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Guidance Note Issued by ICC on Disclosure of Conflicts by ArbitratorsMarch 3, 2016
The International Chamber of Commerce (“ICC”) International Court of Arbitration confirmed that it has adopted a guidance note to assist arbitrators on identification of conflict of interest and disclosure requirements in international arbitrations. The note, which forms part of the Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration, sets the standards on arbitrator independence and impartiality by detailing the circumstances under which disclosure of such potential conflict should be considered. This facilitates arbitrators’ better understanding of the best practice on disclosure of conflicts and ensures a greater transparency on disclosure of potential conflicts.
Circumstances which may require disclosure
On the basis that parties have a legitimate interest to be fully informed of all facts regarding an arbitrator, and that all arbitrators acting in ICC arbitrations “have the duty to act at all times in an impartial and independent manner” (Articles 11 and 22(4)), the note provides the following guidance as a non-exhaustive list of circumstances under which parties may consider that an arbitrator’s independence or impartiality may be in doubt:
- any representation or advice provided by the arbitrator or his or her law firm to one of the parties or its affiliates;
- any representation by the arbitrator or his or her law firm against one of the parties or its affiliates;
- any business relationship with one of the parties or its affiliates, or a personal interest of any nature in the outcome of the dispute;
- any relationship with an entity having a direct economic interest in the dispute or an obligation to indemnify a party for the award, e.g. third party funders;
- any representation by the arbitrator or his or her law firm on behalf of one of the parties or its affiliates as director, board member, officer, or otherwise;
- any involvement in the dispute, or having expressed a view on the dispute in a manner that might affect the arbitrator’s impartiality;
- any professional or close personal relationship with counsel to one of the parties or the counsel’s law firm;
- whether the arbitration acts or has acted as arbitrator in a related case or a case involving one of the parties or one of its affiliates; and
- any previous appointment of the arbitrator 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.
In those circumstances, an arbitrator should make reasonable enquiries and assess whether to make a disclosure in the Statement of Acceptance, Availability, Impartiality and Independence (or at a later stage as appropriate). Nonetheless, a disclosure by an arbitrator does not imply the existence of a conflict. In the event of any challenge by the parties, the Court will make an assessment on the suitability and there could be potential consequences of failure to disclose.
The ICC’s decision to publish names and nationality of the members of the tribunal sitting on ICC cases, as well as the nature of their appointments, will also greatly improve transparency.
Comparison with the IBA’s Guidelines
Similar to the International Bar Association’s (“IBA”) Guidelines on Conflicts of Interests in International Arbitration (“IBA’s Guidelines”) which was amended and adopted by the IBA in 2014, the ICC’s note also recognize the roles of third party funders by requiring an arbitrator to make an assessment on potential disclosure. However, unlike the IBA’s Guidelines, the ICC does not require a party to disclose the fact of any third party funding to the tribunal and other parties.
Given the increasing numbers of arbitrators who are also practising in international law firms or barristers specialized in international arbitration, both the IBA’s Guidelines and ICC’s note make clear that an arbitrator bears the identity of the law firm and require an arbitrator to consider disclosure where such law firm may have acted for or against one of the parties.
As a result of the increasing use of advance waivers regarding potential conflicts, both the IBA’s Guidelines and the ICC’s note also stress that arbitrators have an ongoing duty to disclose potential conflicts during the duration of the arbitration; the arbitrators thus cannot rely on advance declarations or waivers to discharge this ongoing obligation.
The IBA’s Guidelines are comprehensive and set out the General Standards, which consist of seven principles which an arbitrator should adhere to in order to avoid the occurrence of material conflict of interest, and the Application Lists. Similar to the ICC’s note, the Application Lists provides useful practical examples which are categorized into the following lists of non-exhaustive situations:
- Non-waivable Red List of situations - circumstances under which severe conflicts of interests exist and an arbitrator cannot act irrespective of any objection by the parties;
- waivable Red List of situations - circumstances under which conflicts of interests exist and an arbitrator can only act with the parties’ express consent;
- Orange List of situations - circumstances under which conflicts of interest could exist which may require disclosure; and
- Green List of situations - circumstances under which no actual or apparent conflicts of interest exist.
Both the IBA’s Guidelines and ICC’s note make clear that disclosure does not imply the existence of conflict.
This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Denis Brock, an O'Melveny partner licensed to practice law in Hong Kong (Solicitor-Advocate), England & Wales (Solicitor-Advocate), Australia, New Zealand and New York, Candice Wu, an O'Melveny Counsel licensed to practice law in Hong Kong, England and Wales, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
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