The IBA’s updated guidelines on conflicts of interest in arbitration

The IBA recently published the third iteration of its Guidelines on Conflicts of Interest in International Arbitration [1], some 20 years after the first edition was introduced. The Guidelines are widely accepted in international arbitration as a soft law instrument reflecting the standards of impartiality and independence expected from arbitrators, and guiding the circumstances in which disclosures are necessary. The refreshed Guidelines retain the same broad approach but have been modernised and fine-tuned to reflect shifts in arbitral and legal practice since 2014, when the preceding guidelines were adopted. We consider below the main changes that have been made.

The Updated Guidelines

The Guidelines remain structured in two parts: the first comprises General Standards regarding impartiality, independence and disclosure and the latter sets out guidance on the practical application of the General Standards through the familiar colour-coded lists addressing potential situations in arbitration proceedings. The Guidelines now feature gender neutral language throughout.

Time period for obligations of independence and impartiality

General Standard 1 has been clarified to confirm that if the dispute is referred back to the same Tribunal after an award is made, a fresh round of disclosure and review of potential conflicts of interests will be necessary. It is also made clear that the obligation period does not extend to the time period during which the award is under challenge before any relevant courts or bodies.

The role of the waivable and non-waivable lists

General Standard 2 has been adjusted to articulate more clearly the roles of the waivable and non-waivable red lists, whereby an arbitrator should decline to act if they identify circumstances on the non-waivable red list but may make a disclosure with respect to circumstances on the waivable red list.

Arbitrator disclosures

General Standard 3 has been clarified so that in considering disclosure, an arbitrator should take into account all facts and circumstances known to the arbitrator. This means arbitrators should make a subjective rather than objective assessment.  Further, two points have been elevated to the standard from the explanatory guidance: if the arbitrator is prevented from making a required disclosure either by professional secrecy rules or other rules of practice or professional conduct, the arbitrator should not accept the appointment, or should resign. In addition, where an arbitrator fails to disclose facts and circumstances meeting the test for disclosure under General Standard 3 (i.e. that they may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or independence) that failure to disclose does not necessarily mean that a conflict of interest exists, or that the arbitrator should be disqualified, rather the decision should be made on a substantive basis taking account of the facts and circumstances. 

Timing of party objections

General Standard 4 now includes wording to the effect that a party shall be deemed to have learned of any facts or circumstances that a reasonable enquiry would have yielded. This means that parties who were entirely unaware of a particular arbitrator conflict, but could have discovered it by making reasonable enquiries, are effectively considered to have been constructively aware of the conflict in question.

Relationships

The explanatory guidance to General Standard 6 now provides for consideration of a broader range of professional relationships and backgrounds for arbitrators, including employment by companies and other kinds of organisation as well as law firms. The arbitrator is in principle considered to bear the identity of their law firm or employer. In other words, as they are representatives of their firm, the firm should also be considered for the purpose of potential conflicts of interest. Further, subsidiaries of companies may be considered to bear the identity of the parent company and that in addition this is the case for any legal entity or natural person over which a party has a controlling influence.

The Guidelines now also specifically describe what constitutes a law firm for these purposes, which is any firm in which the arbitrator is a partner, or with which the arbitrator is formally associated. The Guidelines note that in each case the organisational structure and mode of practice of the law firm or employer should be considered.

Relationships with States are now provided for separately. The guidance notes that the organisation of States “typically comprises separate legal entities such as regional or local authorities, or autonomous agencies, which may be legally and politically independent from the central government” and advises that relationships within such organisational structures may not be covered by the ‘controlling influence’ and ‘direct economic interest’ criteria specified for companies. Further, a catch all rule is not appropriate as the relationships between such entities vary widely. Instead, the guidance suggests that the particular circumstances of the relationship and their relevance to the subject matter of the dispute should be considered in each individual case and suggests wide ranging disclosure of any relationships with state entities whenever a State is party to the arbitration and even when the status of such entity is disputed.

General Standard 7 sets out the duty of the parties to disclose relationships with the arbitrator and the duty of the arbitrator to make reasonable enquiries to identify conflicts of interest. Parties should now disclose: any relationships between the arbitrator and “persons or entities over which a party has a controlling influence” and “any other person or entity it believes an arbitrator should take into consideration when making disclosures”.

Refreshed ”traffic light” lists

The colour-coded lists within the Guidelines have been updated. The non-waivable red list and orange list feature adjustments consistent with the changes to General Standard 6, to reflect that there is not necessarily a conflict of interest if an arbitrator’s law firm is advising a party. Further, the waivable and non-waivable red lists have been amended so that an arbitrator who advises or represents a party but does not derive significant financial income from the instruction may make a disclosure under the waivable red list.

The orange list has been expanded to include new scenarios in which disclosure should be made including where the arbitrator:

• Has the same employer as another arbitrator (deals with the position where arbitrators work for companies).
• Has within the past three years been appointed to assist in mock-trials or hearing preparations on two or more occasions by one of the parties or an affiliate or by the same counsel or law firm [2].
• Currently serves or has acted within the past three years as expert for one of the parties. [3]
• Has been appointed as an expert on more than three occasions by the same counsel, or the same law firm within the last three years. [4]
• Currently serves together with counsel for one of the parties as arbitrators in another arbitration. [5]
• Currently serves together with their fellow arbitrator(s) as arbitrators in another arbitration.[6]
• Is instructing an expert appearing in the arbitration proceedings for another matter where the arbitrator acts as counsel. [7]
• Has publicly advocated a position on the case through social media or online professional networking platforms.[8]
• Holds an executive or other decision-making position within the administering institution and in that position has participated in decisions relating to the arbitration. [9]

Comment

The issue of arbitrator conflicts has been highlighted by high-profile cases that have come before national courts in the last few years. In Halliburton v Chubb [10] the English Supreme Court considered an application to remove an arbitrator who was appointed in three arbitrations with common facts (they all arose from the Deepwater Horizon incident) and common parties. In its 2020 decision it provided guidance on the duty to disclose in the context of multiple appointments, as well as clarifying the process for assessing whether there is a real possibility of arbitrator bias. Other recent cases have included the setting aside of an award by the Paris Court of Appeal last year as a result of the undisclosed relationship between the Tribunal chair and the claimant’s counsel [11] and the upholding of a challenge against an ICC arbitrator on the basis of his comments during a television broadcast [12]. In Investor State arbitration UNCITRAL’s 2023 Code of Conduct for Arbitrators has provided for increased scrutiny of arbitrator disclosures and impartiality, which has been followed by the inclusion of new text on disclosure in the English Arbitration Bill currently before parliament.  

In this context, the revised Guidelines on Conflicts are a welcome evolution of this important resource for arbitration practitioners, which will no doubt help maintain their status as a useful and widely accepted point of reference for arbitrators and parties for the forthcoming years. The updates reflect a careful and thoughtful approach to bringing the Guidelines up to date without diminishing their core utility or usefulness. By addressing further areas of potential ambiguity as to conflicts, some of which arise from developments in arbitral practice, the clarifications are to the benefit of the arbitration community as they should provide certainty, or at least a helpful framework, when assessing potential conflicts arising in the additional areas covered.

Footnotes

[1] https://www.ibanet.org/document?id=Guidelines-on-Conflicts-of-Interest-in-International-Arbitration-2024
[2] Guidelines, 3.1.4 and 3.2.10
[3] Guidelines, 3.1.6
[4] Guidelines, 3.2.9
[5] Guidelines, 3.2.12
[6] Guidelines, 3.2.13
[7] Guidelines, 3.3.6
[8] Guidelines, 3.4.2
[9] Guidelines, 3.4.3
[10] Halliburton Company v Chubb Bermuda Insurance Ltd and Others [2020] UKSC 48
[11] Douala International Terminal (DIT) v. Port Autonome de Douala, ICC Case No. 24211/DDA, Judgment of the Paris Court of Appeal 20/18330 - 10 January 2023
[12] Crescent Petroleum Company International Limited, Crescent Gas Corporation Limited v. National Iranian Oil Company, PCA Case No. 2019-03, Decision of the ICC International Court of Arbitration Upholding Respondent's Challenge to Charles Poncet - 8 November 2023