Repeat Appointments and Conflicts of Interest

In Tidewater Inc and others v Venezuela (ICSID Case No ARB/10/5) (23 December 2011) the claimants filed a proposal to disqualify Professor Stern, contending that multiple appointments by the same party (Venezuela) and by the same counsel (as had occurred) gave rise to objective and justifiable doubts regarding her independence and impartiality.

In accordance with ICSID rules the challenge was adjudicated upon by the other 2 arbitrators.

The decision of the arbitrators confirms that, in case of multiple appointments by the same party, the three-year period prescribed in the IBA Guidelines on Conflicts should be interpreted flexibly.  That must surely be correct – conflicts cannot be judged on whether the appointment was on a Tuesday or a Wednesday.

They applied the  ‘obvious and highly probable’ test of not being capable of being relied upon to exercise independent and impartial judgement and found it not met.  Such a test is, I suggest, too high.  It sets the bar much closer to the U.S. test of ‘would have to conclude’ than the English test of ‘real possibility’ and the ‘reasonable suspicion’ or ‘reasonable apprehension’ tests that prevail in European Court of Justice, Australia and South Africa and .  The evidential burden seems near impossible to surmount: for an applicant to show that the that appointments might have created a relationship of influence on an arbitrator’s judgment or that the arbitrator would have been influenced by factors outside the case record by virtue of knowledge derived from other cases, seems near impossible.  It appears to create the burden of showing subjectively the arbitrator’s state of mind rather than a legitimate objective doubt.

Equally the fairly relaxed attitude of the arbitrators to the disclosure, both forgiving an initial non-disclosure and relying on the publicly available information for ICSID matters is, I suggest, inadequate.  The IBA Guidelines and the cases make it clear that the duty is on the arbitrator to disclose and any attempt to throw the burden back on the parties to undertake due diligence on the arbitrators is to be resisted.

 

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