Posts tagged: conflict of interest

Vis Pre-Moot in London

Pre-Moot in London:

On the weekend 27-28 February 2016 Fox Williams’ International Arbitration Group will be hosting a Willem Vis Pre-Moot in their new offices in the City of London.

The Pre-Moot will be on the official problem of the 23rd Vis Moot.

Teams and arbitration practitioners, lawyers and academics with interest in participating or judging are encouraged to register their interest in attending the Pre-Moot as early as possible.

Precise timings will be circulated nearer the time depending on the number of participants.

Location:

The Pre-Moot will be held at Fox Williams’ new offices at 10 Finsbury Square, London EC2A 1AF.

Registration:

For further information and registration please contact Ms Sabrina Janzik at sjanzik@foxwilliams.com   (http://www.foxwilliams.com/profiles/132/)

 

We look forward to welcoming you to the 23rd Willem Vis London Pre-Moot !

State Appointee and Independence

Venezuela is again pushing the boundaries of arbitral independence (see Repeat Appointments and Conflicts of Interest below).

In Saint Gobain v Bolivarian Repulic of Venezuela (2013) an ICSID party-nominated arbitrator has survived an attempt to disqualify him on the ground that he manifestly lacked independence and impartiality, qualities required by Article 14(1) of the ICSID Convention.  At the time of appointment, the arbitrator was a lawyer in the Argentinian Attorney General’s Office, a position he subsequently left.  The claimant proposed his disqualification, arguing that he would have been disqualified from sitting as a judge under the International Court of Justice (ICJ) Statute, because his position was political.  Even it were not political, there was an issue conflict, in he had previously argued from Argentina’s perspective issues that may arise in this case.

Rejecting the challenge, the remaining members of the tribunal noted that the ICJ Statute was of no direct application.

The arbitrator’s position was not, of itself, incompatible with his role as an arbitrator.  The tribunal noted the arbitrator was not subject to any current control by Argentina or Venezuela and it rejected the claimant’s concern that there was an issue conflict.  There was no evidence that cast reasonable doubt on his impartiality and independence, let alone that made it highly probable that he lacked these qualities.  The fact that a lawyer has argued a particular position in the past does not necessarily mean that he will take the same position in the future.  The tribunal accepted that the situation could be different if an arbitrator is simultaneously acting as counsel for a party in another arbitration, but there was no indication here that that was the case.

 

SCC publishes Challenge Review

The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) has published a review of the challenges made to arbitrators.

Under the SCC Rules (in common with most other institutional rules), a party may challenge an arbitrator if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess the qualifications agreed by the parties (Article 15).  The SCC Board’s decisions on challenges are not published, so the review of nine decisions provides useful insight into the approach of the SCC Board , as well as the nature of the challenges.

Key points emerging from the review are:

  • The SCC Board takes into account the IBA Guidelines on Conflicts of Interest when deciding arbitrator challenges.
  • Of the nine challenges considered in the review, eight were sustained.
  • Seven successful challenges involved allegations that the arbitrator or his law firm were either previously or currently instructed by a party in the arbitration.
  • The eighth successful case, concerned a company owned by the arbitrator that had been involved in the bidding process for the contract that was the subject of the dispute.
  • The one unsuccessful challenge was based on an allegedly close personal relationship between the challenged arbitrator and counsel for one of the parties, as they had written several articles together.

ICC Arbitration Debate on Arbitrator and Counsel from same Chambers

At an interesting debate on Tuesday (14 June 2011) hosted by Linklaters there was a clear feeling that whilst UK practitioners would be confident that there was no perception difficulty with counsel and arbitrator from the same chambers, the same could not be said from an international perspective.  The topic is very topical especially in light of the ICSID Solvenia decision where a party was prevented from using counsel of its choice.  That decision has been widely criticised and, essentially, not followed in a later ICSID decision, Romania where the tribunal regarded the Slovenia decision as a sanction for the failure to make proper disclosure (of the identity of counsel) in a timely fashion. 

There was consensus at the debate that early disclosure was desirable, indeed essential, in order that any issue could be dealt with at an early stage and before time and cost were wasted.  The tip that appeared to have near universal endorsement was that there should be a running (i.e. regularly updated) “cast-list” identifying counsel engaged by any party.   John Beechey of the ICC Court said that the ICC was encouraging tribunals to adopt this practice.  Equally, John made it clear that:

(a) the ICC Court would back tribunals robustly if there was any attempt to derail an arbitration by a late and tactical engagement of counsel from the same chambers as a member of the tribunal;

(b) that it was the UK that needed to get its house in order rather than the rest of the world being made to understand a peculiarly UK phenomenon ; and

(c) that the ICC, at least, had no appetite to make all appointments to a tribunal as a route to avoid any potential conflict.

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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