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On the last day of the ASIL-ILA joint program, Professor Chiara Giorgetti of the University of Richmond moderated a lively discussion on arbitrator challenges with the following panel members: Judge Charles N. Brower (20 Essex Street, Iran-U.S. Claims Tribunal), Meg Kinnear (ICSID), Judith Levine (Permanent Court of Arbitration), and Luke Sobota (Three Crowns).
Meg Kinnear started off the panel by presenting an historical perspective, noting that ICSID’s first arbitrator challenge occurred in Amco Asia v. Indonesia in 1982, with the second one not taking place until 1998. Since that time, challenges have been increasingly on the rise, and recent trends include challenges to two or even three members of a panel, repeat challenges of the same arbitrator(s) within the same proceeding, and multiple submissions by each party concerning each challenge. She recognized that proposals for arbitrator disqualifications present practical consequences for the parties as they sidetrack cases, taking three months on average to resolve. Although there have not been many actual disqualifications to date, there have been a number of resignations as a result of arbitrator challenges.
Luke Sobota argued in favor of the standard for arbitrator disqualifications set forth in the IBA Guidelines as opposed to the one from Article 57 of the ICSID convention, which provides for disqualification of arbitrators with a “manifest” lack of qualities. Referring to the ICSID standard as “nettlesome,” he proposed lowering the bar to an “appearance of bias” standard. He explained that satisfying third parties that an arbitrator is not actually biased, for example through the use of a “self-proclamation of impartiality,” does not necessarily remove the taint of appearance of bias. As one possible means for curtailing abuse, he proposed using U.S. litigation practices of holding counsel responsible for having a good faith basis before bringing any disqualification request.
Judith Levine focused on late-in-the-game arbitrator challenges and resignations, which she described as particularly concerning because they have the most disruptive effect on proceedings and are often the result of abusive practices used by parties for tactical gain. In some instances, parties are resorting to arbitrator challenges as an appeal mechanism in response to adverse rulings, or they register a challenge after learning of an impending ruling. She agreed with Meg Kinnear that arbitrator resignations represent the “silent flip side” of arbitrator challenges. Among the possible solutions to spurious late challenges are time bar mechanisms, ordering costs for challenges, disqualifying counsel, or drafting provisions in advance to deal with future counsel conflicts.
The only member of the panel who has actually experienced a challenge as an arbitrator, Judge Brower provided the tribunal perspective on the issue. Referring back to the Amco case, he also noted that he was responsible for bringing ICSID’s first arbitrator challenge as counsel at the time for Indonesia. Judge Brower pointed out that people often overlook the importance of “who” decides an arbitrator challenge. For instance, challenges in ICC disputes are resolved by “the Court,” which, in practical terms, means whoever attends the meeting addressing the challenge. Decisions on arbitrator disqualification requests in investment disputes have been inconsistent, he observed, referring to Urbaser v. Argentina and Perenco v. Ecuador as examples. Judge Brower advised that an arbitrator should take the opportunity to say his piece if he is challenged, but he warned against making any statement that would provide an independent basis for a successful challenge. As for multiple appointments through the same firm, he noted that counsel can avoid potential challenges at the outset by closely reviewing their past relations with the candidate arbitrator before going forward with any appointment.
Michael P. Daly is an associate in the Washington D.C. office of White & Case LLP specializing in international arbitration and litigation.