'Bonus atque fidus judex honestum praetulit utili' (Horace, Odes)

'Bonus judex damnat improbanda, non odit' (Seneca, De ira)

[Page25:]

1. Introduction

One of the key functions of arbitral institutions when applying their rules is to vet prospective arbitrators for independence and impartiality. The ICC International Court of Arbitration (the 'Court') is no exception: Article 11(1) of the ICC Rules of Arbitration (the 'Rules') provides that '[e]very arbitrator must be and remain impartial and independent of the parties involved in the arbitration'. The Court ensures this fundamental principle is upheld at three stages: firstly, when confirming or appointing arbitrators (Article 13 of the Rules); secondly, when examining challenges brought against arbitrators (Article 14 of the Rules); and thirdly when replacing arbitrators on its own initiative (Article 15(2) of the Rules). This article focuses on challenges. They are subject to a distinctive procedural regime, which has recently undergone some significant changes as far as the Court's practices are concerned. For purposes of comparison, reference will also be made to confirmations insofar as they relate to issues of independence and impartiality.

Most arbitral institutions are empowered to make decisions on challenges against arbitrators.1 Only rarely in institutional arbitration is it left to arbitral tribunals2 or state courts to decide on challenges.3 Article 14(1) of the Rules provides that an arbitrator can be challenged 'for an alleged lack of impartiality or independence, or otherwise'. While the catch-all expression 'or otherwise' allows for challenges on widely diverse grounds, the vast majority of challenges are based on an alleged lack of independence or impartiality. The Court's decisions on challenges therefore often provide it with an opportunity to check the impartiality and independence of arbitrators and to remove any arbitrators who fail to fulfil these essential requirements.

Upon nomination, all prospective ICC arbitrators are required to sign a Statement of Acceptance, Availability, Impartiality and Independence (the 'Statement') and to disclose in writing 'any facts or circumstances which might be of such a nature as to call into question the arbitrator's independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to the arbitrator's impartiality' (Article 11(2) of the Rules). The Secretariat subsequently invites the parties to comment on any circumstance disclosed by a prospective arbitrator. If a party raises an objection, the Court is invited to decide whether to confirm the arbitrator in question pursuant to Article 13(2) of the Rules. The confirmation process plays a valuable role in providing the Court with an opportunity to examine prospective arbitrators' independence and impartiality (among other requirements) at an early stage of the proceedings, and reduces the risk of challenges later in the proceedings when their impact is likely to be more disruptive.

This article will first provide a statistical overview of challenges brought before the Court. It will then examine the role played by the IBA Guidelines on Conflicts of Interest in International Arbitration (the 'IBA Guidelines') in those challenges. The challenge process before the Court will then be discussed, including recent developments in the Court's practice. Lastly, the article will identify those circumstances most commonly invoked as grounds for challenging arbitrators and issues that have received particular attention in practice in the recent past.

2. Statistical overview

The overall picture in recent years seems at first sight to point to an increasing number of challenges. Of the 465 challenges brought in the last ten years, 40 were made in 2005, 44 in 2008, 57 in 2009, 61 in 2012, 66 in 2013 and 60 in 2014. However, this trend has not been consistent: only 26 challenges were made in 2007 and 28 in 2015. Moreover, the overall increase reflects a corresponding rise in the number of pending cases and the number of arbitrators acting in those cases. When considered in proportion to the number of arbitrators confirmed or appointed in ICC cases, challenges have remained relatively stable, not exceeding 3.7% of the total number of arbitrators appointed or confirmed over the past ten years.4

[Page26:]

Although challenges are rarely successful, their success rate appears to have been increasing. Between 2006 and 2008, only 1 or 2 challenges were accepted by the Court each year, whereas this number has subsequently been higher: 5 in 2009, 6 in 2010, 3 in 2011, 4 in 2013, 5 in 2014 and 3 in 2015, with a peak of 13 in 2012.

It is worth noting that these figures cover only formal challenges brought under Article 14 of the current Rules or the corresponding provisions of earlier versions of the Rules. They do not include cases in which the Court, of its own motion or following a party's objection, decides not to confirm an arbitrator (Article 13 of the Rules).5 Nor do they include cases in which the Court on its own initiative decides to remove an arbitrator already in office because the arbitrator is either prevented from fulfilling his/her functions or is not fulfilling his/her functions in accordance with the Rules or within the prescribed time limits (Article 15(2) of the Rules). Furthermore, the figures do not take account of resignations, which are sometimes occasioned by a potential conflict of interest or a party's objection over the arbitrator's independence or impartiality.

The replacement of an arbitrator on the Court's own initiative generally occurs as a result of the arbitrator's failure to conduct the proceedings efficiently and expeditiously. In some instances, however, arbitrators have been replaced due to doubts as to their independence or impartiality. There have been times when, despite rejecting a challenge, the Court decided to initiate replacement proceedings upon finding evidence of facts or circumstances pointing to a lack of independence or impartiality different from those on which the challenge was based. Unlike non-confirmations and challenges, the number of replacements made on the Court's own initiative does not appear to have grown significantly in recent years. A total of 3 such replacements were made in 2006 and in 2007, 1 in 2014 and none in 2015. The 2013 peak of 9 would appear to be an anomaly.

In addition to examining challenges under its own Rules, the Court may be called upon to decide on the challenge of an arbitrator in its capacity as appointing authority under the UNCITRAL Arbitration Rules or in other ad hoc proceedings. In performing this function the Court applies the ICC Rules as Appointing Authority, which provide for a challenge procedure analogous to that described in the Rules. 6 Since 2005 a total of 14 challenges have been submitted to the Court under Article 12 of the UNCITRAL Rules and 6 in other, non-UNCITRAL ad hoc proceedings.7

3. The role of the IBA Guidelines in the Court's decisions on challenges

The IBA Guidelines were first published in July 2004 and a revised version followed in October 2014. The Working Group that drafted both versions consulted the Secretariat of the Court, which shared its experience and commented on recent trends in arbitral practice. Its input was reflected in the texts eventually adopted by the IBA.

The IBA Guidelines are useful insofar as they identify uniform standards of disclosure. However, they are not directly applicable in ICC arbitration.8 While arbitrators acting under the ICC Rules may give consideration to the IBA Guidelines when deciding what to disclose, they are not bound by the IBA Guidelines unless the parties have specifically agreed otherwise.

A correct understanding of the IBA Guidelines' role in the work of the Court and its Secretariat calls for three initial observations.

First, with respect to the standard for disclosure, prospective ICC arbitrators are bound by the Rules and not the IBA Guidelines. The relevant standard for disclosure is found in Article 11(2) of the Rules, which requires all prospective arbitrators to disclose to the Secretariat 'any facts or circumstances which might be of such a nature [Page27:] as to call into question the arbitrator's independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to the arbitrator's impartiality'. The Court has recently issued guidance on the disclosure of conflicts of interest by arbitrators and prospective arbitrators to complement this provision. It can be found in the note the Secretariat sends to parties and arbitrators at the beginning of the proceedings.9 Unlike the IBA, the Court has not attempted to provide an exhaustive list of circumstances that arbitrators and prospective arbitrators are expected to disclose, but rather examples of circumstances to which arbitrators and prospective arbitrators are invited to pay attention when assessing whether to make a disclosure.10 It is for each arbitrator or prospective arbitrator to decide in his/her particular case what circumstances are of such a nature as to call into question his/her independence in the eyes of the parties or give rise to reasonable doubts as to his/her impartiality.

Second, the Secretariat does not carry out investigations into an arbitrator's independence or disclosures. However, if a prospective arbitrator has failed to disclose circumstances of which it is aware (e.g. involvement in another ICC pending or closed case) and which it considers should have been disclosed under Article 11(2), it may require the arbitrator to disclose such information, and the arbitrator's failure to do so may prevent him or her from being confirmed. The Secretariat acts here on the basis of its own assessment of the situation and not necessarily on the basis of the IBA Guidelines.

Third, both the IBA Guidelines and the standards set out in the ICC Rules relate to arbitrators' disclosures and not to the Court's decisions on challenges, so there can be no question of their governing the Court's decision-making.

When defining the disclosure requirement, Article 11(2) sets a subjective test for independence ('independence in the eyes of the parties') and an objective test for impartiality ('circumstances that could give rise to reasonable doubts'). However, an objective standard is invariably applied for disqualification. The approach taken by the Rules here is slightly different from that of the IBA Guidelines since the latter make no distinction between independence and impartiality. Nevertheless, the IBA Guidelines do make a distinction between the standards applicable to disclosure and disqualification.11

The application of different standards to disclosure and disqualification has significant practical consequences. Firstly, making or - for institutions - requiring disclosure does not imply the existence of a doubt as to the independence or impartiality of an arbitrator, let alone an admission of lack of independence or impartiality. This is clearly reflected in the Statement, which requires arbitrators and prospective arbitrators to disclose circumstances that might call into question their independence in the eyes of the parties or give rise to reasonable doubts as to their impartiality even if they consider themselves impartial and independent, and points out that any doubt as to whether a circumstance should be disclosed 'must be resolved in favour of [Page28:] disclosure'.12 The guidance recently incorporated into the Secretariat's note to parties and arbitrators reaffirms the principle that a disclosure does not imply the existence of a conflict ('On the contrary, arbitrators who make disclosures consider themselves to be impartial and independent, notwithstanding the disclosed facts, or else they would decline to serve.') and that doubts must be resolved in favour of disclosure. The foreword to the IBA Guidelines likewise states unequivocally that 'the standard for disclosure differs from the standard for challenge'.13 Secondly, an arbitrator's failure to disclose a circumstance that may be relevant to assessing his/her independence and impartiality is never in itself a ground for disqualification; an arbitrator can be disqualified only on the basis of an objective assessment of the undisclosed circumstance.14

Despite being non-binding, the IBA Guidelines may play a role in relation to certain challenges brought before the Court. This is particularly the case where a challenge is based on a circumstance that is among or similar to those contemplated by the IBA Guidelines. Although never a ground for disqualification in itself, the act of failing to make a disclosure that can be considered as necessary may prove decisive in otherwise doubtful cases and justify referring to standards of disclosure, including those of the IBA Guidelines.

A study of challenges filed with the Court during the years 2010-2015 reveals that the IBA Guidelines were referred to in a significant number of challenges. Those references were found in parties' arguments, arbitrators' comments and, more frequently, in the Secretariat's reports to the Court. Reference was made to the IBA Guidelines in 85 (28.4%) of the 299 challenges filed in this period. Although this represents a minority of cases, reliance on the IBA Guidelines as a basis for, or defence against, a challenge is still relatively frequent.

The IBA Guidelines do not cover all grounds on which challenges have been made under the Rules. Of the 85 references to the IBA Guidelines between 2010 and 2015, 26 (30.6%) were negative references mentioning that the situation was not contemplated by the IBA Guidelines. It will be interesting to see whether the inclusion of additional circumstances in the 2014 revision of the IBA Guidelines will lead to an increase in the number of cases in which the Guidelines are referred to.

Finally, as observed in the past in relation to the 2004 version of the IBA Guidelines,15 many of the circumstances over which there may be doubt as to the need to disclose are in the Orange List, which requires disclosure 'depending on the facts of a given case'. Therefore, it will be difficult for the Court to infer from the Guidelines whether or not to accept a challenge in such cases. Hence, the Court tends to attach more importance to its own precedents than to the IBA Guidelines.

4. The procedure

The procedure for challenging an arbitrator was not changed when the Rules were last revised. However, practice relating to communication of the Court's decisions on challenges has recently evolved with a view to ensuring greater transparency. This section will briefly examine the procedure set out in the Rules, while the following two sections will look at the recent changes to the Court's practices.

A challenge against an arbitrator is made by the submission to the Secretariat of a written statement specifying the grounds on which it is based.16 The challenge must be submitted within 30 days of receipt by the challenging party 'of the notification of the appointment or confirmation of the arbitrator', or within 30 days 'from the date when the party making the challenge was informed of the facts and circumstances on which the challenge is based if such date is subsequent to the receipt of such notification'.17

[Page29:]

Challenges are generally examined and decided by the Court at its monthly plenary sessions.18 As is customary at plenary sessions, the matter is submitted to the Court with a report and recommendation from the Secretariat (including references to relevant precedents with similar fact patterns), as well as a report by a Court member, which is circulated in writing beforehand and then presented orally by the rapporteur and discussed at the session.

Before a decision is made, the Secretariat will give the challenged arbitrator, the other members of the arbitral tribunal and the other party(ies) an opportunity to comment on the challenge in writing 'within a suitable period of time' (generally ten days). All comments are gathered and circulated by the Secretariat. Although replies to those comments are generally neither invited nor encouraged, the Court will take into consideration any additional comments the Secretariat happens to receive before the matter is submitted to the Court.19

In this respect, the procedure relating to challenges differs from that relating to the confirmation of arbitrators. While challenged arbitrators have always been given the opportunity to comment on the request for their disqualification prior to its being considered by the Court, prospective arbitrators have until recently been neither informed of objections to their confirmation nor invited to comment on such objections. Only the party(ies) were invited to submit observations, which would then be brought to the Court's attention. The rationale for this practice was that prospective arbitrators are not yet in office and therefore not entitled to comment on requests for their disqualification. Also, the Secretary General and the Court are given wider discretion in relation to confirmations as they are less disruptive than removing an arbitrator once proceedings have commenced. 20 However, this practice has recently met with opposition on the grounds that prospective arbitrators are themselves best placed to respond to objections to their confirmation. Consequently, it has been decided that the prospective arbitrator (but not any other arbitrators nominated, confirmed or appointed in the case) should be informed of any objections to his/her confirmation and allowed to comment on the objection within a suitable period of time.

The Court decides on the admissibility and, as the case may be, on the merits of the challenge at the same session. Admissibility, which is addressed in more detail below, relates to the time when the challenge is submitted. The Secretariat subsequently notifies all concerned whether the challenge has been accepted or rejected.

5. Communication of reasons for the Court's decisions

The Court has recently introduced two related changes to its practice concerning challenges in order to make its decisions more transparent. The first concerns the communication of reasons for decisions, which is the subject of the present section. The second relates to challenges rejected on grounds of inadmissibility, which will be covered in the following section.

Article 11(4) of the Rules provides that '[t]he decisions of the Court as to the appointment, confirmation, challenge or replacement of an arbitrator shall be final, and the reasons for such decisions shall not be communicated'. The ICC Commission on Arbitration and ADR discussed the possibility of removing this provision during the revision process leading to the adoption of the 2012 Rules, but in the end decided to maintain it. The provision affirms the administrative role of the Court when deciding on matters relating to the constitution and composition of arbitral tribunals and aims to remove the risk of decisions being disputed in state courts. It also serves the practical purpose of avoiding the potential delays and costs associated with the preparation of a reasoned decision. Besides, the specific reasons underlying the Court's decision to accept or reject a challenge may be difficult to identify as it is reached after general discussion in which various opinions may be expressed.21

The legitimacy of the rule in Article 11(4) has been acknowledged by the French courts. In the Fairplus case, a first instance court in Paris held [Page30:] that the arbitral institution is under no obligation to provide reasons for its decisions on challenges, which are administrative in nature, and that failure to provide reasons for these decisions is neither a violation of due process nor contrary to public policy.22

However, the rule has been criticised by the proponents of an alternative view and by parties who wish to know the reasons for the decisions. Their arguments are based on several grounds. Firstly, similar decisions made in courts are regularly substantiated. Secondly, without pretending to create a system of precedents analogous to those of state courts, the communication of reasons is likely to help establish standards and enhance the consistency and predictability of the decisions. Although articles by members of the Secretariat reviewing selected decisions have been published from time to time, they are limited by the confidential nature of the work of the Court and can do no more than point to trends and identify general standards considered by the Court, without describing in detail the factual setting justifying individual decisions in specific cases.23 Finally, communication of the reasons for decisions reached by highly experienced arbitration specialists on issues relating to the independence and impartiality is likely to strengthen the arbitral awards, if subsequently attacked on the same grounds in the courts.

Although the default rule remains that reasons will not be provided for decisions on challenges, the Court's practice in this field has evolved in three stages in response to the call for greater transparency in international arbitration.

The first change took place in 2012 when an ICC Commission on Arbitration and ADR task force on arbitration involving states or state entities drafted a report in which it suggested that states resorting to investment arbitration under the ICC Rules and seeking greater transparency may consider derogating from Article 11(4) by including in the relevant investment instrument appropriate wording requiring the Court to provide reasons for decisions on challenges.24 This suggestion answered a request for greater transparency in investor-state dispute settlement on account of the public interest underlying this type of arbitration.

The second development took place in 2014 when the parties in two cases agreed that the Court should provide reasons for challenge decisions. These cases involved state entities but were not investment arbitrations and so did not directly apply the principle set out in the above-mentioned Commission report. They nonetheless showed that: i) public interests similar to those in investor-state arbitration may also be relevant in commercial cases based on contractual dispute resolution clauses and give rise to similar requests made jointly by the parties; and ii) Article 11(4) is a rule from which the parties may derogate.

The third step was the recent decision to open the possibility of derogating from Article 11(4) to all parties. In October 2015, the Court announced that, if requested by the parties, it may communicate reasons for several types of decisions, including those on challenges.25 Once the principle that parties can derogate from Article 11(4) had been allowed for investment arbitrations and other cases involving states, there [Page31:] remained no compelling reason not to allow a similar derogation in commercial arbitration involving only private parties.26

Under the new practice, the communication of reasons is subject to a request by the parties prior to the decision for which reasons are sought.27 The request does not have to meet any particular formal or other requirement; it may be incorporated into the arbitration agreement or any other agreement made prior to the decision for which reasons are sought (e.g. the Terms of Reference), or be made jointly by all parties, or unilaterally by one party and then adhered to by all other parties. The Court retains full discretion to accept or reject the request. However, save exceptional circumstances (such as a situation in which the communication of reasons could result in a breach of confidentiality or another overriding principle under applicable rules) and provided that all parties have unambiguously expressed their consent, it is difficult to imagine the Court rejecting such a request.

In the few months following the announcement of this new practice, there has been one case in which the parties jointly requested that reasons for the decision be communicated and the Court accepted the request. In two other cases, the challenging party requested that reasons be communicated, but the prerequisite of an agreement of all parties to derogate from Article 11(4) could not be met (in one case, one of the parties was not participating in the proceedings).

The Court may make the communication of reasons conditional upon the payment of extra administrative expenses, which will normally not exceed USD 5,000. This will not necessarily require the fixing of an additional advance on costs or immediate reconsideration of the advance on costs, but it may lead the Court to fix the administrative expenses at the end of the case at a higher level than it would otherwise do.

It is worth noting that, for the moment, this change in the Court's practice concerns only the communication of reasons to the parties and arbitrators, not the publication of decisions. However, insofar as it will lead to the drafting of reasons, the possibility that it might be a first step towards publication cannot be excluded. In any event, communicating reasons to parties and arbitrators will in itself make the standards applied by the Court more widely and better known and contribute to greater transparency.

6. Inadmissible challenges

The Court recently implemented a second change of practice concerning challenges rejected as inadmissible.

Article 14(3) of the Rules provides that the Court decides at the same session 'on the admissibility and …, if necessary, on the merits of a challenge'. In the past, the Court informed parties of the rejection of a challenge without indicating whether it was due to inadmissibility or lack of merit. There were several reasons for this. First, the precise starting date of the 30-day period for challenging an arbitrator, i.e. the date on which the challenging party was informed of the circumstances on which the challenge is based, is not always easily identifiable. For instance, where a challenge is based on facts or circumstances that the arbitrator should have disclosed but failed to do so, the Court may be inclined to give the challenging party the benefit of the doubt as to the date on which it became aware of the relevant circumstances and proceed to examine the challenge on its merits.28 Second, in cases where the Court has felt that a challenge was manifestly unmeritorious and deserved to be rejected, it has regarded the analysis of admissibility as unnecessary. Finally, it may be argued that informing parties that a challenge has been rejected for inadmissibility rather than on its merits is contrary to Article 11(4).

It has however recently been decided that whenever the Court finds that the challenge is inadmissible it will so inform the parties when notifying them of its decision, regardless of any agreement of the parties on the communication of reasons. This change of practice was prompted by important policy considerations. First of all, examining and deciding on admissibility and the merits separately seemed more consistent with the wording of Article 14(3) of the Rules, which clearly distinguishes between the two, requiring the Court to decide on both aspects (to the extent consideration of the merits is necessary). Second, the new practice is more procedurally efficient [Page32:] and better reflects the logical sequence followed by the Court. It is appropriate to deal with the often factually complex background of challenges only if their admissibility has been ascertained. Third, informing the parties that a challenge is inadmissible does not violate the rule that reasons should not be communicated as it does not entail the giving of reasons and, besides, the Rules expressly authorise the Court to make a decision on admissibility as distinct from the merits. Fourth, the identification of challenges as inadmissible will help to discourage spurious and dilatory challenges as it is precisely these that are often inadmissible.

There are three main types of challenges that give rise to admissibility issues.

i) Challenges submitted before an arbitrator has been confirmed

At this stage, parties may object to the confirmation of a prospective arbitrator under Article 13(2), but not challenge him/her under Article 14. Were the parties to submit a challenge at this stage, the challenge would not be submitted to the Court under Article 14 and would be dealt with by the Secretary General and the Court under Article 13(2). It is impossible to challenge an arbitrator prior to his/her appointment, as Article 14 only applies following confirmation.

ii) Challenges filed after expiry of the 30-day time limit

The determination of admissibility is generally unproblematic where challenges are based on information that was available to the challenging party when the arbitrator was confirmed or appointed. However, it may be problematic when the information becomes known at a later stage.

iii) Challenges filed after notification of the final award

Such challenges would normally be inadmissible as at this stage the arbitral tribunal has completed its mandate and is functus officio. Hence, any irregularities concerning any members of the arbitral tribunal would have to be invoked in the context of a challenge against the award. However, when arbitrators are challenged after the award has been rendered, it sometimes happens that an application is also made for correction or interpretation of the final award, which causes the proceedings to be reopened for this limited purpose. In cases where no concurrent application for correction or interpretation of the award has been made, the Court has in the past regarded the challenge of the arbitrator as inadmissible. However, parties were then not informed whether the challenge was rejected for lack of admissibility or on its merits. In a case examined by the Court in 2012, the party challenging an arbitrator after notification of the final award was informed by the Secretariat that post-award challenges would not be submitted to the Court as the arbitral tribunal was functus officio. The parties drew the Secretariat's attention to a ruling by a state court that had been requested to set aside the final award, in which it held that the Secretariat's letter did not constitute a valid declaration of inadmissibility since the power to declare a challenge inadmissible is vested in the Court, not the Secretariat. In light of this ruling the Court examined and rejected the challenge, but without indicating whether this was for inadmissibility or lack of merit. In another case, a similar challenge filed after the recent change of practice was likewise submitted to the Court and declared inadmissible. In this case, although no application for correction or interpretation of the final award had been filed, the challenge was submitted before expiry of the 30-day period for doing so. In declaring the challenge inadmissible, the Court considered that: i) when the challenge was filed, the proceedings had not been reopened by an application for correction or interpretation of the award; and ii) when the challenge was decided, even the 30-day period had elapsed, the tribunal was functus and there was no tribunal in place against which a challenge could be addressed.

A different approach has been taken in cases where there is a concurrent application for correction or interpretation of the award. In such circumstances, the Court has generally considered that the proceedings are not closed and the challenge is therefore admissible. This approach was influenced by the Court's practice at the time of examining challenges on their merits, notwithstanding doubts as to their admissibility, and not informing the parties whether a challenge was rejected on grounds of admissibility or on the merits. In a case examined in 2011, the president of the arbitral tribunal was challenged after notification of the final award. The challenging party simultaneously filed an application for correction of the final award, inviting the Secretariat not to transmit it to the arbitral tribunal until the challenge had been [Page33:] decided. Eventually, the president of the arbitral tribunal resigned and the Court accepted the resignation without examining the challenge.29

An application for correction or interpretation of a final award may not modify the tribunal's decision. However, its potential impact on the award justifies the practice of treating a post-award challenge as admissible and examining it on its merits. Nevertheless, if the Court considers the application to have been made in bad faith simply to justify the belated filing of a challenge, under the new practice it may declare the challenge inadmissible and so inform the parties.

7. Commonly invoked grounds for challenges

The broad categories of reasons on which challenges are most frequently based have remained fairly constant in the past decade. They are the arbitrator's relationship to an individual or entity involved in the arbitration; the arbitrator's relationship to an individual or entity related to, but not directly involved in, the arbitration; issue conflicts; and the arbitrator's alleged (mis)conduct in the course of the proceedings.30 Individual challenges may be based on more than one of these grounds. Where a challenge refers to the relationship between the arbitrator and another individual or entity or to an issue conflict, it is typically accompanied by an allegation of the arbitrator's failure to disclose these circumstances.

However, there have been some changes in the situations covered by these broad categories. For instance, where challenges are based on the relationship between an arbitrator and an individual or entity involved in or related to the arbitration, issues such as the parties' advance waiver of the right to invoke any circumstances affecting the arbitrator's independence that may arise in the course of the arbitration (so-called 'advance waivers'), the involvement of barristers from the same chambers as other participants in the proceedings, and relationships with experts and third-party funders are now being invoked. Not surprisingly, these issues have received particular attention in the revised IBA Guidelines. It is interesting to observe that issue conflicts, which were typically associated with investment arbitrations, are now raised in commercial arbitrations.

These changes are a corollary of the changing landscape of international arbitration. Not only has the number of disputes referred to arbitration increased, but the disputes themselves and the users of arbitration have become far more diverse. This has led to an increase in the number of lawyers who act as both arbitrators and counsel, and exposed arbitration to the contrasting practices and characteristics of diverse legal traditions. The nature and diversity of the issues raised as reasons for challenges reflect these developments. Without attempting to be exhaustive, the following analysis looks at some emerging trends that have been observed among the challenges brought before the Court.

A) Relationship between an arbitrator and an individual or entity involved in the arbitration

When a challenge is based on the relationship between the arbitrator and an individual or entity involved in the arbitration, it most often relates to the financial aspects of a professional relationship or access to information otherwise unavailable in the arbitral proceedings. Both aspects may call into question the challenged arbitrator's impartiality and independence.

The following may be cited as examples: the arbitrator's law firm has existing or past engagements with one of the parties in unrelated matters generating overall firm profits and profit per partner; the arbitrator has been previously nominated by the same party or counsel on multiple occasions; in the course of the proceedings the arbitrator joins a new law firm which has financial ties to one of the parties; the arbitrator's current or future law firm has access to information concerning one of the parties which the arbitrator would not otherwise receive in the arbitral proceedings. It is less often a [Page34:] question of a personal relationship between the arbitrator and an individual involved in the arbitration.31

When deciding on challenges based on the relationship between an arbitrator and an individual or entity directly involved in the arbitration, the Court has considered such factors as the degree of involvement between the arbitrator's law firm and the party, whether such involvement is ongoing or concluded, the perceived impact and detail of the information the firm may have and share with the arbitrator, and the extent of the resulting financial ties. Although not decisive, other factors the Court may take into consideration are the stage the arbitral proceedings have reached32 and whether the matter is being decided by a sole arbitrator or a three-member tribunal.33

In light of such factors, the Court has accepted challenges against an arbitrator where: (i) a former counsel of a party joined the arbitrator's law firm; (ii) the arbitrator's new law firm represented the non-challenging party in two ongoing litigations; or (iii) counsel to a party had nominated the arbitrator five times in twelve years. On the other hand, the Court has rejected challenges where: (i) the arbitrator's law firm had previously done limited work for one of the parties and the matters had been closed for a significant period of time; (ii) the arbitrator's law firm acted against the law firm representing one of the parties in a matter unrelated to the arbitration; or (iii) the arbitrators were acting in related arbitrations but this did not lead to asymmetry in the information they had or their access to information.

More recently, new issues have started to be raised to justify challenges based on the relationship between an arbitrator and an individual or entity involved in the arbitration. They concern the relationship between lawyers in barristers' chambers, advance waivers, and an arbitrator's link to expert witnesses. The Court's experience of these issues is discussed below.

i) Barristers' chambers

To date, the Court has received nine challenges based on the fact that the challenged arbitrator and counsel to one of the parties were affiliated to the same barristers' chambers, three of which were accepted. The term 'barristers' chambers', common in jurisdictions such as the United Kingdom, Australia and Hong Kong, refers to a group of self-employed barristers working in the same office space. Earnings from clients are individual, while the administrative costs of the chambers are shared between the barristers. A key difference between this structure and that of a law firm is that, unlike the partners of law firms, barristers in chambers do not share clients or profits. In English practice it is not uncommon for an arbitrator to be from the same chambers as counsel to one of the parties, and this is traditionally not considered as an impediment to the arbitrator's independence and impartiality.34 However, questions have arisen, particularly in jurisdictions less familiar with this practice, concerning the possibility of exchanges of information through shared printers and fax machines or possible exchanges of information between barristers about cases, which may be relevant to the assessment of independence according to the standard laid down in the Rules. As more barristers are nominated as arbitrators [Page35:] and counsel from increasingly diverse jurisdictions come to represent parties in arbitral proceedings, it is quite likely that challenges on such grounds will increase.

When deciding on these challenges the Court has considered several factors, including the parties' awareness of and familiarity with barristers' chambers and the domestic law at the seat of the arbitration and in jurisdictions where the enforcement of an award is likely to be sought.

The first challenge to be accepted involved a claimant from the United Kingdom and respondents (and their counsel) from continental Europe. The place of arbitration was Vienna, Austria, and Austrian law was applicable. The respondents filed a challenge based on two grounds: (i) additional counsel acting for the claimant belonged to the same barristers' chambers as one of the co-arbitrators and this allegedly compromised the co-arbitrator's independence; and (ii) the challenged co-arbitrator had inadvertently sent the parties emails intended only for the other arbitrators which demonstrated bias and prejudgment of the dispute. The respondents referred to Article 3.3.2 of the IBA Guidelines' Orange List in support of the first ground.35

When assessing the merits of the first ground, the Court considered the perception of barristers' chambers in jurisdictions outside the United Kingdom. It noted that their unique structure gave rise to a degree of concern and uncertainty outside the United Kingdom. In light of the respondents' argument that the jurisdictions where an award was likely to be enforced would be unfamiliar with barristers' chambers, it considered the place(s) where enforcement might be sought. It also considered the timing of the additional counsel's appearance and found that the respondents and the arbitral tribunal were unaware of the claimant's additional counsel until the preliminary hearing, which meant they had had no prior opportunity to seek additional information or clarification from the co-arbitrator. On the basis of these considerations, the Court accepted the challenge.

The second challenge to be accepted occurred in a case in which the respondent state party was unfamiliar with the concept of barristers' chambers, while counsel to both parties were from the United Kingdom. The place of arbitration was London and English law was applicable. In accordance with the procedural schedule and approximately a week prior to the hearing on the merits, the claimant informed the respondent and the sole arbitrator of the appearance of additional counsel, a barrister from the same chambers as the sole arbitrator. The respondent first requested that the claimant instruct an alternative barrister, and then asked the sole arbitrator either to exclude the additional counsel from the hearing or to resign. When the sole arbitrator rejected all three requests, the respondent filed a challenge arguing that: (i) the relationship between the sole arbitrator and the additional counsel was impermissible under the laws of the respondent state; (ii) the respondent had not previously participated in proceedings seated in Europe and was unfamiliar with the concept of barristers' chambers; and (iii) the sole arbitrator was younger than the additional counsel36 and the hearing would be held at the barristers' chambers, raising doubts as to the sole arbitrator's independence and impartiality in the arbitration and an appearance of bias. In deciding to accept this challenge, the Court took particular note of the respondent's assertion that a relationship such as that between the arbitrator and the additional counsel was not only unfamiliar, but impermissible in its jurisdiction.

On the other hand, the Court has rejected four challenges in which barristers' chambers were at issue. Situations in which challenges for this reason were rejected included where all parties and their counsel were familiar with the structure and operation of barristers' chambers, where the fact that an arbitrator and counsel to one of the parties are from the same barristers' chambers is unlikely to be regarded as a source of conflict under the applicable law or the law at the seat of the arbitration, and, to a lesser degree, where the concept of barristers' chambers is accepted in countries where enforcement of an award is likely to be sought.

No one factor can be singled out as determinative, however. While the Court has so far rejected all challenges that involved disputes with a place of arbitration in London and likely enforcement jurisdictions familiar with barristers' chambers, other factors could come into play to yield a [Page36:] different result. The Court has also rejected a challenge in which the place of arbitration was outside the United Kingdom and another in which none of the parties' counsel was English, considering that these grounds alone were insufficient to justify the challenge.

ii) Advance waivers

In recent years, the Court has seen an increase in recourse to advance waivers as more law firms have adopted this policy for members of the firm who wish to act as arbitrators. Broadly, an advance waiver may be defined as a declaration 'in relation to possible conflicts of interest arising from facts and circumstances that may arise in the future'.37

Whenever a prospective arbitrator includes in his/her Statement a disclosure that may be considered as an advance waiver, the Secretariat brings this to the parties' attention and invites their comments. Its aim is to satisfy itself that the parties and the arbitrator have the same understanding of the waiver before the Court decides on the confirmation of the prospective arbitrator. When making that decision, the Court considers factors such as the scope and content of the advance waiver, any objections from the parties, and any risks the waiver might cause for the enforcement of the award.

The Court has been inclined to confirm arbitrators whose advance waivers are limited in scope (e.g. to the firm's future representation of a parent company or to representation of a party in matters unrelated to the arbitration), and where the parties do not object to confirmation. On the other hand, the Court has withheld confirmation in cases where a party objected to the content of the advance waiver. On a limited number of occasions, even though the parties did not object to, or even expressly agreed to, the terms of the advance waiver, the Court has also withheld confirmation, considering the scope of the waiver to be too wide.38

After a prospective arbitrator whose Statement included an advance waiver has been confirmed, he or she may be challenged notwithstanding the advance waiver. This is because the parties retain their right to file a challenge at any time in the course of the proceedings and the arbitrator is bound by an ongoing duty of impartiality and independence and the attendant obligation of disclosure. This is not to say that an advance waiver has no effect on the Court's decision on a challenge, however. In doubtful cases, the advance waiver may weigh in favour of rejecting a challenge.

While advance waivers have led to objections at the stage of confirming arbitrators and have sometimes been the reason for not confirming the arbitrator, they have only once been used as the basis for a challenge. This is not to suggest that they are less common than expected, but rather that issues relating to advance waivers are more frequently addressed at the stage of confirming arbitrators and only exceptionally in connection with challenges. Such exceptions would include a party subsequently acquiring new information or a subsequent change in the terms of the advance waiver. It was the former that led to the only challenge based on an advance waiver that has come before the Court.

In the case in question, the advance waiver provided that the arbitrator's law firm could act on matters involving the parties that were unrelated to the arbitration, including contentious matters for or against either party. The respondent, a state party, challenged a co-arbitrator on the following grounds: (i) the arbitrator's law firm was representing and providing advice to parties operating in the sector at issue in the arbitration, had previously represented parties against the respondent in matters in other sectors and had an ongoing practice representing private parties against the respondent; (ii) the arbitrator's law firm had taken a position unfavourable to the respondent in an online publication on an issue in dispute in the arbitration; (iii) the arbitrator had prior and [Page37:] current relations with one of the law firms representing a party in the dispute; (iv) the broad scope of the advance waiver; and (v) the arbitrator's failure to disclose such facts in full. According to the respondent, these circumstances compromised the arbitrator's impartiality and independence and demonstrated bias. The challenging party invoked the IBA Guidelines in respect of the ongoing representation and alleged issue conflict.39

Notwithstanding the waiver, the Court accepted the challenge. It considered a series of factors, including the effect and impact of multiple grounds taken together and the relatively early stage of the proceedings. Rather than focusing on the scope of the advance waiver, the Court considered the extent of the legal representation performed by the arbitrator's law firm and whether or not such representation prevented the arbitrator from meeting his ongoing obligation of impartiality and independence under the Rules.

While this is the only challenge to date in which an advance waiver was at issue, a rise in the number of challenges linked to advance waivers may be expected in the future, as the number of cases involving arbitrators in large law firms that have written advance waivers into their disclosure statements increases and the existing cases involving arbitrators who have made advance waivers progress.

iii) Experts

Seven challenges so far have been based on an arbitrator's relationship with an expert.40 Some objections to the confirmation of arbitrators have been raised on this ground, too. Of the seven challenges, most of which were made in recent years, only one has been successful.41

In the unsuccessful challenges, the challenging party sought to remove the arbitrator on account of: (i) the fact that the arbitrator and the expert were both professors at the same university; (ii) the delay in the proceedings caused by the arbitrator's decision to appoint an expert; (iii) payment of a small fee for an accounting service provided by an expert engaged by the arbitrator; or (iv) the fact that the expert's spouse and the arbitrator were co-owners of a condominium.

In the case in which the challenge was accepted, the co-arbitrator who had been nominated by the claimant was alleged to have a business relationship with the claimant's expert witness as the arbitrator's law firm had retained the same expert in two arbitrations, one of which had recently terminated and the other was still ongoing. According to the respondent, this compromised the arbitrator's independence and impartiality and could cause bias as it was possible that ex parte communications could take place between the co-arbitrator and the expert and that the arbitrator's ability to assess the expert report objectively would be impaired. The arbitrator's relationship with the expert had remained undisclosed for ten weeks following submission of the expert's report, and the challenge was filed four months prior to the hearing in the arbitration. The expert withdrew from the arbitration and was replaced by a colleague who defended the original expert report.

This situation is not contemplated in the IBA Guidelines and the Court had received no similar challenges before. The following considerations led the Court to accept the challenge: the arbitrator's law firm engaged the expert in two matters after he had filed his expert report in the arbitration; it was likely that the expert would still be engaged by the arbitrator's firm when the hearing took place; and the expert's withdrawal made no difference to the challenge as the content of the report remained unchanged despite the involvement of a new expert witness. It could also be considered that there were financial ties between the arbitrator and the expert as a consequence of the expert being engaged by the arbitrator's firm in other matters.

B) Relationship between an arbitrator and an individual or entity related to the arbitration

When a challenge is based on the relationship between the arbitrator and an individual or entity related to the arbitration, it frequently concerns financial ties between the arbitrator's law firm and the related entity. The related entity may belong to the same group of companies as a party, or be a parent company or an affiliate of a party, or hold shares in one of the parties, or otherwise have a financial interest in the outcome of the arbitration.

[Page38:]

The situations invoked and the factors taken into consideration by the Court are similar to those discussed in the previous section dealing with the relationship between an arbitrator and an individual or party involved in the arbitration. For example, if an arbitrator moves from one law firm to another, the new firm may be representing one or more affiliates of a party,42 or the arbitrator's existing firm may be acting for the one or more affiliates of a party in unrelated matters.43 Here, however, the party challenging the arbitrator has to demonstrate two links: on the one hand between the arbitrator and the related individual or entity and on the other hand between the party to the arbitration and the related entity or individual. The Court considers both of these links when deciding on the challenge. Increasing recourse to third-party funding has led to a new category of potential conflicts under this heading.

i) Related entities and individuals

Of the 34 challenges that have been accepted since 2010, 12 were accepted on the basis of alleged financial ties between the arbitrator and an individual or entity involved in or related to the arbitration, and all three of the challenges that were accepted in 2015 were based on this ground. In each instance the challenging party alleged that the financial ties between the arbitrator and the individual or entity linked to one of the parties compromised the arbitrator's independence and impartiality and, on some occasions, created an appearance of bias.

In one case, the claimant challenged the co-arbitrator who had been nominated by the respondent and did so in the final stages of the proceedings when the members of the arbitral tribunal were exchanging drafts of the final award. The claimant observed that the arbitrator was to be appointed to a six-member board of overseers of the respondent's parent company, the board's other members included a representative of the respondent's parent company, and the appointment would lead to significant remuneration for the arbitrator. When disclosing this appointment, to which the parties did not object, the arbitrator failed to mention the remuneration. Upon learning of the remuneration and the composition of the board, the claimant's counsel challenged the arbitrator, arguing that the remuneration and the presence of a representative of the respondent's parent company on the board would undermine the arbitrator's independence and impartiality44 and that the arbitrator was wrong not to disclose that information. The claimant also argued that any award rendered by a tribunal that included that arbitrator would be unenforceable at the place of arbitration. When accepting the challenge, the Court attached particular weight to the ongoing financial link between the arbitrator and the parent company and the objectively significant level of remuneration, as well as the likelihood of an unenforceable award.

The second challenge related to the financial ties between the spouse of one of the co-arbitrators and counsel to one of the parties, which came to light several weeks after the co-arbitrators had been confirmed. The co-arbitrator's spouse was a retired partner of the predecessor firm representing the respondent and continued to hold a part-time, non-client-related position in the firm. When the respondent announced that it had instructed new counsel, the co-arbitrator disclosed the link between his spouse and the law firm that had previously been acting for the respondent, referring in his disclosure to the IBA Guidelines.45 He initially offered to resign if requested to do so, but did not in fact do so despite a request from the claimant. On a previous occasion, the Court had rejected a challenge where the spouse of the co-arbitrator nominated by the respondents occasionally acted as legal consultant to her husband's law firm and worked on several projects involving state entities related to one of the respondents. However, that case could be distinguished as a third-party was paying for the consulting work and the project had lasted six months and had ended two years prior to the challenge. In the case in question the Court attached importance to the fact that the situation was ongoing, that the spouse was in the same [Page39:] office as the individual lawyers who were working on the case, and that the proceedings were still at a relatively early stage.46

In the third case, a shareholder of the respondent belonged to a group of companies which the arbitrator's law firm represented and the guarantor of the respondent's contractual obligations in dispute in the arbitration also belonged to the same group. The arbitrator's law firm had been representing companies within the group for seven years, and all work in this connection was performed by one department and generated annual revenue representing less than 1% of the firm's income. The arbitrator was not a member of the department performing that the work and offered assurances that he had no contact with it.47 The proceedings were at a relatively early stage as the Terms of Reference had not yet been signed. Although the Court had not previously encountered such a situation in the context of a challenge, it had done so when confirming arbitrators. Its general approach was not to confirm arbitrators whose law firms had ongoing relationships with a group of companies to which a party belonged, regardless of the significance of the financial relationship at the time of the objection to the arbitrator's confirmation.48 This approach was taken into account, as was the significance of the outcome of the arbitration for the guarantor (the guarantor would be held jointly and severally liable for any award against the respondent). As the group of companies to which the arbitrator's law firm gave legal advice had both an ownership interest in one of the parties and a financial interest in the outcome of the dispute, the challenge was accepted.

ii) Third-party funding

Third-party funding in international arbitration has received considerable attention in recent years. A third-party funder is defined in the IBA Guidelines as 'any person or entity that is contributing funds, or other material support, to the prosecution or defence of the case and that has a direct economic interest in, or a duty to indemnify a party for, the award to be rendered in the arbitration'.49

The existence of a third-party funder adds a layer of complexity to the relationship among the players in the arbitral process and may give rise to doubts as to the arbitrators' independence. Whether parties should disclose the existence or identity of third-party funders, the structure and content of funding arrangements and the extent of the third-party funder's involvement in the arbitration are questions that have elicited differing reactions from the various players involved. In a number of non-ICC cases, tribunals have requested the parties to disclose such information.50

In 2013 the Court received its first - and, to date, only - challenge against an arbitrator on the basis of an alleged relationship with a third-party funder. The challenge was brought by the respondent after the final award had been notified to the parties, and at the same time an application was made for the correction of the final award.51 The respondent asserted that a third party allegedly funding the claimant in the arbitration had an ongoing financial relationship with the law firm of one of the arbitrators in an unrelated case. The claimant denied that the arbitration was financed by a third-party funder. Prior to filing the challenge, the respondent had requested the [Page40:] members of the arbitral tribunal to provide information and make specific disclosures on the relations between themselves or their respective law firms and the alleged third-party funder. After receipt of the arbitral tribunal's responses, the respondent filed its challenge against an arbitrator who, it alleged, failed to disclose that his law firm and the third-party funder were linked in an unrelated investment treaty dispute. The challenge was rejected due to the limited role of the third-party funder and the specific facts of the case: the third-party funder had been engaged to facilitate settlement negotiations between the parties, which never took place, and the arbitrator's law firm had a role other than that of counsel in the investment treaty dispute in which the third-party funder was involved.52

Other situations involving third-party funding that could give rise to conflicts are when an arbitrator (i) is nominated several times in unrelated cases funded by the same third-party funder (particularly in situations where the funder is involved in such nominations); (ii) has a role in the corporate structure or operation of the third-party funder (e.g. as board member or consultant); or (iii) has expressed an opinion that could be interpreted as demonstrating bias against third-party funding.53

C) Issue conflicts

Issue conflicts result from views expressed or positions taken by arbitrators in academic publications, when acting as counsel in other proceedings, or when rendering prior arbitral awards.54 Such views or positions are alleged to conflict with issues to be decided in the dispute at hand. Although more commonly associated with investment treaty arbitration, challenges based on issue conflicts have arisen in certain areas of commercial arbitration, particularly in markets where identical or similar legal or factual issues arise frequently. As a general matter, challenges based on this ground are likely to be unsuccessful, especially if this is the sole basis for the challenge. However, there have recently been two successful challenges due to issue conflicts.

In the first case, the respondent challenged the co-arbitrator nominated by the claimant, alleging that he lacked impartiality and independence because: (i) he failed to disclose his role as counsel in a case in the state courts involving the same legal issues several years prior to the arbitration; (ii) his role as counsel in the court case and his comments on that case at the arbitration hearing indicated he had prejudged the issue; and (iii) the questions the co-arbitrator asked of witnesses at the hearing showed that he was biased in favour of the claimant. For one of the parties, the court case constituted an important legal precedent for calculating the amount if its claim were to succeed, and each party had submitted expert witness testimony on the effect and applicability of the precedent. The two facts noted, among others, by the Court when accepting the challenge were that the questions asked by the challenged arbitrator at the hearing demonstrated prejudgment of the applicability of the state court decision and that the arbitrator had failed to disclose to the parties his role as counsel in the court case despite being aware of the impact the decision could have on the arbitration.

The second challenge was similarly due to the arbitrator's role as counsel in state court proceedings, but here related to the specific legal position taken by the arbitrator. The challenge was made by the respondent against the co-arbitrator nominated by the claimant. The respondent alleged that the arbitrator and his law firm had repeatedly defended the same position as that taken by the claimant in the arbitration. The dispute related to the interpretation of a contract in a highly regulated industry. The respondent had previously objected to the arbitrator's confirmation for the same reason, and subsequently discovered new information relevant to the arbitrator's disqualification, which led to the challenge. The arguments put forward by the respondent were that: (i) the arbitrator's repeated defence of a key issue in the arbitration suggested prejudgment of that issue (were he to advocate or agree to a different position, this could cause him to lose clients);55 (ii) in his Statement the arbitrator had failed to disclose his role as counsel in court proceedings or the fact that he was linked to a professional association that represented the [Page41:] claimant; and (iii) the objectionable tone of the arbitrator's comments on the challenge revealed the extent of the arbitrator's alleged lack of impartiality and independence. The Court considered that the new information introduced by the respondent demonstrated the existence of an issue conflict: the arbitrator had on several previous occasions expressly advocated the same stance on an issue central to the arbitration.

The Court has however rejected challenges based on issue conflicts alleged to result from prior academic writings. One such example is a case where an arbitrator had written an academic article criticising a law on which one of the parties relied when objecting to the tribunal's jurisdiction; however, the article had been written several years prior to the arbitration.56

8. Conclusion

In the changing landscape of arbitration today it is important to be rigorous in assessing impartiality and independence. This is not only one of the essential missions of arbitral institutions but also a key to the continuing success of arbitration and users' confidence in the process.

In the past five years, the traditional grounds for challenges have expanded to include potential conflicts of interest caused by barristers from the same chambers acting as arbitrator and counsel in the same arbitration, advance waivers designed to allow lawyers from large law firms to act as arbitrators without compromising the firm's ability to obtain future mandates, and third-party funders with a stake in the outcome of proceedings. Like the traditional grounds for challenges, these new situations may raise questions of financial ties, access to information or prejudgment of matters in dispute. The criteria formerly used to assess challenges remain relevant but have had to be adapted to these new circumstances.

The Court's practice of assessing challenges on a case-by-case basis gives it the flexibility to adapt to such new circumstances. At the same time, the Court is aware of the importance of creating predictability in the treatment of challenges and discouraging the use of challenges as a delaying tactic. Its recent change of practice allowing it to provide parties with reasoned decisions on challenges at their joint request and to inform parties when a challenge is rejected for reasons of inadmissibility confirms its commitment to these goals.

1
See LCIA Rules, Art. 10; ICDR Rules, Arts. 8-9; SIAC Rules, Arts. 11-13; Swiss Rules, Arts. 9-11; SCC Rules, Art. 15.

2
Rule 9 of the ICSID Arbitration Rules provides that a proposal for the disqualification of an arbitrator shall be decided by the other members of the arbitral tribunal or, if they cannot agree, by the Chairman of the ICSID Administrative Council.

3
See e.g. Art. 64 of the 2010 NAI Arbitration Rules, which gave a Dutch judge jurisdiction over challenges if the place of arbitration was in the Netherlands.

4
L. Malintoppi & A. Carlevaris, 'Challenges of Arbitrators, Lessons from the ICC' in C. Giorgetti, ed., Challenges and Recusals of Judges and Arbitrators in International Courts and Tribunals (Brill/Nijhoff, 2015) 141. The increase in the number of challenges from 40 to 60 between 2005 and 2014 is comparable with the increase in the number of cases registered (from 521 in 2005 to 791 in 2014) and arbitrators confirmed or appointed (from 948 in 2005 to 1327 in 2014). A total of 12,391 arbitrators were appointed or confirmed in the period 2006-2015.

5
The number of prospective arbitrators who are not confirmed has also been increasing: from 27 in 2006 to 34 in 2011, 46 in 2013 and 48 in 2014. However, the figure dropped to 32 in 2015. Interestingly, while most non-confirmations occur in cases where the prospective arbitrator has submitted a qualified Statement that has given rise to objections, there have been a significant number of cases (9 in 2013, 11 in 2014) in which the Court decided not to confirm an arbitrator who had not made any disclosures.

6
Articles 3(5) and 4(5) deal with challenges, respectively in UNCITRAL and non-UNCITRAL cases, in almost identical terms: the Court shall decide on the challenge 'at a Special Plenary Session after the Secretariat has afforded an opportunity for the arbitrator concerned, the other party or parties and any other members of the arbitral tribunal to comment in writing within a suitable period of time. Such comments shall be communicated to the parties and to the arbitrators, before being submitted to the Court.'

7
These cases do not seem to be on the rise: of the 17 challenges filed in ad hoc cases between 2006 and 2015, 3 were filed in each of the years 2007, 2011 and 2012, 5 in 2008, 1 in 2010 and 2 in 2014.

8
A.M. Whitesell, 'Independence in ICC Arbitration: ICC Court Practice concerning the Appointment, Confirmation, Challenge and Replacement of Arbitrators', in Independence of Arbitrators, 2007 Special Supplement, ICC International Court of Arbitration Bulletin, 7 at 36.

9
See: http://www.iccwbo.org/Products-and-Services/Arbitration-and-ADR/Arbitration/Practice-notes,-forms,-checklists/

10
The guidance lists the following circumstances: 'The prospective arbitrator or the arbitrator or his or her law firm represents or advises, or has represented or advised, one of the parties or one of its affiliates. The prospective arbitrator or the arbitrator or his or her law firm acts or has acted against one of the parties or one of its affiliates. The prospective arbitrator or the arbitrator or his or her law firm has a business relationship with one of the parties or one of its affiliates, or a personal interest of any nature in the outcome of the dispute. The prospective arbitrator or the arbitrator or his or her law firm acts or has acted on behalf of one of the parties or one of its affiliates as director, board member, officer, or otherwise. The prospective arbitrator or the arbitrator or his or her law firm is or has been involved in the dispute, or has expressed a view on the dispute in a manner that might affect his or her impartiality. The prospective arbitrator or the arbitrator has a professional or close personal relationship with counsel to one of the parties or the counsel's law firm. The prospective arbitrator or the arbitrator acts or has acted as arbitrator in a case involving one of the parties or one of its affiliates. The prospective arbitrator or the arbitrator acts or has acted as arbitrator in a related case. The prospective arbitrator or the arbitrator has in the past been appointed as arbitrator by one of the parties or one of its affiliates, or by counsel to one of the parties or the counsel's law firm.'

11
General Standard 2(b) requires arbitrators to refuse to act 'if facts or circumstances exist, or have arisen since the appointment, which, from the point of view of a reasonable third person having knowledge of the relevant facts and circumstances, would give rise to justifiable doubts as to the arbitrator's impartiality or independence ...' (emphasis added). A similar standard is set in Article 12 of the UNCITRAL Model Law on International Commercial Arbitration. A subjective test is applicable to the identification of the circumstances to be disclosed (see General Standard 3(a): 'If facts or circumstances exist that may, in the eyes of the parties, give rise to doubts as to the arbitrator's impartiality or independence, the arbitrator shall disclose such facts or circumstances to the parties, the arbitration institution or other appointing authority ...' (emphasis added); see also Explanation to General Standard 3 at (c): 'any challenge should only be successful if an objective test, as set forth in General Standard 2 above, is met').

12
The following language is used in the Statement: 'Acceptance with disclosure: I am impartial and independent and intend to remain so. However, mindful of my obligation to disclose any facts or circumstances which might be of such a nature as to call into question my independence in the eyes of the parties or that could give rise to reasonable doubts as to my impartiality, I draw attention to the matters below and/or on the attached sheet.'

13
See IBA Guidelines, foreword: 'It is also essential to reaffirm that the fact of requiring disclosure - or of an arbitrator making a disclosure - does not imply the existence of doubts as to the impartiality or independence of the arbitrator. Indeed, the standard for disclosure differs from the standard for challenge.' See also Explanation to General Standard 3 at (c): 'A disclosure does not imply the existence of a conflict of interest. … It is hoped that the promulgation of this General Standard will eliminate the misconception that disclosure itself implies doubts sufficient to disqualify the arbitrator, or even creates a presumption in favour of disqualification.'

14
This approach is reflected in the Court's guidance, which however also states that failure to disclose will be considered by the Court when assessing whether an objection to confirmation or a challenge is well founded.

15
A.M. Whitesell, supra note 8 at 36.

16
Article 14(1) of the Rules.

17
Article 14(2) of the Rules.

18
In cases of particular urgency, challenges may be submitted to a Committee of the Court. Committee meetings are held weekly.

19
In particularly controversial cases the Secretariat may exceptionally extend the original time limit for comments or request a second round of comments. In deciding whether to do so, it will be keen to avoid undue delays.

20
Under Article 13(2) of the Rules, the Secretary General may confirm arbitrators nominated by the parties or pursuant to their particular agreements, provided that they have submitted a Statement without disclosures or that any disclosure has not given rise to objections. The Secretary General refers any controversial cases to the Court, which alone is empowered not to confirm arbitrators.

21
A.M. Whitesell, supra note 8 at 39: 'This mechanism therefore gives scope for the expression of several strands of thinking in reaching a decision without necessarily requiring a single line of reasoning.'

22
Tribunal de grande instance Paris, 19 Dec. 2012, Fairplus Holding et La Valaisanne v. CCI, The Paris Journal of International Arbitration, 2013, 455.

23
J. Fry & S. Greenberg, 'The Arbitral Tribunal: Applications of Articles 7-12 of the ICC Rules in Recent Cases' (2009) 20:2 ICC International Court of Arbitration Bulletin 12; A.M. Whitesell, supra note 8, who stresses that the Court and its Secretariat endeavour to raise awareness of the Court's practice not only through publications, but also through conferences, training courses, research and liaison with other institutions, associations and governments.

24
'The Parties agree that the International Court of Arbitration shall communicate the reasons for its decisions on the disputed confirmation, non-confirmation, challenge, and replacement of arbitrators, in derogation of Article 11(4) of the ICC Rules of Arbitration.' (ICC Commission Report, States, State Entities and ICC Arbitration, § 21.)

25
See 'ICC Court to communicate reasons as a new service to users', 8 Oct. 2015, http://www.iccwbo.org/News/Articles/2015/ICC-Court-to-communicate-reasons-as-a-new-service-to-users/. The other decisions covered by this change are decisions to initiate replacement proceedings and subsequently to replace an arbitrator under Article 15(2) of the Rules, decisions on the consolidation of arbitrations under Article 10 of the Rules, and decisions on the prima facie assessment of jurisdiction under Article 6(4) of the Rules. The relevant part of the Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration, entitled 'Communication of Reasons for Court Decisions', reads as follows: '11. Article 11(4) of the Rules provides that the Court shall not communicate the reasons for its decisions as to the appointment, confirmation, challenge or replacement of an arbitrator. However, upon request of all the parties, the Court may communicate the reasons for (i) a decision made on the challenge of an arbitrator pursuant to Article 14 of the Rules, and (ii) a decision to initiate replacement proceedings and subsequently to replace an arbitrator pursuant to Article 15(2) of the Rules. The Court may also, upon request of all the parties, communicate the reasons for decisions pursuant to Articles 6(4) and 10 of the Rules. 12. Any request by a party for the communication of reasons must be made in advance of the relevant decision in respect of which reasons are sought. For decisions pursuant to Article 15(2) of the Rules, the parties are to address their request to the Court when they are invited to comment pursuant to Article 15(3). 13. The Court has full discretion to accept or reject a request for communication of reasons. The Court may subject the communication of reasons to an increase of the administrative expenses, normally not exceeding US$ 5,000.'

26
A. Carlevaris, 'The Bounds of Party Autonomy in Institutional Arbitration' in A. Carlevaris, L. Lévy, A. Mourre, E.A. Schwartz, eds., International Arbitration Under Review, Essays in Honour of John Beechey (ICC, 2015) 122.

27
Decisions to replace arbitrators pursuant to Article 15(2) of the Rules constitute an exception as the request may be made after the Court has decided to initiate replacement proceedings, when the parties are invited to comment pursuant to Article 15(3). This exception is explained by the fact that the initiative here lies with the Court and the parties are informed of the replacement proceedings only after the Court has made its initial decision.

28
J. Fry, S. Greenberg, F. Mazza, The Secretariat's Guide to ICC Arbitration (ICC, 2012) at 177-179.

29
The claimant had requested that the Court reject the challenge before examining the president's resignation, since the resignation might be regarded as an admission of the conflict of interest invoked by the respondent when challenging the final award in the state courts.

30
Challenges of this type are not considered in depth in this article. Many of these challenges are made for dilatory purposes, as evidenced by their timing (e.g. after a partial award or a procedural order). Examples of circumstances that have been invoked in support of challenges of this kind (all of which were rejected) include an arbitrator's decision to modify the procedural schedule or issue numerous procedural orders in the course of the proceedings, and an arbitrator's alleged mental or physical state during the proceedings.

31
More than ten years ago, the Court rejected a challenge on the basis of facts that arose between the merits and quantum phases of the proceedings, when the son of the co-arbitrator nominated by the respondents started working in one of the offices of the respondents' law firm (in which none of the lawyers working on the arbitration were located).

32
The Court may be more hesitant to accept a challenge in proceedings that have reached an advanced stage and the challenge could be a delaying tactic. For instance, it has in the past rejected a challenge against an expert who provided an annual accounting service to one of the co-arbitrators, given that the challenge was filed three weeks before the final hearing when the parties exchanged lists of experts and witnesses for cross-examination (despite the fact that such experts and witnesses had submitted their written reports earlier in the proceedings).

33
The Court has, for instance, accepted a challenge against a sole arbitrator where her law firm had rendered legal services to an affiliate of the non-challenging parties on several occasions in the past.

34
Acknowledging the concern over barristers from the same chambers acting as arbitrators and counsel in the same proceedings, the English Bar Council issued an 'Information Note regarding barristers in international arbitration' in July 2015. The Information Note provides guidance for barristers acting as advocates and as arbitrators, noting that: 'We recognise that English and Welsh barristers are now involved in disputes ranging far outside the traditional range of UK law disputes. The parties to such disputes may not always be familiar with the particular way the English and Welsh bar is structured. … Barristers should be sensitive to the possible concerns of clients, and should take such steps as are properly open to them to address such concerns. It is also the case that different types of disputes require different approaches, and barristers should remain alive to the varying expectations, backgrounds and cultures of those who utilise arbitration. Many arbitrations involving English and Welsh barristers may have little or no connection with England and Wales or English and Welsh law. … Such arbitrations may require a different approach from that which would be involved in a purely domestic setting.' The Information Note includes a series of practical scenarios that may arise in an arbitration in which an arbitrator and counsel are from the same chambers, and provides suggestions on how these scenarios may be addressed. With respect to barristers acting as arbitrators, the Note focuses on disclosure obligations, encouraging barristers to 'consider what steps should be taken to ensure early disclosure at the time of appointment, bearing in mind all relevant obligations of confidentiality'. In this respect, the English Bar Council recommended early identification of counsel and prompt notification of any changes in counsel.

35
Orange List 3.3.2: 'The arbitrator and another arbitrator, or the counsel for one of the parties, are members of the same barristers' chambers.'

36
The age difference between a challenged arbitrator and counsel has also arisen in the context of supervisor-student relationships in prior challenges. In one case, an arbitrator was challenged as he had supervised the doctoral theses of the two sons of the counsel who had appointed him. The sons worked for the same law firm as their father but did not participate in the arbitration. The Court rejected the challenge. In another case, the Court rejected a challenge against a co-arbitrator based on his failure to disclose that he had supervised the thesis of one of the lawyers acting for the respondent.

37
IBA Guidelines, 3(b), the full text of which reads: 'An advance declaration or waiver in relation to possible conflicts of interest arising from facts and circumstances that may arise in the future does not discharge the arbitrator's ongoing duty of disclosure under General Standard 3(a).' The Explanation to Guideline 3 at (b) indicates as follows: 'The Guidelines, however, do not otherwise take a position as to the validity and effect of advance declarations or waivers, because the validity and effect of any advance declaration or waiver must be assessed in view of the specific text of the advance declaration or waiver, the particular circumstances at hand and the applicable law.'

38
In one instance, the confirmation of an arbitrator was considered at a plenary session of the Court. The prospective president of the arbitral tribunal, nominated jointly by the co-arbitrators, disclosed that other lawyers of his firm had worked on cases in which they represented parties against the claimant and that he could not hinder his colleagues in certain offices of the firm from acting for or against any of the parties and could act as president only if both parties accepted this condition, which they did. The Court decided not to confirm the nomination.

39
Orange List, 3.4.1: 'The arbitrator's law firm is currently acting adversely to one of the parties, or an affiliate of one of the parties.' Orange List, 3.5.2: 'The arbitrator has publicly advocated a position on the case, whether in a published paper, or speech, or otherwise.'

40
Three of the seven challenges were filed in the same case.

41
In another case in which a challenge was accepted, the relationship between the arbitrator and an expert was invoked and considered by the Court, but its decision to accept the challenge turned principally on the relationship between the arbitrator and his new firm and the failure to make a full disclosure.

42
In one case, a co-arbitrator was challenged due, among other things, to the relationship between his new firm and the consulting firm of which the tribunal-appointed expert was a partner and his incomplete disclosure of certain of these attorney-client relationships.

43
In one case the Court declined to confirm an arbitrator whose firm represented affiliates of both parties in approximately equal shares. The Court considered that the number of instances of representation was high and that there was no guarantee that the representation of the parties would remain equally balanced if the arbitrator were confirmed.

44
It is worth mentioning that at the outset of the arbitration the claimant's counsel had objected to the arbitrator's nomination on the grounds of less meaningful financial ties, prior service on the board of a company that held a stake in the claimant and alleged links to the claimant's management.

45
Orange List, 3.3.5: 'A close family member of the arbitrator is a partner or employee of the law firm representing one of the parties, but is not assisting with the dispute.'

46
The number of challenges related to the appearance of additional counsel in proceedings may be set to fall as arbitral tribunals increasingly specify in the Terms of Reference that such counsel may be excluded in certain circumstances. Cf. IBA Guidelines on Party Representation in International Arbitration: '5. Once the Arbitral Tribunal has been constituted, a person should not accept representation of a Party in the arbitration when a relationship exists between the person and an Arbitrator that would create a conflict of interest, unless none of the Parties objects after proper disclosure. 6. The Arbitral Tribunal may, in case of breach of Guideline 5, take measures appropriate to safeguard the integrity of the proceedings, including the exclusion of the new Party Representative from participating in all or part of the arbitral proceedings.'

47
Reference was made to a 'Chinese wall' preventing such contact. In a previous challenge in similar circumstances in 2013, the respondents had alleged that the co-arbitrator could have access to information not otherwise available in the arbitration even if the firm had established a 'Chinese wall'. The Court accepted the challenge, rejecting the idea that a 'Chinese wall' guarantees an arbitrator's independence or that a dividing line could be drawn between offices in a law firm (the partners representing the respondents' affiliates were in offices in a country neighbouring the country where the co-arbitrator was located).

48
This practice differs from the disclosure standards of the IBA Guidelines, which seek to differentiate between significant and non-significant commercial relationships depending on the Application List.

49
See Explanation to General Standard 6 at (b), which states that, due to their direct economic interest in the outcome of the case, third-party funders (and insurers) 'may be considered to be the equivalent of the party'.

50
In June 2015, the ICSID tribunal in Muhammet Çap & Sehil Insaat Endustri ve Ticaret Ltd. Sti. v. Turkmenistan ordered the claimants to disclose the identity of their third-party funder and the terms of the funding agreement (ICSID Case No. ARB/12/6, Procedural Order No. 3 of 12 June 2015). See also South American Silver v. Bolivia, PCA Case No. 2013-15, Procedural Order No. 10 of 11 Jan., 2016 (the arbitral tribunal ordered the disclosure of the 'name or names of the third-party funder(s)', but rejected the request to 'produce for the record the financing agreement between the Claimant and the third-party funder').

51
See section 6 above on issues of admissibility raised by challenges made at such a late stage.

52
A partner from the arbitrator's law firm acted as administrator of two companies involved in the arbitration that were subject to bankruptcy proceedings.

53
In RSM Production Corporation v. Saint Lucia (ICSID Case No. ARB/12/10), decision on St Lucia's request for security for costs, 13 Aug. 2014, an arbitrator who had expressed a critical view on the practice of third-party funding in an assenting opinion was subsequently (unsuccessfully) challenged by the funded party. The basis for the challenge in this case was bias and lack of impartiality rather than lack of independence.

54
Orange List, 3.1.5: 'The arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration on a related issue involving one of the parties, or an affiliate of one of the parties.' For a general discussion of issue conflicts in the investment treaty context see e.g. M. Hwang & K. Lim, 'Issue Conflicts in ICSID Arbitrations', TDM, Vol. 8-4, Dec. 2011.

55
The respondent referred to the IBA Guidelines' Orange List, 3.5.2: 'The arbitrator has publicly advocated a position on the case, whether in a published paper, or speech, or otherwise.'

56
In the same case, the Court accepted a simultaneous challenge against another arbitrator. The facts were the following: a state entity party to the proceedings alleged that the arbitrator had given expert witness evidence on a legal issue that was relevant to the case at hand. The party against which the witness evidence was proffered was another state entity from the same state as the challenging party. In accepting the challenge, the Court took into account the fact that the expert testimony in the other case concerned certain facts that were related to those of the arbitration in which the arbitrator was challenged.