994UnderstandingonRulesandProceduresGoverningtheSettlementofDisputes(the‘DSU’),panelistsareselectedwithaviewtopreservingtheirindependenceandinordertoensurethatthepanelconsistsofpanelistswithadiversebackgroundandvarietyofexperience.UnderArticle18oftheDSU,expartecommunicationsbetweenpanelorAppellateBodymembersandthepartiesareprohibited.

TheRulesofConductfortheUnderstandingoftheRulesandProceduresGoverningtheSettlementofDisputes(the‘DSURulesofConduct’)wereadoptedon11December1996. Theirgoalistopreservetheintegrityandimpartialityofthedisputesettlementproceedings,‘therebyenhancingconfidenceinthenewdisputesettlementmechanism’(PreambletotheDSURulesofConduct).TheRulesofConductapplytomembersofWTOdisputesettlementpanels,theStandingAppellateBodyandarbitrators,aswellastomembersoftheSecretariatandexpertsparticipatingintheproceedings(sIVpara1oftheDSURulesofConduct).

ThegoverningprincipleoftheDSURulesofConduct,embodiedinSectionsIIandIII,imposesindependenceandimpartialityonallpersonscoveredtherein,strictadhesiontotheprovisionsoftheDSU,disclosureofanymatterorrelationshipthatthecoveredpersonisexpectedtoknow‘andthatislikelytoaffect,orgiverisetojustifiabledoubtsasto,thatperson'sindependenceorimpartiality’(sIII.1andVI).Thecoveredpersonsarealsorequiredto‘takeduecareintheperformanceoftheirdutiestofulfiltheseexpectations,includingthroughavoidanceofanydirectorindirectconflictsofinterestinrespectofthesubject-matteroftheproceedings’(sIII.1).

WhenapartybecomesawareofevidencepointingtoamaterialviolationoftheobligationsundertheDSURulesofConduct,itmustsubmitsuchevidence,‘attheearliestpossibletimeandonaconfidentialbasis’,totheappropriatebody,depending(p.816)ontheprocedureadopted,thatistheChairoftheDisputeSettlementBody,ortheDirector-GeneraloftheStandingAppellateBody(sVIII.1).However,failuretodisclosewillnotbesufficientgroundfordisqualification‘unlessthereisalsoevidenceofamaterialviolationoftheobligationsofindependence,impartiality,confidentialityortheavoidanceofdirectorindirectconflictsofinterestandthattheintegrity,impartialityorconfidentialityofthedisputesettlementmechanismwouldbeimpairedthereby’(sVIII.2).UndersectionVIII.20oftheDSURulesofConduct,allinformationconcerningpossibleoractualviolationsoftheRulesshallremainconfidential.

(5)SummaryReviewofNationalLawsNationallawsandjudicialprecedentsanalyseindetailthequestionoftheindependenceofthejudiciary.However,dothesamestandardsapplytointernationalarbitrators?Internationaldoctrineisdividedontheissue.ThefamousmaximbyLordHewartCJintheEnglishcaseRvSussexJustices,exparteMcCarthy, that‘justiceshouldnotonlybedone,butshouldmanifestlyandundoubtedlybeseentobedone’remainsvalidtodayinthecaseofarbitrators.Nonetheless,ifnationallawsdonotcontainspecificprovisionsregardingthedutiesofarbitratorswithrespecttoindependenceandimpartiality,thestandardsgoverningnationaljudgeswillapply.

Dependingontherulesapplicabletothearbitrationandpublicpolicyprovisionsofthelexfori,nationalcourtsmaybecalledupontodecideachallengeofanarbitratororreviewgeneralissuesaffectingtheproperconstitutionofatribunal,suchasanarbitrator'sbiasorlackofindependence,inthecontextofarequestfortheannulmentofanaward.

(a)FranceFrenchcase-lawhasanalysedthequestionoftheextentofanarbitrator'sdutytoinformthepartiesofcircumstanceswhichmayraisedoubtsastohisorherindependenceandimpartiality.Frenchcourtshaveupheldanobjectivetestof‘intellectual(p.817)independence’(‘indépendanced'esprit’)asoneoftheessentialqualitiesofarbitrators. Intwojudgmentsrenderedon6

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November1998,theCourtofCassationruledthat‘toutepersonneadroitàcequesacausesoitentendueparuntribunalimpartial’andaddedthat‘cetteexigencedoits'apprécierobjectivement’.

InFrance,until1995,thegroundsforchallenginginternationalarbitratorswerelimitedtothoselistedunderArticle341ofthenewcodeofcivilprocedureforthechallengeofnationaljudges. Aseriesofjudgmentshasmodifiedthisapproachanddistinguishedthesituationofarbitratorsfromthatofnationaljudges. Frenchcourtshavealsostressedthatthedutytodisclosefactswhichmightraisereasonabledoubtsastoanarbitrator'sindependencecontinuesthroughoutthearbitration.

Forinstance,theParisCourtofAppeals—inajudgmentof12January1999relyingontheCourtofCassation'sdecisioninMaecSAvPMumbach—statedthatanarbitratorhastheobligationto‘révélerdèsqu'ilenaconnaissance,toutfaitoucirconstancedenatureàfairelégitimementdouterdesonindépendance’.TheCourtofAppealsdefinedsuchfactsorcircumstancesasbeing‘caractériséesparl'existencedeliensmatérielsetintellectuels,unesituationdenatureàaffecterlejugementdel'arbitreenconstituantunrisquecertaindepréventionàl'égarddel'unedespartiesàl'arbitrage’.TheCourtofAppealsaddedthattheobligationtodisclose‘n'existepasseulementaumomentdeladésignationdel'arbitremaissecontinuetoutaulongdel'exerciceparcelui-cidesamission’.

ThescopeofthedutytodisclosewasfurtherreviewedintwojudgmentswheretheParisCourtofAppealsandtheCourtofCassationwerecalledupontodecideonthechallengeofanarbitratorwhohadbeenrepeatedlyappointedbythesamepartyinanumberofarbitrationsandhadfailedtorevealthisfact. Bothcourtsunderscoredtheimproprietyoftheconductofanarbitratorwhochosenotto(p.818)informthepartiesofthefactthathehadbeenappointedarbitratorbythesamepartyforcasesinvolvingsimilarcontractsatleasttentimes.ParticularlynoteworthyisthedecisionoftheCourtofAppeals,whereitnoted:

…ilestdeprincipequel'arbitredoitrévélerauxpartiestoutecirconstancedenatureàaffectersonjugementetàprovoquerdansl'espritdespartiesundouteraisonnablesursesqualitésd'impartialitéetd'indépendance,quisontdel'essencemêmedelafonctionarbitrale.

(b)EnglandandWalesTheEnglish1996ArbitrationActprescribesadutyofimpartialityforarbitrators(sections1(a),24(1)(a)and33(1)(a)),withnomentionofindependence.Thefinaldecisiononanarbitrator'simpartialitywillbemadebyEnglishcourtsandthelatterwilldecideevenwhenthearbitrationisconductedunderinstitutionalrules,suchasthoseoftheICCortheLCIA.

Englishlawappliesthesamestandardsofimpartialitytojudgesandarbitrators. AlthoughtheArbitrationActcontainsnospecificdutytodisclose,animplicitobligationexists,drawnbyanalogyfromthepositionofnationaljudges.Thus,thefollowingdictumoftheEnglishCourtofAppealcanbeconsideredtoextendtoarbitratorsanddeservestobequotedinfull:

Ajudgemustrecusehimselffromacasebeforeanyobjectionismadeifthecircumstancesgiverisetoautomaticdisqualificationorifhefeelspersonallyembarrassedinhearingthecase.If,inanyothercase,thejudgebecomesawareofanymatterwhichcanarguablybesaidtogiverisetoarealdangerofbias,itisgenerallydesirablethatdisclosureshouldbemadetothepartiesinadvanceofthehearing.Whereobjectionisthenmade,itwillbeaswrongforthejudgetoyieldtoatenuousorfrivolousobjectionasitwillbetoignoreanobjectionofsubstance.However,ifthereisarealgroundfordoubt,thatdoubtmustberesolvedinfavourofrecusal…Thelevelofdisclosureappropriatelydependsinlargemeasureonthestagethatthematterhasreached.Thus,if,beforeahearinghasbegun,thejudgeisalertedtosomematterwhich,dependingonthefullfacts,maythrowdoubtonhisfitnesstosit,heshouldinquireintothefullfacts,sofarastheyareascertainable,in

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ordertomakedisclosure(p.819)inlightofthefacts.Incontrast,whereajudgehasembarkedonahearinginignoranceofamatterwhichemergesduringthehearing,itissufficientforthejudgetodisclosewhathethenknows.Ifhedoesmakefurtherinquiryandlearnsadditionalfacts,hemustalsodisclosethosefacts.

Thisapproachtouchesonanumberofdelicatepoints,includingthefactthatjudges/arbitratorsmaysometimesresigninthepresenceofanobjection,nomatterhowfrivolous.ThispracticeiscondemnedbytheEnglishCourtofAppealswhichhasatthesametimestressedtheimportanceofacontinuingdutytodiscloseandthefactthatdisclosuremustbemadeasearlyaspossible.

Sincetheenactmentofthe1998HumanRightsActon2October2000,Englishcourtsareobligedtoabidebysection3oftheActimposinganinterpretationofthelawcompatiblewiththerightsundertheEuropeanConventiononHumanRights.Thus,thecaselawoftheEuropeanCourtofHumanRights(‘ECHR’)onjudicialindependenceandimpartialitycannolongerbeignoredbyEnglishcourtsorbyarbitratorssittinginEngland. Thismeans,inparticular,theneedtotakeintoaccountthesubjective/objectivetestforbiaselaboratedbytheECHRintheFindlayvUnitedKingdominthefollowingterms:‘Astothequestionof“impartiality”,therearetwoaspectstothisrequirement.First,thetribunalmustbesubjectivelyfreefromjudicialbias.Secondly,itmustalsobeimpartialfromanobjectivepointofview,thatis,itmustoffersufficientguaranteestoexcludeanylegitimatedoubtsinthisrespect.’

(c)SwitzerlandSwisslawonlyreferstothenotionofindependenceonthepartofthearbitratorandnottoimpartiality.UnderArticle180(1)(c)oftheSwissPrivateInternationalLawAct,anarbitratorcanbechallengedwhen‘circumstancesexistwhichgiverisetojustifiabledoubtsconcerninghisindependence’.However,therighttoanimpartialjudgeisguaranteedbytheSwissConstitutionandhasbeenconsistentlyextendedtoarbitratorsbySwisscourtsasafundamentalprincipleofpublicpolicy.

Article180oftheSwissPrivateInternationalLawActleavesopentothepartiesthepossibilityofspecifyingbyprioragreementthequalitiesofanarbitrator,andanarbitratorcanbechallengedifheorshedoesnotmeetsuchrequirement.Additionally,thegroundsofchallengeandthechallengeprocedurecanbespecifiedbyagreementbetweentheparties. TheSwiss(cantonal)judgeattheseatofarbitrationis(p.820)competenttodecideuponthechallengeunlessthepartieshaveagreedthatotherrules—suchastheICCRules—apply. If,forexample,theICCRulesapply,thedecisionoftheICCCourtunderArticle7(4)ofthe1988Rulesisfinal(Art180(3)oftheSwissPrivateInternationalLawAct)andthereisnoappealagainstthedecision,eithertoasuperiorcantonalcourtortotheFederalSupremeCourt.

(d)USAIntheUSA,thefederalstatutorylawofarbitrationintheformoftheFederalArbitrationAct(‘FAA’)containsnoexpressprovisionsregulatingchallengestoorreplacementsofarbitrators.TheFAAappliestointernationalarbitrationsintheUSAandgenerallysupersedesStatelaw.IntheabsenceofspecificnormsrelatingtochallengesorreplacementsofarbitratorsintheFAA,anindividualStatecanissuespecificrulestothateffect.However,theexistingStatearbitrationlawsadoptedbyanumberofStates(theUniformArbitrationAct(‘UAA’)adoptedby34StatesandtheDistrictofColumbia)containnoexpressprovisionsregulatingchallengestoorreplacementsofarbitrators.Therefore,thecourts—andtherelevantprofessionalassociationstoacertainextent,aswillbeseenbelow—havesteppedintofillthisgap.

Anobjectivetestofimpartialityforarbitratorsandastrictdutytodisclosewasarticulatedasearlyas1968intheCommonwealthCoatingsCorpvContinentalCasualtyCocase, wheretheUSSupremeCourtrequireddisclosureofanydealingswhichmayconveyanimpressionofbias,includingsocialconnectionswiththepartiesandtheircounsel. Suchastrictimpartiality

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requirementappliestoallarbitrators,whetherparty-appointedornot.Curiously,becauseoftheabsenceofspecificprovisionsonthesubjectinUSlegislation,apartycannotchallengeanarbitratororraiseanobjectiontohisorherappointmentbeforeacourtuntiltheawardisrenderedunlessthepartieshavepreviouslyagreedtoabidebyarbitrationrulesthatcontainspecificprovisionsinthatrespect.

(p.821)(6)TheContributionofProfessionalAssociationsTheneedforageneralcodeofconduct,oratleastnon-mandatoryguidelinesforinternationalarbitrators,hasreceivedtheattentionofprofessionalassociations,whichhavebeenseekingtoprovidepracticalanswerstotheproblem.TheAmericanArbitrationAssociation/AmericanBarAssociationCodeofEthics(‘AAA/ABACodeofEthics’)wasthepioneerinthisfield.Itsfirsttextonthesubjectwasfinalizedin1977(andrevisedin2004).Thiswasfollowedin1987bytheInternationalBarAssociation'sRulesofEthicsforInternationalArbitrators(‘theIBARules’)whichhavebeensupersededbythe2004IBAGuidelines.

Professionalassociationscertainlyhaveanimportantroletoplayinthisfield,butcautionshouldbeexercisedwhenusingtheirproposalssoasnottomisunderstandtheirstatusandfunction.Whataresetforwardarenotbindingprovisionsoflaw,butinformalguidelinesorgeneralrecommendations.ThisisrecognizedbythedraftersoftheIBAGuidelineswho,atparagraph6oftheIntroduction,specifiedthat‘[T]heGuidelinesarenotlegalprovisionsanddonotoverrideanyapplicablenationallaworarbitralrulechosenbytheparties’.AsimilardisclaimeriscontainedinthePreambleoftheAAA/ABACodeofEthics.

(a)TheIBAGuidelinesonConflictsofInterestinInternationalArbitrationTheIBAGuidelineshavebeenelaboratedbyagroupofbusinesslawyersoveraperiodofseveralyears.TheywerefinallyapprovedbytheIBACouncilon22May2004.TheGuidelinesaretheproductofacompromisebetweendifferentinterestsandtheyhavebeentheobjectofsomecriticismbymembersofthelegalcommunity.Nonetheless,theyclearlyrespondtoanexistingneedbecausetheyarerepeatedlyusedasacodeofreferencebypartiesinthecontextofchallengesorobjectionstotheappointmentofarbitrators.Moreover,inatleastoneoftheexamplesofchallengesdiscussedabove,theSaipemvBangladeshICSIDarbitration,thetribunalexpresslyreferredtotheIBAGuidelinesinitsdecision.

ThegeneralprincipleinspiringtheGuidelinesisthatarbitratorsmustbe‘impartialandindependentofthepartiesatthetimeofacceptinganappointmenttoserveandshallremainsoduringtheentirearbitrationproceedinguntiltheawardhasbeenrenderedortheproceedinghasotherwisefinallyterminated’(General(p.822)Standard1).TheGuidelinesadoptabroadandobjectivestandardbasedonwhetherthereare‘anydoubtsastotheability[ofanarbitrator]tobeimpartialandindependent’justifyingthearbitratorinresigningordeclininghisorherappointment(GeneralStandard2(a)).

Theobjectivestandardfordisqualificationmentionedaboveisaccompaniedbyadifferenttestfordisclosure.Inthatrespect,theGuidelinesacceptthepositionofmostinstitutionalarbitrationrulesthatdisclosurerequirementsshouldbeseenfromtheparties'perspective.TheyhavethusadoptedthesamesubjectivestandardfordisclosureasthatcontainedinArticle7(2)oftheICCRules.TheWorkingGroupalsopointedtothedangersof‘unnecessarydisclosure’whichmightunderminetheparties'confidenceinthearbitralprocesswhentherearenorealrisksthatthearbitrator'simpartialityorindependencemaybeaffected(GeneralStandard3(c)).TheGuidelinesconcludethatchallengesordisclosures—andtheirpossibleconsequences—shouldnotbeconsidereddifferentlydependingonthestageoftheproceedingsatwhichtheyarise.

ThestatedpurposeoftheGuidelinesistobeapracticaltoolforarbitrationusers.Accordingly,theyincludethreecolour-codedlists(red,orange,andgreen)encompassinganumberofsituations,illustratedbyexamples,wherethedutytodisclosevaries:ifamatterfallsundertheredlist,the

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arbitratorshouldnotaccepttheappointment,orresign(butexceptionsaremadeformattersthatcanbewaivedbytheparties);theorangelistisanintermediateareadescribingsituationswherethearbitratormayormaynotdiscloseorresign,andthegreenlistcontainssituationswherethedisqualificationisunfoundedandthereisnoneedtodisclose.

Whatevertheirflaws,theIBAGuidelineswillunquestionablycontinuetobeusedbecausetheyhavethesealofapprovalofawell-knownprofessionalassociationandtheyprovideamuch-neededpracticalapproachabsentinnationallawsandarbitrationrules.Significantly,theyhavebeeninvokedbythepartiesseekingdisqualificationsintheTMBvGhanaUNCITRALarbitrationandtheSaipemvBangladeshICSIDarbitrationdiscussedearlierinthischapter.WhiletheywereignoredinthefirstcasebytheDistrictCourtofTheHague,whichpreferredtobaseitsdecisiononDutchlaw,theywerereferredtobytheICSIDtribunalinitschallengedecisioninthesecondcase.

(b)TheAAA/ABACodeofEthicsforArbitratorsinCommercialDisputesLiketheIBAGuidelines,thisCodewasnotintendedtoreplaceexistinglawsandregulations,oreventofillgapstherein,butsimplytoprovideguidanceinthisarea.Thechangesintroducedin2004includeapresumptionofneutralityforallarbitrators,includingparty-appointedarbitrators.Thisrepresentsacompletereversalof(p.823)thepositionadoptedinthe1977versionoftheAAA/ABACodewhich,absentagreementbetweentheparties,wasbasedonapresumptionofnon-neutralityforparty-appointedarbitrators.

UndertherevisedAAA/ABACode,party-appointedarbitratorshaveadutyoftimelydisclosurewhethertheyareactingasneutralsornot.Incaseofdoubt,party-appointedarbitratorsshallserveasneutralsuntilsuchdoubtisdispelled.

Allarbitrators,includingnon-neutrals,arerequiredtodiscloseanyinterestorrelationshiplikelytoaffecttheirimpartialityandwhichmightcreateanappearanceofbias.Thisdutyencompasses‘anyknowndirectorindirectfinancialorpersonalinterestintheoutcomeofthearbitration’andanyexistingorpastsuchrelationshipswhich‘mightreasonablyaffectimpartialityorlackofindependenceintheeyesofanyoftheparties’(CanonII.A.(1)and(2)).Theobligationtodisclosecontinuesthroughoutthearbitration,andanydoubtastowhetherdisclosureshouldbemade‘shouldberesolvedinfavourofdisclosure’(CanonII.C.andD).

TheAAA/ABACodeisnaturallyaproductofUSlegalcultureand,assuch,maynotalwaysserveasareferenceoutsideaUScontext.Nonetheless,itsapproachtotheissueisnotdissimilarfromotherarbitralrulesandisrelevanttotheextentthatitshowsacertainuniformityinthewaytheissuehasbeentreatedbytheinternationallegalcommunity.ItisalsoworthnotingthattheAAA/ABACodestartsfromtheprinciplethatfundamentaldifferencesexistbetweentheroleofjudgesandarbitrators.Itrecognizesthat—althougharbitrators,likejudges,mustservejustice—theydonotoccupyfull-timepositions(likejudges).Frequently,arbitratorsareexpertsinthesametradeasthepartiesthatappointthemandconflictsofinterestmaythereforebemorefrequent.ThedraftersoftheCodeacknowledgetheserealitiesandhavetakenthemintoaccount.

(7)CantheExistingRulesProvideaModelforInvestmentArbitration?Inthelightoftheabove,itcanbeconcludedthatthereisagooddealofsimilarityandconsistencyinthegeneralapproachesappliedbydifferentinstitutions.Commonprinciplesandrulescanbeidentified,andthesecouldbeadaptedtoformthebasisofacodeofethicsorguidelinestobeappliedtotheconductofinvestmentarbitrations.

(p.824)Thepreliminaryconclusionofthisauthoristhatthisareaiscertainlyworthexploringfurther.Withtheexponentialgrowthininternationalinvestmentarbitration,theriskofasimilarincreaseinobjectionstoconfirmationsandappointmentsofarbitratorsandactualchallengesisreal.


ConcludingRemarksandRecommendationsItiswidelyacceptedthatstandardsofindependenceandimpartialityapplytoallarbitrators,whethertheyactaschairmenorareparty-appointed.AsSirRobertJenningsnotedintheIran-USClaimsTribunalcase,ReJudgeBroms,whereheactedastheappointingauthority:

OneoughttoresisttheassumptionthattheindependenceandimpartialityofthemembersoftheTribunalwhoarenominatedbyaPartyaredifferentintheirjuridicalnaturefromtherequirementsforoneofthe‘neutral’judges.Nosuchdistinctionismadeinthe[UNCITRAL]Rulesgoverningthechallenge.

Thequestionofindependenceandimpartialityofarbitratorsisconsideredandregulatedinmostcountriesandisaquestionofpublicpolicyundernationallaws.ThiswasrecognizedbytheILACommitteeonInternationalArbitrationinitsFinalReportonpublicpolicyasabartoenforcementofinternationalarbitralawardsissuedatthe2002NewDelhiConference.Recommendation1(e)specificallymentionstherequirementofimpartialityofarbitraltribunalsasanexampleofproceduralpublicpolicy,therefusalofwhichmayjustifyanationalcourtdenyingenforcement.

Awardsarefrequentlychallengedbeforenationalcourtsbecauseanarbitrator'slackofimpartialityhasbeenperceivedtohaveledtoaninequalityoftreatmentbetweenthepartiesandabreachoffundamentalrulesofdueprocess.Asseenabove,insomecountries,suchasEngland,nationalcourtsretaincompetencetodecidechallenges,regardlessofwhetherthearbitralrulesgoverningtheproceedingsconfersuchcompetenceonaspecificappointingauthority.

ThepossibilityofjudicialrecourseagainstdecisionsonchallengesisalsoforeseenintheUNCITRALModelLaw.PursuanttoArticle13(3)oftheModelLaw,apartymayapplytoacourttodecideuponachallengethathasbeenrejectedbyanarbitralinstitution.Itshouldbenotedthat,incertaincountries,likeFranceandSwitzerland,partiesdonothavetherighttoapplytoadomesticcourttodecideon(p.825)achallengewhenadecisionhasalreadybeenmadebyanarbitralinstitution.Inanyevent,asillustratedbytheTMBvGhanaandEurekovPolandchallengesdiscussedabove,theinterventionofanationalcourtindecidinguponanarbitrator'sdisqualificationisarealitythatmustbetakenintoaccount.

Inmostcases,whenanationalcourtiscalledupontodecideanissueofindependence/impartiality,itislikelytoequatethepositionofanarbitratorwiththatofajudge.Whilesimilaritiesdoexist,onemaywonderwhetherjudgesandarbitratorsshouldbesubjecttothesamedutiesandobligationsincarryingouttheirmissionsbecausethelatterareappointedbyvirtueofaprivateundertakingwhiletheformerareappointedbyStatestoadjudicatemattersofnationallaw.Moreover,thereisnohierarchyofcourtsintheinternationalsystemandarbitralawardsarefinalandbindingwhilejudicialdecisionsaresubjecttoappellatereview.

Whenitcomestoinvestmentarbitration,furtherelementsintervenetocomplicatemattersfurther.Thenumberofpractitionersactingascounselandarbitratorsininvestmentarbitrationsisstillrelativelysmall.Someofthepractitionershavealreadymadeitknownthattheyonlywishtoactasarbitratorsandthusturndowninvitationstorepresentpartiesascounselinordertoavoidbeingconfrontedwithchallengesthatmayquestiontheirprofessionalintegrity.Thispracticepresentstherisk,notunlikewhatmayalreadybehappeninginthecaseofjudgesadhocattheInternationalCourtofJustice,thatthepoolofexpertsfromwhichpartiescandrawpotentialarbitratorswillbecomeevenmorelimitedthanitcurrentlyis.Isthisadesirableoutcome?Thisissuecanbearguedbothways,butthealternative—thatis,theprospectoftheappointmentofarbitratorswhosejudgmentrisksbeingaffectedbytheconductofanothercaseinwhichtheyarecalledontoarguepartisanpositions—isevenlessappealing.

Thereareothersituations,suchaswhenarbitratorswritearticlesorexpressviewsonsubjectswhichmayturnouttobesignificantforagivencase,orwhichpresentmoredifficultissues.Thosesituationsshouldindeedbeinvestigatedattheappointmentphase,andmayleadtodiscardingaprospectivearbitrator,but—barextremecircumstances—challengesorobjectionstoappointments

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shouldnotbeupheldinthesecircumstances.

TheinitiativeledbytheICSIDSecretariatinOctober2004withitsDiscussionPaperhassoughttorespondtosomeoftheseissues. IntheDiscussionPaperof22October2004,theICSIDSecretariatproposedexpandingthedisclosurerequirementsforICSIDarbitratorsalongthelinesoftheUNCITRALRuleswhich,asdiscussedabove,requireanarbitratortodisclosetothepartiesanycircumstanceslikelytogiverisetojustifiabledoubtsastohisorherimpartialityorindependence(Article9).Itwasalsorecommendedthatconsiderationbegiventoapplyingthisrequirementtotheentireproceedingandnotjusttotheinitialstagesinvolvingtheconstitutionofthetribunal.Thethirdandfinalrecommendation(p.826)advocatedconsiderationofacodeofconductwhichwouldbespecifictoinvestmentarbitration.

TheWorkingPaperof12May2005hasendorsedthefirsttwosuggestionscontainedintheDiscussionPaperandaccordinglyproposedtoamendICSIDArbitrationRule6toreadasfollows:

Rule6ConstitutionoftheTribunal…

(2)BeforeoratthefirstsessionoftheTribunal,eacharbitratorshallsignadeclarationinthefollowingform:

‘TothebestofmyknowledgethereisnoreasonwhyIshouldnotserveontheArbitralTribunalconstitutedbytheInternationalCentreforSettlementofInvestmentDisputeswithrespecttoadisputebetween_____________and_____________

…

Attachedisastatementof(a)mypastandpresentprofessional,businessandotherrelationships(ifany)withthepartiesisattachedheretoand(b)anyothercircumstancethatmightcausemyreliabilityforindependentjudgmenttobequestionedbyaparty.IacknowledgethatbysigningthisdeclarationIassumeacontinuingobligationpromptlytonotifytheSecretary-GeneraloftheCentreofanysuchrelationshiporcircumstancethatsubsequentlyarisesduringthisproceeding.

…

TheWorkingPaperfurthersuggestedmakingsimilarchangestothecorrespondingprovisionsintheAdditionalFacilityArbitrationRules,Article13(2).

AlthoughthefinalamendmentstotheRuleswhichcameintoeffecton10April2006differinseveralaspectsfromtheWorkingPaperofMay2005,therearenodiscerniblechangeswithrespecttoRule6.ThefinalamendmenttothisRulecorrespondstothetextcitedintheparagraphaboveandinparticularstillrequires,(i)thatthearbitratorattachastatementdisclosing‘anyothercircumstancethatmightcause[any]reliabilityforindependentjudgmenttobequestionedbyaparty’,and(ii)imposesacontinuingobligationtodiscloseonthearbitrator.

ItshouldbeobservedthattheamendmentstotheRulesappeartoacceptasubjectivestandardofindependenceandmakenoreferencetoimpartiality.Thelanguageisunusual,totheextentthatitrequiresprospectivearbitratorstodiscloseanycircumstancesthatmightcausetheir‘reliabilityforindependentjudgmenttobequestionedbyaparty’.Theexplanatorynotethataccompaniesthechangesstatesthattheirpurposeisto‘expandthescopeofdisclosuresofarbitratorstoincludeanycircumstanceslikelytogiverisetojustifiabledoubtsastothearbitrator'sreliabilityforindependentjudgment’.However,thetextdoesnotrefertojustifiabledoubts,thusseemingtoadoptabroaderinterpretationofthecircumstancesthatoughttobedisclosedbyprospectivearbitrators.Furthermore,thereferencetoavaguenotionofanarbitrator's‘reliabilityforindependentjudgment’—whenasimplereferencetothearbitrator'sindependenceofjudgmentmighthavebeensufficient—maywidenexcessivelythescopeoftheobligationtodisclose.

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(p.827)Inthelightofthecurrentstateofplay,certainquestionsneedtobeasked:

(1)Isthereaneedtoissuespecificrulesofbehaviouroracodeofconductforinvestmentarbitrators,orisitsufficienttorelyontheassumptionthatdefactomembersoftheinternationalBarwillabidebygenerallyacceptedprinciplesofdeontology?

(2)Canitbesaidthatthereisabodyofgeneralprinciplesinthisfield?

(3)AretheamendmentstotheICSIDRulessufficientorshouldadditionalmodificationsbeconsidered?

Inresponsetoquestion(1),itcanbearguedthat,inanidealworld,anumberofchallengescouldbeavoidedsimplybyapplyingcommonsenseandbasicrulesofdeontologygoverningtheconductofmembersofBarsacrosstheworld.However,notionsofimpartialityandindependencefindtheirrootsindifferentculturalrealitieswhichmaintaindifferentapproachestotheissue.SufficeittorefertotheAmericanpracticeof‘non-neutralarbitrators’,andtheBritishsystemof‘arbitrators-advocates’. Furthermore,inthisdayandage,arbitrationisnotthemonopolyoflawyers,butmayextendtootherprofessionalswhoarenotnecessarilyboundbythesamestandardsofethics.

TherearestrongreasonsforarguingthattheanswershouldberegulatedbyasystemofuniformrulesorbyacodeofconductmodelledontheexamplesprovidedbytheNAFTAandWTOcodes.Tobeeffective,however,theserulesmustbeadoptedbyanauthoritativebodytoavoidtheriskofanunrulyproliferationofcodesandregulationswhichwouldinevitablycontradictoneanotherandleadtoevengreaterconfusion.

SomeofthegeneralrulesofconductforinvestmentarbitratorsareadequatelytreatedbytheUNCITRALRules,buttheriskremains—forbothICSIDandUNCITRALinvestmentarbitrations—thattheinterventionofnationalcourts,whichadoptdifferentstandards,mayleadtoinconsistentoutcomes.Theanswertothesecondquestionmaybe,therefore,that,althoughcertainprinciplesdoexistandaretosomeextentcodified,aneedforacomprehensivesetofrulesgoverningspecificallythecaseofinvestmentarbitrationisapparent.

Withrespecttothethirdandfourthquestions,forICSIDarbitration,gapsinthesystemhavebeenidentifiedin2004intheICSIDDiscussionPaper,partialresponseswereprovidedintheWorkingPaperofMay2005,andthesehaveledtotheamendmentstotheICSIDRuleswhichcameintoeffectinApril2006.However,thesemayneedtobesupplemented.Considerationmightbegiventothesuggestionthatdecisionsonchallengesininvestmentarbitrationsbemadepublic.

(p.828)Thenewrequirementthattheobligationtodisclosebecontinuingiscertainlyawelcomechange.Disclosuredoesnotendwithanarbitrator'sappointment.Thisisthecaseformostinstitutionalrules,andinvestmentarbitrationshouldbenoexception.AlthoughitistruethatinthedeclarationssignedattheoutsetofICSIDproceedings,prospectivearbitratorsattestthattheyshallact‘fairlyasbetweentheparties’,thusraisinganimplicitobligationtodosoforthedurationofthearbitralproceeding,itiscertainlybesttospelloutthattheobligationtorevealanyfactthatmaycallthearbitrator'sindependenceandimpartialityintoquestioncontinuesfortheentiretyofthearbitralproceedings.

AnotherareawherereformmaystillbeenvisagedistheICSIDrégimerequiringthattheunchallengedarbitratorsdecideuponachallenge.Thispracticemayhavetheeffectofputtingtheunchallengedarbitratorsinadifficultpositionparticularlywhentheirdecisions,andthemotivationscontainedtherein,arepublished.Thedecisionsofotherarbitratorsmayalsobeperceivedbytheoutsideworldasprotectingtheinterestsofanelitistgroupofspecialists,whichisalreadyunderattackforbeinga‘membersonly’typeofclubwithlimitedaccess.Ideally,itmaybepreferablefortheappointingauthority,whichhasamoredetachedpositionvis-à-visthecase,todecideonchallengesanddisqualifications.Alternatively,theestablishmentofaneutralbodycouldbeenvisaged,thatisa‘ChallengeFacility’whichcouldbecomposedofsuperpartes,highlyqualifiedmembers,andbechargedwithdecidinguponconflictsofinterestsandrequestsofdisqualificationsofarbitrators.However,thediscussiononthispointistoalargeextentacademicsincethis

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practiceisbasedonArticle58oftheICSIDConventionand,assuch,itisunlikelytobemodified.

Topreservetheintegrityofthearbitralprocess,involvementwithoneofthepartiesinthearbitration,whetherfinancialorintellectual,mustbeavoided.ToparaphrasethedictumoftheHouseofLordsinthePinochetcase,arbitratorsshould‘takecarenotonlythatintheirdecreestheyarenotinfluencedbytheirpersonalinterests,buttoavoidtheappearanceoflabouringundersuchinfluence’.

Ifapersonshouldnotbeajudgeinhisorherowncase,thenalawyeradvocatingapositiononbehalfofoneofthepartiesinonearbitrationmaybeexpectedtobeundulyinfluencedifheorshesitsasanarbitratorinanotherarbitrationinvolvingthesameorsimilarissuesevenifthepartiesarenotthesame.Ataminimum,suchasituationgivesrisetolegitimatedoubtsaboutimpartiality.

Ultimately,acertainmeasureofcommonsenseandpracticalityneedstobeapplied.Thereisgeneralagreementthat—althoughtherighttoafairtrialandprinciplesofinternationalpublicpolicyshouldbeparamount—abalanceshouldbeachievedbetweenpreservingtheseprinciplesandmaintainingapracticalapproachtodisputesettlement.Partiesshouldnotbedeprivedofthepossibilityofappointingqualifiedinternationalarbitrators.Naturally,arbitratorsareentitledtofreedomof(p.829)expression.Theymustbefreetoformulatetheirviewsonlegalissueswithoutconstraint,providedthattheyrespecttheindependenceandimpartialityoftheirfunctionsasarbitrators.

ThedebatetriggeredbyrecentchallengescontributedtoamendingtheICSIDRulesatleastbyexpandingthescopeofthearbitrator'sdeclarationuponappointmentandimposingacontinuingdutytodisclose.Nonetheless,itmaystillbenecessarytoconsiderenactingacodeofethicsforinvestmentarbitratorsundertheguidanceandleadershipofICSID.Toomuchisatstakeinthistypeofarbitrationtocontinuetoignoretheneedforacomprehensivesolutiontotheissueofconflictsofinterestininvestmentarbitration.

SelectBibliographyClay,T,L'arbitre(Paris,EditionsDalloz,2001)

Derains,YandSchwartzE,AGuidetotheNewICCRulesofArbitration(TheHague,KluwerLawInternational,1998)

Duprey,Pierre,‘DoArbitralAwardsConstitutePrecedents?ShouldCommercialArbitrationbeDistinguishedinthisRegardfromArbitrationBasedonInvestmentTreaties?’,inPhilippePinsolle,AnneVSchlaepfer,andLouisDegos(eds),TowardsaUniformInternationalArbitrationLaw?IAISeriesonInternationalArbitrationNo.3(Huntington,NY,JurisPublishing,2005)

Hascher,D,‘ICCPracticeinRelationtotheAppointment,Confirmation,ChallengeandReplacementofArbitrators’,6(2)ICCBull4(1995)

Henry,M,‘Lesobligationsd'indépendenceetd'informationdel'arbitreàlalumièredelajurisprudencerécente’,RevArb193(1999)

Hürlmann,R,‘InternationalArbitrationinSwitzerland—FirstExperiencewiththeNewInternationalArbitrationLaw’,ArbDispResLJ8(1994)

Legum,Barton,‘Investor-StateArbitratorDisqualifiedforPre-appointmentStatementsandChallengedMeasures’,21(2)ArbInt'l241(2005)

Osborne,B,‘IndependenceandImpartiality:InternationalStandardsforNationalJudgesandCourts’,2TheLawandPracticeofInternationalCourtsandTribunals97(2003)

Sandy,David,‘Independence,Impartiality,ArbitrationandtheHumanRightsActinEngland’,20(3)ArbInt'l305(2004)

Schreuer,Christoph,TheICSIDConvention:ACommentary(Cambridge,CambridgeUniversityPress,2001)

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Shelton,Dinah,‘LegalNormstoPromotetheIndependenceandAccountabilityofInternationalTribunals’,2TheLawandPracticeofInternationalCourtsandTribunals27(2003)

Smith,Murray,L,‘ImpartialityoftheParty-AppointedArbitrator’,6(4)ArbInt'l320(1990)

Watts,SirArthur,‘NewPracticeDirectionsoftheInternationalCourtofJustice’,1(2)TheLawandPracticeofInternationalCourtsandTribunals247(2002)

Footnotes:∗Anearlierversionofthischapterhasappearedin2(5)TransnationalDisputeManagement(2005)availableat<http://www.transnational-dispute-management.com>.

SeeICSIDSecretariat,‘PossibleImprovementsoftheFrameworkforICSIDArbitration’,ICSIDSecretariatDiscussionPaper(22October,2004),availableat<http://www.worldbank.org/icsid>.

Ibid,paras16–17,at11–12.

ThefulltextofthesuggestedchangestoICSIDArbitrationRule6iscitedbelow.

TheamendmentscanbefoundontheICSIDwebsite,at<http://www.worldbank.org/icsid/>.Itshouldberecalledthat,pursuanttoArt44oftheICSIDConvention,unlessagreedbytheparties,anICSIDarbitrationisconductedinaccordancewiththeRulesineffectonthedateonwhichthepartiesconsentedtoarbitration.

ItisgenerallyrecognizedthatthestaredecisisruledoesnotapplyinICSIDarbitration.PartofthedoctrineinterpretsArt53(1)oftheICSIDConventionasexcludingtheapplicationofthisruleinICSIDproceedings.SeePierreDuprey,‘DoArbitralAwardsConstitutePrecedents?ShouldCommercialArbitrationbeDistinguishedinthisRegardfromArbitrationBasedonInvestmentTreaties?’inPhilippePinsolle,AnneVeroniqueSchlaepfer,andLouisDegos(eds),TowardsaUniformInternationalArbitrationLaw?IAISeriesonInternationalArbitrationNo.3(Huntington,NY,JurisPublishing,2005)at251–82.

AsProfessorSchreuernotes,theoriginaldraftsmenoftheConventionconsideredthattheimpartialityandindependenceofarbitratorswasa‘given’.CSchreuer,TheICSIDConvention:ACommentary(Cambridge,CambridgeUniversityPress,2001)at57.

See,also,AdditionalFacilityArbitrationRulesArt13(2).

Rule6(2),asamended,isalsodiscussedbelow.ItshouldbenotedthattheAdditionalFacilityRulesaddtheword‘relevant’tothewords‘otherrelationship’,thusseeminglylimitingthedisclosuretorelationsofsomesignificancetothedispute.

Schreuer,aboven6at516–17.

ICSIDCaseARB/81/1,DecisionontheProposaltoDisqualifyanArbitrator(24June1982)(unreported).CommentariesontheDecisioncanbefoundinSchreuer,aboven6,andWMTupman,‘ChallengeandDisqualificationofArbitratorsinInternationalCommercialArbitration’,38(1)ICLQ26(1989)at44–5.

Tupman,ibid,at45.

Schreuer,aboven6at517.

ConciliationRule9(1)issimilar.

Schreuer,aboven6at1199–200.

Ibid,para16at1200.

CompañíadeAguasdelAconquijaSA&VivendiUniversalvArgentineRepublic,DecisionontheChallengetothePresidentoftheCommittee,17ICSIDReview-FILJ(2002)at168.

Ibid,para26at180.

Ibid,para28at181.

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SGSSociétéGénéraledeSurveillanceSAvIslamicRepublicofPakistan,DecisiononDisqualificationofArbitrator,19December2002,8ICSIDReports398.

Ibidat405.

SaliniCostruttoriSPAandItalstradeSpAvTheHashemiteKingdomofJordan,ICSIDCaseNo.ARB/02/13,DecisiononJurisdiction,9November2004,20ICSIDRev-FILJ148(2005).AFrenchtranslationoftheEnglishoriginaloftheDecisioncanbefoundin132Journaldudroitinternational182(2005)(excerpts).

Ibid,para5.

Ibid,para9.

See‘ICSIDTribunalsDivergeoverIndependenceofArbitratortoHearArgentineClaims’InvestmentLawandPolicyNewsBulletin(25March2005),availableat<http://www.icsid.org/investment>.

DukeEnergyInternationalPeruInvestmentNo.1LtdvRepublicofPeru,ICSIDCaseNo.ARB/03/26.

SaipemSpAvPeople'sRepublicofBangladesh,CaseNo.ARB/05/7.

Unpublished.

ICSIDCaseNo.ARB/98/2.

Thischallengeisalsounpublished,butwasreportedintheIISDonlinenewsletter.

SDMyersIncvtheGovernmentofCanada,Award,13November2000,availableat<http://naftaclaims.com/disputes_canada>.

Ibid,para20at5.

Documentsrelatingtothiscasecanbefoundat<http://www.state.gov/s/l/c7424.htm>.Foradiscussionofthiscaseandthearbitrator'schallenge,seeBartonLegum,‘Investor-StateArbitratorDisqualifiedforPre-AppointmentStatementsandChallengedMeasures’21(2)ArbInt(2005)at241–5.

CitedinLegum,aboven32at243.

Ibid,at245.

DistrictCourtofTheHague,18October2004,ChallengeNo.13/2004;PetitionNo.HA/RK/2004.667;andChallenge17/2004,PetitionNo.HA/RK/2004/778,5November2004(unofficialEnglishtranslationsofthejudgmentscanbefoundat:<http://www.transnational-dispute-management.com>).

ICSIDCaseNo.ARB/00/6(Italy-MoroccoBIT).

Ibid,at5.

Ibid,at6.

Judgmentof5November2004,para11.

EurekoBVvRepublicofPoland,PartialAwardandDissentingOpinion,19August2005.

Acopyofthedecisionofthe4èmeChambredutribunaldepremièreinstancedeBruxellesof22December2006canbefoundat<http://ita.law.unic.can/>.

SeeInvestmentTreatyNews(17January2007)availableat<http://www.iisd.org/investment/itn>.TheAppealsCourtofBrusselsrejectedPoland'sappealon29October2007andheldthatthechallengedarbitratorwasindependentfromthelawfirminquestion.TheCourtofAppealsdidnotacceptthatthearbitratorcouldbeinfluencedbythefactthatmembersofthatlawfirmactedascounselinthatcase,astheir‘psychologicalattitude’couldnotbetransferredtohim.TheAppealsCourtalsostressedthat,foranarbitrator,professionalintegritymustbemoreimportantthan‘lessensibilitésetlesbutsqu'ilpursuitentantqu'avocat’.A

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copyofthejudgmentcanbefoundatPetitesAffiches,24–5March2008,Nos60–1,pp17–25.

FindlayvUK(1997),IEurCtHR263,para73.

LimitedchangeshavebeenmadetothisprovisionasaresultoftheongoingrevisionoftheUNCITRALRules.Theonlyamendmentprovidesfora15-daytime-limit(runningfromthedateofnoticeofthechallenge)withinwhichthepartymakingthechallengemayseekadecision.NofurtheramendmentstoArt12(1)havebeenproposed.

TherequirementofindependencewasfirstintroducedintheRulesin1975andfurthersecuredin1988bythesystemthatiscurrentlyinplace.Foranexhaustivediscussionoftheseissues,seeYDerainsandESchwartz,AGuidetotheNewICCRulesofArbitration(TheHague,KluwerLawInternational,1998)at108–28,andDHascher,‘ICCPracticeinRelationtotheAppointment,Confirmation,ChallengeandReplacementofArbitrators’6(2)ICCBulletin(1995)at4–18.

See,inthisrespect,Raffineriesdepétroled'HoinsetdeBaniasvChambredecommerceinternationale,Judgmentof28March1984,Tribunaldegrandeinstance,Paris,inRevArb(1985)at141wheretheFrenchCourtdidnotannuladecisionbytheICCCourttoremoveanarbitrator,holdingthatthedecisionwasan‘administrativeactbythearbitralinstitution’(at146)and,assuch,didnothavetoconformtoFrenchrulesofcivilprocedurebut,rathertotheICCRules.

SeeDerainsandSchwartz,aboven45at124.

Forareviewoftheseexamples,seeHascher,aboven45.

Asimilarsituationhasrecentlyariseninaninvestmentarbitrationcontext.IntherecentSAURInternationalvArgentineRepubliccase,counselrepresentingtheprivateinvestorhasannouncedtheintentiontoappointthesamearbitratorasthatselectedbytheinvestorintheAzurixCorpvArgentineRepubliccase.InlightofthefactthattherespondentinbothcasesistheArgentineRepublicandtheissuesatstakeareapparentlyverysimilar,theclaimant'sdecisiontohavethesamearbitratorinbothcasesseemsreasonable.ThisisreportedinIISD,‘InvestmentLawandPolicyWeeklyNewsBulletin’(6February2004).

11(2)LCIANews(June2006)at2.

LegalConsequencesoftheConstructionofaWallintheOccupiedPalestinianTerritory,Orderof30January2004,ICJReports2004,at3.

DissentingOpinionofJudgeBürgenthal,ibid,at9(para10).

SeeSirArthurWatts,‘NewPracticeDirectionsoftheInternationalCourtofJustice’1(2)TheLawandPracticeofInternationalCourtsandTribunals247(2002)at253.

Ibid,at254.

Forananalysisofsomeoftheissuesrelatingto,theWTOsystemandaselectionofotherpermanentinternationaltribunals,seeDinahShelton,‘LegalNormstoPromotetheIndependenceandAccountabilityofInternationalTribunals’2TheLawandPracticeofInternationalCourtsandTribunals27(2003);see,also,BOsborne,‘IndependenceandImpartiality:InternationalStandardsforNationalJudgesandCourts’2TheLawandPracticeofInternationalCourtsandTribunals97(2003).

WT/DSB/RC/1.

[1924]1KB256.

See,Cass2eciv,13April1972,JCP,1972,édG,II17189,notePLevel;D,1973.2,noteJRobert,Revarb(1975)at235,noteELoquin;Paris,8June1972,Revarb(1973)at38,noteJRubellin-Devichi;TGIParis,réf,22March1983,Revarb(1983)at479,2DecembernoteBMoreau;JCP,1983II20004,noted'AntinetLacorne;TGIParis,réf,21September1989,Revarb(1990)at176,2DecembernotePKahn;Cass2eciv,8November1989,StéEditionsMédicafrique,inédit;Paris,2June1989,2arrřts,Revarb(1991)at87;Paris,28June1991,KFTCIC,Revarb(1992)at568,notePBellet;Paris,6April1990,PhilippBrothers,Revarb(1990)at880,noteMdeBoisséson.

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StéBordNaMonavSANorskhydroazoteandGuillotelvStéCasteletFromages,CassAssplén6November1998,JCP,1998II10198.

Seethecase-lawcitedinMHenry,‘Lesobligationsd'indépendenceetd'informationdel'arbitreàlalumièredelajurisprudencerécente’,Revarb193(2,1999)at200–1,nn19–20.

MaecSAvPMumbach,judgmentof23March1995,RTDcom,1995.588,noteELoquin,Revarb(1996)at446.MilanPressevMediaSudCommunication,judgmentof12January1999,Revarb(1999)at381.AzzarovCattan,judgmentof12November1998,Revarb(1999)at374.

MilanPresse,aboven61.

FremarcvITMEnterprises,CourtofCassation,judgmentof6December2001andParisCourtofAppeals,2April2003,Revarb(2003)at1231.See,also,STPIFvSBBallestrero,CourtofAppeals,judgmentof16May2002,Revarb(2003),commentarybyEGaillardat1240–7;ParisCourtofAppeals,29January2004,SASerfvDVConstruction,Revarb(2005)at709,commentarybyMHenry,at720–36;ParisCommercialCourt,réf,6July2004,ChomatvA,Ibid.

FremarcvITMEnterprises,ParisCourtofAppeals,judgmentof2April2003,aboven63.See,also,ParisCourtofAppeals,17February2005,SociétéMytilineosHoldingsvTheAuthorityforPrivatizationandStateEquityAdministration,Revarb(2005)at709,commentarybyMHenry,at720–36.InSociétéMytilineosHoldingsvTheAuthorityforPrivatizationandStateEquityAdministration,theCourtspecifiedthat:‘…cetteobligationd'informationviseàétabliretàmaintenirunliendeconfianceentrel'arbitreetlesparties,maisquetoutmanquementn'entraînepasautomatiquementl'annulationdelasentencedanslamesureoùcedevoird'informations'étendau-delàdescausesderécusation,qu'ils'ensuitqueleseffetsd'uneéventuelleréticencedoiventětreappréciésparlejugedel'annulationpourmesurersi,àelleseule,ourapprochéed'autreélémentsdelacause,elleconstitueuneprésomptionsuffisantedudéfautd'indépendanceallégué.’

RvGough[1993]AC646(HouseofLords)andATTvSaudiCable[2000]2AllER625(CourtofAppeal).

Locabail(UK)LtdvByfield[2000]AllER65.

SeeDavidSandy,‘Independence,Impartiality,ArbitrationandtheHumanRightsActinEngland’,20(3)ArbIntl(2004)at305–21.

FindlayvUnitedKingdom[1997]24EHRR221.CitedinSandy,aboven67.

SeeTClay,L'arbitre(Paris,EditionsDalloz,2001)at264–5andthecase-lawcitedtherein.

SeeRHürlmann,‘InternationalArbitrationinSwitzerland—FirstExperiencewiththeNewInternationalArbitrationLaw’,ArbDispRes8(1994)at12.

InternationalHandbookonCommercialArbitrationSuppl27,December1998,Switzerland—16.

CertainStateshavesetforthgroundsforchallenge.InCalifornia,forexample,arbitratorsininternationalarbitrationsmustmakemandatorydisclosuresofinformationthatmightleadtheirimpartialitytobequestioned.CalCodeCivPro§1297.121.Thedisclosuresaremandatoryandcannotbewaivedbythepartieswithrespecttopersonsservingasthesolearbitratororasthepresidingarbitratorinaproceeding,CalCodeCivPro§1297.122.Nonetheless,unlessotherwiseagreedtobytheparties,anarbitratormaybechallenged‘onlyifcircumstancesexistthatgiverisetojustifiabledoubtsastohisorherindependenceorimpartiality,orastohisorherpossessionofthequalificationsuponwhichthepartieshaveagreed’Cal.CodeCivPro§1297.124.

393US145(1968).

See,also,MurrayLSmith,‘ImpartialityoftheParty-AppointedArbitrator,’6(4)ArbIntl320(1990)at324–5.

InternationalHandbookonCommercialArbitrationSuppl28,January1999,USA—1,p27.

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Unpublished.

16(5)Mealy'sIntArbRep(2001)at7.

ICSIDSecretariat,‘PossibleImprovements’,aboven1.

SeethediscussiononthispracticeinClay,aboven69at293–302andthedoctrinecitedtherein.The1977AAAandABACodesofEthicsforArbitratorsinCommercialDisputesincorporatedthenotionof‘non-neutralarbitrators’,butthishasbeenreplacedbyageneralpresumptionofneutralityforarbitratorsinthemostrecentrevisionsofthesetexts(1March2004).

RvBowStreetMetropolitanStipendiaryMagistrates,expartePinochetUgarteNo.2[2001]1AC119.

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