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S6 | MONDAY, AUGUST 7, 2017 | Alternative Dispute Resolution | NYLJ.COM
Navigating the Standards Used to Assess Arbitrator Bias in International Arbitration
BY CHRISTOPHER RYAN, JON GREENBLATT
AND HENRY WEISBURG
Acommon concern among companies engaged in international commerce is the fear of suing or being sued “over there”—a euphemism used to describe courts in a foreign jurisdiction. Whether arising from the threat of discovery and punitive damages, or questions of corruption and bias within a country’s judiciary, this fear typically mani- fests itself in a belief that “outsiders” will be treated worse than locals, thereby leading to an uneven playing field. Companies, therefore, routinely seek ways to resolve disputes that avoid local courts.
Arbitration has emerged as a leading form of resolving both international commercial and investment disputes. It allows companies to have control over the dispute resolution process, including the use of a neutral forum
CHRISTOPHER RYAN, JON GREENBLATT, and HENRY WEISBURG are partners in the international arbitra- tion group at Shearman & Sterling.
and selection of arbitrators. While such party autonomy is a benefit of arbitration, the selec- tion of arbitrators by the parties can raise similar questions of dependence and partial- ity that cause parties to view local courts with skepticism. The participants in the interna- tional arbitral system—e.g., arbitral institu- tions, bar associations, governments—have recognized the potential harm that could arise from unchecked concerns over arbitrator bias and, as a result, a web of overlapping rules and ethical guidelines governing arbitrators have emerged.
Efforts to Address Arbitrator Bias
Participants in the arbitral process have adopted rules, guidelines, and law that address the substance and timing of arbitra- tor disclosures, describe which relationships may give rise to potential conflicts, and permit parties to challenge awards on the grounds of bias. Given the existence of such widespread regulation, the question is not whether there are sufficient safeguards in place to protect against arbitrator bias, but how each layer of regulation interacts and how each can be reasonably satisfied.
Arbitral institutions, for example, require arbitrators to disclose actual or potential con- flicts prior to accepting appointments and impose continuing disclosure obligations on arbitrators over the life of the arbitration. The International Chamber of Commerce (ICC), for example, requires that “[e]very arbitrator must be and remain impartial and indepen- dent of the parties involved in the arbitra- tion.” International Chamber of Commerce, Rules of Arbitration (2017), Art. 11. To assess a potential arbitrators suitability, the ICC requires each arbitrator nominee to submit a written statement setting forth 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. These requirements apply before appointment or confirmation, as well as dur- ing the arbitration. Other leading institutions, like the American Arbitration Association, London Court of International Arbitration, and Stockholm Chamber of Commerce, have simi- lar requirements. See American Arbitration Association, Commercial Arbitration Rules (2013), Rule R-17; London Court of Arbitra-
tion, Arbitration Rules (2014), Rules 5.3-5.5; Arbitration Institute of the Stockholm Cham- ber of Commerce, Arbitration Rules (2017), Article 18.
Advisory groups, such as the International Bar Association (IBA), have released guide- lines on conflicts of interest and arbitrator ethics that often play a prominent role in inter- national arbitrations. Indeed, the IBA Guide- lines on Conflicts of Interest in International Arbitration, which segregate various relation- ships into different categories that range from presumptively permissible (Green Light) to non-waivable conflicts (Red Light), are viewed by many in the arbitral community as the standard against which potential conflicts are to be measured. In 2016, the ICC added to the available resources by issuing a “guid- ance note” to assist arbitrators in identifying potential conflicts of interest and disclosure requirements in international arbitrations.
In practice, such guidelines are non-binding and unenforceable. While they may help iden- tify situations that raise questions about an arbitrator’s independence and impartiality, they are not determinative. Moreover, the standards for disclosure and assessing poten- tial conflicts may vary depend- » Page S11
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