The Investment Treaty Arbitration Review: Challenging Arbitrators in Investment Treaty Arbitration

I General introduction

This chapter deals with the challenges faced by arbitrators and parties alike in investment treaty arbitrations under the arbitration rules of the International Centre for Settlement of Investment Disputes (ICSID) regime and under non-ICSID Arbitration Rules, particularly the United Nations Commission on International Trade Law (UNCITRAL) Rules of Arbitration. It does not deal with the issue of challenges to a tribunal's jurisdiction generally, but rather challenges based on alleged bias or issue-based conflicts that an arbitrator is alleged to possess.

One cannot emphasise enough the importance of neutrality of an arbitrator or judge and the ability of the arbitrator to adjudicate the dispute fairly and provide equal treatment to the parties. The overwhelming majority of international investment arbitrations are heard before a three-member arbitral tribunal.

One of the key pillars of international arbitration is the principle of party autonomy, and this entails allowing the parties themselves an opportunity each to nominate one of the arbitrators. The chairperson or presiding arbitrator is then selected either with the agreement of the parties, or by the two party-appointed arbitrators, or, as is often the case, by a neutral appointing authority under the selected rules of arbitration.

Article 37(2)(b) of the ICSID Convention typically provides as follows:

Where the parties do not agree upon the number of arbitrators and the method of their appointment, the Tribunal shall consist of three arbitrators, one arbitrator appointed by each party and the third, who shall be the president of the Tribunal, appointed by agreement of the parties.

In the event of default by a party to appoint its arbitrator, Article 38 of the ICSID Convention provides that:

If the Tribunal shall not have been constituted within 90 days after notice of registration of the request has been dispatched by the Secretary-General in accordance with paragraph (3) of Article 36, or such other period as the parties may agree, the Chairman shall, at the request of either party and after consulting both parties as far as possible, appoint the arbitrator or arbitrators not yet appointed. Arbitrators appointed by the Chairman pursuant to this Article shall not be nationals of the Contracting State party to the dispute or of the Contracting State whose national is a party to the dispute.

Similarly, for non-ICSID investment treaty arbitrations, the UNCITRAL Arbitration Rules 2010 provide a comparable mechanism for the appointment of arbitrators.

Article 9 of the UNCITRAL Rules provides as follows:

  1. If three arbitrators are to be appointed, each party shall appoint one arbitrator. The two arbitrators thus appointed shall choose the third arbitrator who will act as the presiding arbitrator of the arbitral tribunal.
  2. If within 30 days after the receipt of a party's notification of the appointment of an arbitrator the other party has not notified the first party of the arbitrator it has appointed, the first party may request the appointing authority to appoint the second arbitrator.
  3. If within 30 days after the appointment of the second arbitrator the two arbitrators have not agreed on the choice of the presiding arbitrator, the presiding arbitrator shall be appointed by the appointing authority in the same way as a sole arbitrator would be appointed under article 8.2

There are nationality restrictions under both the ICSID3 and UNCITRAL Rules4 because of the presumption that an arbitrator who has the same nationality as one of the parties may feel more sympathetic towards that party or its position.

Generally, each of the parties will nominate and appoint their own arbitrator and not leave the appointment to a neutral appointing authority. Parties often spend a lot of time and resources conducting in-depth research in selecting their appointed arbitrator as the experience and calibre of the arbitrator is crucial for a successful arbitration. It is often said that arbitration is only as good as the arbitrator and some commentators have gone as far to say: 'choosing the right arbitral tribunal is critical to the success of the arbitral process. It is, above all, the quality of the arbitral tribunal that makes or breaks the arbitration, and it is one of the unique distinguishing factors of arbitration.'5

These days, it is taken as a starting point and a norm that most, if not all, leading arbitrators already have the basic academic qualifications6 and 20 years of experience as distinguished counsel in their chosen field. For the most important and largest cases, parties and counsel often tend to spend a lot of time and money to identify and select well-known arbitrators who possess similar commonalities – they are highly knowledgeable; are highly experienced, with many years sitting as arbitrators; have a commanding presence; have a great knowledge of comparative law; and are academically advanced. Many arbitrators who had proven themselves to be worthy advocates in their younger years would also be sought by counsel, who may prefer to have an arbitrator who appreciates and sympathises with the rigours and practical difficulties faced by counsel. All of these factors help to mould and balance the different skill sets needed of the appointed arbitrator.

The skills of the arbitrators will generally have quite an important impact on the conduct and evolution of the arbitration process. They will also have an ultimate impact on the award itself and the successful enforcement of the award. This is because arbitrators are the sole adjudicators of all the issues in disputes between the parties. In the course of the proceedings, the arbitrators will have to exercise their power to make important decisions on all procedural steps as well as the substantive matters that pertain to the parties' dispute.

Yet, what is perfume to one person may be regarded as poison to another and one sometimes sees this at play where one party has appointed as its arbitrator an extremely highly rated academic who is known for his or her black-letter law knowledge, while the other party has appointed a renowned lawyer who is known for his or her previous counsel practice experiences and who knows the machinations, complexities and practical difficulties faced by governments in running a country.

In such cases, the two party-appointed arbitrators may be unable to agree on a presiding arbitrator and the neutral appointing authority will have to step in to appoint the presiding arbitrator. However, this means that the scene is already set for potential confrontation between the tribunal and the parties, which may have different expectations of how the tribunal should run the arbitration.

In addition to the restriction on nationality, the other two requirements for arbitrators are for them to be impartial and independent. Impartiality means that an arbitrator should not be partial towards or biased against one of the parties in the arbitration case. Independence means that an arbitrator should not be professionally linked to one of the parties or its counsel and should not be financially dependent on either of the parties.

II True reasons behind the challenges of arbitrators

The usual reasons that are given by parties in the challenge process against one or more members of a tribunal is that the parties are concerned about protection of the parties' fundamental right to an impartial and independent tribunal. In any challenge, the parties will almost always start off with a speech on the need to guarantee a fair and unbiased arbitral proceeding.

However, as is quite often is the case, the real reason behind the challenge has nothing to do with a party's alleged concerns over fairness or bias. Challenges are often made for tactical reasons, and there is a reason behind this. As it is very difficult to set aside arbitral awards under the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), a party that has been reluctantly dragged into an arbitration may need to find another excuse to try to delay or derail the arbitral proceedings. It is easier for a party to do so by finding some minor doubt as to an arbitrator's independence or impartiality and then to find some form of opportunistic means to challenge that arbitrator to both create delay and to hope for a derailment of the proceedings.

In any event, whether the reason is genuine or a purely tactical attempt to delay the arbitration proceedings, a party that seeks to challenge the independence or impartiality of an arbitrator needs to appreciate at the outset that there is a very high barrier to being able to reach a successful challenge. While both the ICSID and UNCITRAL rules of arbitration and national laws do provide for a statutory mechanism to challenge an arbitrator on the basis of a lack of independence or impartiality, generally such challenges tend to fail.

The generally accepted view of those regularly involved in such arbitrations is that there is only a slim chance of success under the UNCITRAL Rules and an even slimmer chance of success available under the ICSID Rules, unless the facts are very strong. As such, before a party can even start preparing for the challenge against an arbitrator, it will need to have mastery over: (1) the applicable arbitration rules; (2) national statutory legislation; (3) relevant case law under the applicable rules of arbitration; and, to a limited extent, (4) generally recognised guidelines including the International Bar Association's Guidelines on Conflicts of Interest in International Arbitration 2014 (the IBA Guidelines). It is important to make it very clear at the outset that although the IBA Guidelines may have gained full acceptance in international arbitration practices across the world, they cannot override national law; nor can they override any arbitral rules that have been selected by the parties.

III The ICSID regime for the appointment of and challenges to arbitrators

Arbitrators in ICSID matters are generally directly appointed by the parties. There is often less controversy when the arbitrators are appointed by the Chairman of the Administrative Council of ICSID7 from the ICSID panel of arbitrators. The criteria for arbitrators is set out in Articles 14(1) and 40(2) of the ICSID Convention and it obliges all ICSID arbitrators to be 'persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment'. Article 14 clearly states that competence in 'the field of law shall be of particular importance in the case of persons on the Panel of Arbitrators' and in a large number of cases, many of the arbitrators on the ICSID panel of arbitrators are lawyers experienced in international law.8

By the time of the tribunal's first session, each of the ICSID arbitrators must have already signed a declaration confirming his or her independence. ICSID specifically amended Rule 6(2) in 2006 obliging arbitrators to disclose their professional, business dealings and other relationships with the parties to the arbitration. It includes a very important paragraph that obliges ICSID arbitrators to provide in the declaration a statement of all 'past and present professional, business and other relationships (if any) with the parties' and also 'any other circumstance that might cause' their 'reliability for independent judgment to be questioned by a party'. The signed declaration is also couched as a continuing obligation to promptly notify the Secretary-General of ICSID of 'any such relationship or circumstance that subsequently arises during this proceeding'. The last sentence of Article 6(2) of the ICSID Rules makes it clear that '[a]ny arbitrator failing to sign a declaration by the end of the first session of the Tribunal shall be deemed to have resigned'.9

It has to be observed that when compared to the UNCITRAL Arbitration Rules, Article 57 of the ICSID Convention sets a much higher barrier to any party that wishes to challenge an arbitrator. The challenge application must clear the initial barrier and prove that the arbitrator has exhibited a 'manifest lack of the qualities' as provided for under Article 14(1) of the Convention.

A challenging party will need to set out a clear basis to challenge the arbitrator on unshakeable facts as opposed to inference. The challenger needs to prove why the arbitrator has in the past acted in such a way as to amount to a manifest lack of high moral character, a manifest lack of competence in his or her field of law, or a manifest lack of ability to exercise his or her own independent judgement.

IV Repeat appointments of arbitrators in ICSID and UNCITRAL cases

One of the concerns about arbitrators that have repeat appointments by parties or law firms is that there is a possibility of the arbitrator having an economic interest in being reappointed or at least a cognitive disposition to favour the appointing party.10 Such concerns are particularly highlighted when an arbitrator's primary occupation was solely that of a professional full-time arbitrator.

While there may be more indifference cast on busy counsel who are not full-time arbitrators and earn a lot more fees on counsel work, this concern will only increase with the rise of challenges against arbitrators for 'double-hatting' (combining counsel and arbitrator work). Increasingly, lawyers involved in investment treaty cases have to choose between sitting as arbitrator or acting as counsel but not both.

While it is not binding and by no means free from difficulties,11 the IBA Guidelines on Conflicts in International Arbitration (2014) are generally referred to by arbitral tribunals in non-ICSID arbitrations and used as a guide by tribunals and parties alike in deciding whether or not a conflict of interest exists between a particular arbitrator and a party. The Orange List in the IBA Guidelines on Conflicts addresses multiple appointments under Section 3.3.8 where '[t]he arbitrator has, within the past three years, been appointed on more than three occasions by the same counsel, or the same law firm'.

Unlike in arbitrations governed under the UNCITRAL rules, which tend to apply the IBA Guidelines on Conflicts, there are still many ICSID disputes that do not take heed of the IBA Guidelines, especially over the issue of repeat appointments of arbitrators by the same party or same law firm.

There have been a few powerful articles that have criticised the current rules allowing for repeat party appointments of arbitrators within the ICSID system. The repeated appointment of arbitrators to ICSID arbitrations by the same law firm or similar state entities continues to be a rather controversial topic. This has occurred in a number of ICSID tribunals, including those in Tidewater Inc v. Venezuela12 and Universal Compression v. Venezuela,13 which have decided to adopt a position that repeat appointments do not, in themselves, necessarily affect an arbitrator's independence or impartiality. Those ICSID decisions held that each case would turn on its own facts and that one requires an objective evaluation of the economic significance of the party appointments to the arbitrator. In Tidewater Inc v. Venezuela, the two remaining members of the tribunal (Professor McLachlan and Dr Rigo) decided that while Section 3.1.3 of the 2004 IBA Guidelines (predecessor of the 2014 revision) did lay down such guidelines, they questioned whether 'multiple appointments to arbitral tribunals may impugn the independence or impartiality of an arbitrator is a matter of substance, not of mere mathematical calculation'. The two remaining tribunal members also decided that the 'starting point is that multiple appointments as arbitrator by the same party in unrelated cases are neutral, since in each case the arbitrator exercises the same independent arbitral function'.

Similarly, in Universal Compression v. Venezuela, the Chairman of the Administrative Council rejected a challenge against Professor Stern that was based on her multiple appointments by Venezuela. The decision was that there was 'no objective fact' to suggest her independence or impartiality would be manifestly impacted by her multiple appointments by the same party.

Some prominent arbitration practitioners have made strong suggestions that this should not be allowed, as it destroys the legitimacy of ICSID.14 Others have reached the opposite conclusion and have said that there is nothing significantly wrong with the ICSID system of party appointments and that one can make simple adjustments to the appointment process.15 One should laud the decision of the two remaining tribunal members (Professor Doug Jones, AO and Professor Guido Tawill) in OPIC v. Venezuela.16 The two members who had to decide a challenge made against Professor Philippe Sands, which was based on multiple appointments by Venezuela, expressly disagreed with the earlier position stated in Tidewater that multiple appointments are to be regarded as a neutral factor. The two members came to the conclusion that:

[47] . . . It is suggested by the arbitrators in that decision that multiple appointments as arbitrator by the same party in unrelated cases are a neutral factor in considerations relevant to a challenge. We do not agree. In our opinion, multiple appointments of an arbitrator by a party or its counsel constitute a consideration that must be carefully considered in the context of a challenge. In an environment where parties have the capacity to choose arbitrators, damage to the confidence that investors and States have in the institution of investor-State dispute resolution may be adversely affected by a perception that multiple appointments of the same arbitrator by a party or its counsel arise from a relationship of familiarity and confidence inimical to the requirement of independence established by the Convention. The suggestion by the arbitrators in Tidewater that multiple appointments are likely to be explicable on the basis of a party's perception of the independence and competence of the oft appointed arbitrator is in our view unpersuasive.

The two members decided that in their view, 'multiple appointments of an arbitrator are an objective indication of the view of parties and their counsel that the outcome of the dispute is more likely to be successful with the multiple appointee as a member of the tribunal than would otherwise be the case'.

They then proceeded on the basis that multiple appointments of an arbitrator by a party or its counsel is one of the factors that 'may lead to the conclusion that it is manifest that the arbitrator cannot be relied upon to exercise independent judgment as required by the Convention'.

In relation to the IBA Guidelines on Conflicts, the two members decided that:

[48] . . . We accept that the IBA Guidelines are not conclusive for the purposes of the decision that we are required to make on this challenge, and that the examples contained in the IBA Guidelines are both non-exhaustive and not in themselves decisive of whether or not the standards set out in the guidelines for impartiality and independence of arbitrators have been met. The IBA Guidelines do, however, indicate that multiple appointments represent an issue relevant to impartiality and independence and, in our opinion, are correct in so doing.

Many of the challenges against arbitrators in ICSID cases have tended to be on the basis of relationships of the arbitrator with parties,17 and also relationships between arbitrators and counsel or law firms.18 ICSID decisions such as Caratube v. Kazakhstan,19 Opic v. Venezuela20 and Universal Compression v. Venezuela21 also applied the test contained within Articles 14 and 57 of the ICSID Convention and have concluded that the mere fact of having sat in previous arbitral appointments does not, in itself, indicate a manifest lack of independence or impartiality on the part of an arbitrator.

The unchallenged arbitrators in Opic v. Venezuela did, however, make the following statement [at 47]:

In an environment where parties have the capacity to choose arbitrators, damage to the confidence that investors and States have in the institution of investor-State dispute resolution may be adversely affected by a perception that multiple appointments of the same arbitrator by a party or its counsel arise from a relationship of familiarity and confidence inimical to the requirement of independence established by the Convention.

In the decision of Canepa v. Spain,22 Spain unsuccessfully brought two separate applications to challenge the Claimant's appointed arbitrator. The first challenge to disqualify Peter Rees QC from hearing an Energy Charter Treaty claim over the state's renewable energy reforms was based on two main grounds. Spain challenged Rees on the alleged close relationship between Rees and the claimant's counsel, Allen & Overy. Spain alleged that when Rees was legal director at Royal Dutch Shell, Allen & Overy had been one of the favoured law firms that was instructed as external counsel. Spain complained that Rees has been appointed on three occasions (including the current case) by Allen & Overy in the past three years for proceedings where the total quantum exceeded €2 billion but Rees had failed to make this disclosure. Spain submitted that this situation falls within Section 3.3.8 of the IBA Guidelines on Conflicts of Interest in International Arbitration.

Spain also challenged Rees on the ground that he had initially failed to disclose former membership on the investment committee of third-party funder, Harbour Litigation Funding (HLF). Spain complained that before he stepped down from the committee, Rees had been involved in HLF's decision to fund a claim brought by Rockhopper Exploration against Italy as this was also an intra-EU dispute that had been filed under the ECT. The two unchallenged co-arbitrators, Sean Murphy and Silvina Gonzalez Napolitano declined to uphold the first challenge against Rees as they highlighted that had already disclosed on 8 May 2019 the fact of his two prior appointments relating to Allen & Overy, thereby alerting the respondent to those two cases. In addition, the unchallenged arbitrators stated that the mere fact that an arbitrator has been appointed twice previously by a law firm in arbitral cases 'is not, standing alone, a basis for finding either an actual or an appearance of a manifest lack of independence or impartiality when appointed in a third case'.23 The unchallenged arbitrators concluded that no objective fact had been presented to demonstrate that the arbitrator's independence or impartiality had been impacted by the three appointments involving Allen & Overy. They stated that it has not been shown that Rees is in a relationship of financial dependence to the Firm based on these three appointments. In addition, the unchallenged arbitrators found that the earlier two cases were unrelated and any relationship of familiarity and confidence between Rees and the Firm is not obvious from the fact of the three appointments. It was also concluded that Rees has not received more than three appointments by Allen & Overy within the past three years and only had two such appointments.

The unchallenged arbitrators took the view that Rees should have disclosed his connection with HLF as a part of his declaration and statement as the third-party litigation fund was actively involved in funding investor–state disputes. The unchallenged arbitrators believed that it is a circumstance that might cause Rees' reliability for independent judgment or impartiality to be questioned by a party. However, the unchallenged arbitrators then concluded that a failure to disclose a relevant fact does not by itself demonstrate a manifest lack of impartiality or independence. The purpose of disclosure is to inform the parties of a situation that they may wish to explore further to determine whether there are justifiable doubts as to the arbitrator's independence or impartiality. The final conclusion was that the initial failure to disclose such information is not of sufficient gravity to merit disqualification of the arbitrator.

With regard to the HLF membership issue, there was no discussion at the Investment Committee in relation to the issue of an investor from an EU country making a claim against an EU state. Because the Achmea decision was not released by the Court of Justice of the European Union until March 2018, this issue could not have been a subject of debate. Because the respondent had not identified any specific opinion rendered by Rees on the validity of a jurisdictional objection to intra-EU investment arbitration, this ground for disqualification is based on a conjecture as to what Mr Rees might have believed at the material time. The unchallenged arbitrators concluded that it was too speculative to assume that Rees had already pre-considered and pre-rejected the validity of a jurisdictional objection to intra-EU investment arbitration.

Spain then brought a second challenge to disqualify Peter Rees QC based on his successful removal by the European Union in another ECT case. The two unchallenged co-arbitrators, Sean Murphy and Silvina Gonzalez Napolitano declined to uphold the challenge on the ground that the successful challenge in the other ECT case was based on the ground that his previous employer Royal Dutch Shell was financing that claim. However, this ground had nothing to do with the Canepa v. Spain case and it did not prove a lack of independence and impartiality on the part of the arbitrator.

In Serafin Garcia Armas and others v. Venezuela (PCA Case No. 2013-3), Venezuela again challenged Professor Tawil for a second time towards the end of 2017 and this time based its challenge on the basis that a former employee of D'Empaire Reyna (the Venezuelan law firm that was acting as co-counsel for the claimants) had been employed by M&M Bomchil, a law firm in Argentina where Professor Tawil was a partner.

Venezuela took the position that the failure by Professor Tawil to disclose this fact was intentional, or should be treated as intentional. Venezuela submitted that this non-disclosure gave rise to a risk of a lack of independence or impartiality by Professor Tawil. On 12 February 2018, the Permanent Court of Arbitration rendered its decision to dismiss the challenge brought by Venezuela. The PCA held that while the employee's transfer from D'Empaire Reyna to M&M Bomchil may in principle have given rise to an on-going obligation on the part of Professor Tawil to disclose that circumstance, there was no conclusive evidence to show that Professor Tawil had been aware of the move of the junior lawyer. The PCA went on to deal with the hypothesis that Professor Tawil had been made aware of the employment of the junior lawyer and had failed to disclose this fact. It decided that there was no solid evidence that such a lack of disclosure alone would give rise to justifiable doubts to trigger off the exceptional requirements to remove a challenged arbitrator. The PCA decided that any lack of disclosure by professor Tawil appears to have been inadvertent, the result of an honest exercise of discretion taken by the arbitrator, or both.

V Challenges made against arbitrators based on an allegation of issue conflicts

Some challenges have been made based on the same arbitrators sitting in other arbitrations involving similar issues in dispute.24 This is a separate category of challenges against arbitrators sitting in investment arbitration and would fall under alleged 'issue conflicts'. The concern is over issue-based conflicts where the arbitrators may have a subconscious bias based on their particular mindset. Arbitrators in investment dispute cases tend to have to make decisions on recurring topics and they are likely to have decided those on those topics in several cases. The allegations that are made against such arbitrators are that particular arbitrators are appointed because the appointing party knows through experience or through research that the arbitrator's view tends to be aligned with the case that the appointing party expects to make in the arbitration. As an arbitrator may have decided the same legal issue or issues in other previous investment treaty cases, the appointing party would be very confident that such an arbitrator would rule in their favour on those legal issues.

The idea behind this category of challenges is based on the arbitrator's impartiality and independence in dealing with certain subject factual matters and legal thinking. For example, the arbitrator may have to decide a certain issue or legal point but had in the past written an article or a book setting out his or her thinking on the identical subject matter. The arbitrator may also be asked to decide a point of law or interpretation of contractual terminology that he or she had previously decided in a previous life as a court judge. Similarly, the arbitrator may have been counsel in a previous case whereby he or she had advocated his or her strong views on the subject matter or on how to interpret certain legal positions.

In investment treaty arbitrations, some of the typical challenges are made against arbitrators who have heard similar evidence and legal submissions and have made decisions on such subject matters. Such arbitrators are often accused of possessing certain defined 'doctrinal predispositions' and predetermined views on various key legal issues.25 Such challenges, if successful or if accepted by the arbitrator,26 tend to have the effect of slowing down the dispute resolution process significantly.27

In Ickale Insaat v. Turkmenistan,28 Ickale, a Turkish company, sought to disqualify Professor Philippe Sands from hearing an ICSID claim against Turkmenistan on the basis of his participation in another case involving the same legal issues. The basis of Ickale's challenge against Professor Sands was his appointment by Turkmenistan in a different ICSID case that had been brought by another Turkish company, Kilic, under the Turkey–Turkmenistan bilateral investment treaty (BIT). Kilic was unsuccessful as the tribunal in that arbitration held that Kilic as the claimant had failed to comply with the BIT through its failure to submit its dispute to the local courts first. Accordingly, the Kilic tribunal decided that Kilic could not rely upon the Turkey–Turkmenistan treaty's most favoured nation (MFN) clause to circumvent that requirement.

In its challenge against Professor Sands, Ickale submitted that the earlier Kilic ICSID case raised the same jurisdictional issues as Ickale's own claim. This included the important question of whether the disputes clause of the BIT requires an investor to first bring its claims before Turkmenistan courts prior to filing an arbitration. There was also the question as to whether other disputes provisions from other treaties that did not have a local courts requirement could be imported into the BIT by way of an MFN clause.

Ickale submitted that Professor Sands had in the previous Kilic arbitration already been shown similar factual evidence and had already been shown similar witness evidence in deciding these identical issues. Ickale submitted that much of the factual evidence it will be relying on, such as the drafting history of the treaty, would be exactly the same as the evidence considered in the earlier Kilic case. Ickale complained that Turkmenistan had submitted witness statements by government officials and the same expert witnesses who had also prepared expert reports in Kilic. Ickale also pointed out the fact that Turkmenistan had hired the same translator and the same expert linguist to give evidence on the conflicting English and Russian translations of the BITs.

Ickale complained that Professor Sands had already been presented with the identical facts and legal arguments in the Kilic arbitration. Ickale submitted that these factors would result in a 'manifest imbalance' in the tribunal, as the same information had not been made available to the other two arbitrators in its panel. Finally, Ickale submitted that Professor Sands would be conflicted as he would be faced with 'a position to defend' and that he would have 'a desire to conform' to his earlier views as expressed in Kilic. The two remaining tribunal members, Veijo Heiskanen and Carolyn Lamm, subsequently dismissed the challenge and held that Professor Sands' appearance on an earlier ICSID panel that had ruled on the interpretation of the same investment treaty did not demonstrate a manifest lack of impartiality.

The Secretary-General of the Permanent Court of Justice had to deal with a challenge brought by Venezuela made against Professor Guido Tawil who was the party-appointed arbitrator of the claimants in the case of Serafin Garcia Armas and others v. Venezuela (PCA Case No. 2013-3). Venezuela alleged that Professor Tawill had an affinity and sympathy towards the claims of foreign investors and he had a pre-disposition bias against states. It was also alleged that he was very likely to have pre-decided the case as he had been involved in similar cases involving foreign investors and national expropriation by states.

The Secretary-General published his decision on 8 May 2013 and rejected the challenge on several grounds. First, the Permanent Court of Arbitration (PCA) found that that Professor Tawil had demonstrated a clear intention to disclose all relevant issues in his declaration of impartiality and independence. The PCA also held that Venezuela had failed to prove a connection between the earlier investment cases apart from the fact that those cases concerned sovereign expropriations. The PCA also decided that there was no evidence that the information present in the previous investment cases were capable of influencing Professor Tawil to pre-decide any issues that would arise in the Venezuelan case. Finally, the PCA decided that while there may be a real risk in certain cases that an arbitrator would identify with the interests of a party that he had once represented as an advocate, one cannot presume that this is the case.

There are clearly two different views on the subject of issue conflicts. The purist view is that arbitrators should always be beyond reproach in any way and that anyone who has expressed a certain line of legal thinking on a particular subject matter should not sit as an arbitrator. This is considered to be the more narrow-minded view when compared to the other line of thinking that there is nothing wrong with party-appointed arbitrators that have such predictable predetermined doctrinal ideas.

In fact, one would say that this was probably the real reason why such an arbitrator had been carefully selected out of a pool of available arbitrators. Where parties to international arbitration have an equal opportunity to select and appoint their party-appointed arbitrator, they do so because they believe that their chosen arbitrator would be able to influence the thinking of the tribunal and eventually lead them to a favourable outcome of the case.

One would, however, submit that both sole arbitrators and presiding arbitrators should be held to a higher standard of doctrinal neutrality on any potentially relevant issues that will require the decision of the tribunal.

VI General background of arbitrators matters

In a study made on investor–state arbitrators, based on 247 cases collected from public databases, some researchers had reached the conclusion that the international investment arbitration group is very much controlled by a small and close-knit community of northern hemisphere-based leading arbitrators. It was claimed that this group tends to defend rights brought by private investors. It concluded that this small community valued private investor rights above public interest and also alleged that they had an inherent pro-corporate bias.29

In an interesting study involving a compilation of responses received between December 2017 and February 2018 from selected arbitration institutions, stakeholders and experts in response to a request for comments on an Organisation for Economic Co-operation and Development (OECD) Secretariat research paper, it was discovered that while ICSID the Convention requires the ICSID chair to appoint 100 per cent of the ad hoc committees, parties appoint in roughly 75 per cent of ICSID cases without assistance from the institution.30 In addition, the research paper indicated that while private sector lawyers and commercial arbitrators form the bulk of appointees at ICSID, a very significant number of ICSID arbitrators come from other backgrounds like legal academics, international judges or former diplomats.

For non-ICSID investment cases, the PCA makes the most appointments of arbitrators. This is because the UNCITRAL Arbitration Rules stipulate for the Secretary-General of the PCA to designate an appointing authority if parties fail to agree on the choice of appointing authority, or if the designated appointing authority refuses or fails to act.31

The PCA, which contributed to the OECD Secretariat research paper, explained that the PCA deals with a more varied group of dispute resolution proceedings, both procedurally and substantively, than most arbitral institutions. The PCA Secretary-General's approach when designating an appointing authority or acting as appointing is highly flexible and is adapted to the needs of each case. The PCA Secretary-General will take account of many considerations, including the following factors to determine the appropriate procedure in an appointing-authority matter:32

Applicable rules of procedure (e.g., PCA Rules, UNCITRAL Rules (1976/2010/2013), other ad hoc rules, etc.) as potentially modified by underlying agreement (BIT or FTA, compromis, contract, etc.);
Nature of the parties (States, intergovernmental organizations, private parties);
Nature of the dispute (treaty claim, commercial contract claim, environmental dispute, human rights dispute, etc.);
Size of the claim (ranging from disputes worth several thousand euros to disputes worth several billion euros);
Agreement by the disputing parties on procedural steps at the appointment stage.

The PCA only discloses what is agreed by the parties to the dispute, or what the tribunal decides should be disclosed to the public. When disclosure is agreed, the PCA's Case Repository enables the PCA to make a wide range of case-related information available to the public.33 An interesting point that was noted is the fact while ICSID arbitrators make US$3,000 per day, equivalent to US$375 per hour, arbitrators at some other centres make significantly more and up to US$1,000 per hour.34 The PCA Secretary-General frequently designates eminent jurists, including members of the international judiciary or former officials of intergovernmental organisations, as appointing authorities to answer concerns commonly voiced in investor–state cases under the UNCITRAL Rules about the 'most appropriate profile for appointing authorities in proceedings involving States or intergovernmental organizations under international law (as compared with commercial claims between private parties under domestic law)'.35

While it deals with a connected subject on case strategy, the background of arbitrators is very important to how the case is likely to be run.36 Parties tend to look for arbitrators that are perceived to adopt procedures that are more advantageous for the appointing party. For example, given that US-style discovery (including requests to produce) is quite onerous, a party that is trying to avoid or limit extensive document production is most likely to propose a civil law professor as a chair as opposed to an American court litigator.

Three arbitrators in the International Chamber of Commerce (ICC) case of Grupo Unidos Por El Canal, S.A. (Panama) and 3 others v. Authoridad Del Canal De Panama (Panama)37 were all challenged by the claimants on the grounds that each of the arbitrators had improperly failed to timely make certain disclosures of professional relationships with one of the other arbitrators in this case, counsel in this case or an arbitrator in a different related arbitration. The ICC Court applied a two-pronged test to deal with the challenges. Firstly, whether the facts at issue should have been disclosed by the relevant arbitrator. Secondly, if disclosure was required, whether the undisclosed facts were of such a nature that the challenge was well-founded. The challenge against tribunal chair Pierre-Yves Gunter was on the ground that he had failed to disclose that he had sat alongside Bernard Hanotiau as arbitator in three unrelated arbitrations (under ICC, London Court of International Arbitration (LCIA), and ad hoc rules) and that he had appeared as counsel in a fourth unrelated arbitration chaired by Hanotiau and which resulted in a successful award in Gunter's client's favour. It should be clarified that Hanotiau was not involved in the current ICC case but had chaired a related ICC arbitration between the same parties, arising from the same contracts. The ICC Court dismissed the challenge and held that while Gunter and Hanotiau sitting as co-arbitrators in unrelated cases may have 'created a theoretical opportunity for them to discuss issues relevant to the Panama Canal arbitrations', there was no evidence to prove that this had happened. In addition, the ICC Court held that the theoretical opportunity for improper communication would exist whether they were sitting together in other cases or not. The court dismissed another challenged based Gunther's professional relationship with Hanotiau. It held that 'the alleged appearance of possible bias does not constitute a reasonable doubt as to Mr Gunter's independence or impartiality'. It also held that the relationship between the two arbitrators did not fall within the non-exhaustive list of disclosable circumstances issued by the ICC and that Gunter had no duty to disclose his relationship with Hanotiau.

The ICC Court dismissed a challenge brought against the second arbitrator, Dr Robert Gaitskell on the grounds that Gaitskell had failed to make timely disclosure of the fact that he was sitting as president of an arbitral tribunal in another case where a member of the counsel team for the canal authority had acted for one of the parties. The ICC Court held that the relationship did not justify his removal. In relation to the challenge brought against the third arbitrator, Claus von Wobeser, the ICC Court agreed with the Claimants that von Wobeser should have disclosed the fact that he was sitting as arbitrator in an unrelated ICSID case alongside Jana, another member of the respondent's counsel team. However, the ICC Court held that the relationship was not enough to justify his disqualification and dismissed the challenge.

VII Double-hatting

There is increasing concern that while serving as arbitrators, some lawyers also act as counsel in representing clients in other cases that also deal with the same contested issues. Such arbitrators are said to wear 'double hats' and this can sometimes raise challenges both to their legitimacy and impartiality. It has been suggested by academics that double hatting is practised consistently by a small but 'highly visible and powerful core of actors in the investment arbitration community'.38

One notable example involved Professor Emmanuel Gaillard who was challenged in the case of Telkom Malaysia v. Ghana.39 While Professor Gaillard was serving as the claimant's appointed arbitrator in the PCA matter, he was also acting as the legal counsel for the claimant in an ICSID annulment proceeding in a different case of RFCC v. Morocco.40 Professor Gaillard had made disclosure that he was acting as counsel in RFCC v. Morocco. However, the respondent (Ghana) in the PCA arbitration, where he was serving as arbitrator made several challenges against him in the Hague District Court,41 which was the seat of the PCA arbitration. Ghana alleged that Professor Gaillard's role as arbitrator in the PCA case was contradictory with his concurrent role as legal counsel in the ICSID annulment case, as both cases involved similar legal issues and as Ghana was relying on the case of RFCC v. Morocco in its own legal submissions. Ghana alleged that Professor Gaillard who was opposing a specific position, in his capacity of counsel, cannot be unbiased in his adjudication of that same approach in the ICSID case in which he was acting as arbitrator. The Hague District Court made an order for Professor Gaillard to make a decision as to whether he wanted to continue as arbitrator or legal counsel, but he could not be in both roles. This was because an appearance of bias or conflict could be reasonably made out, even if there was no showing of actual bias itself.

VIIi Arbitrators who are members of the same barristers' chambers

General Standard 6(a) of the IBA Guidelines on Conflicts of Interest makes it clear that arbitrators need to consider the identity of their law firm when considering potential conflicts or whether there is any need for disclosure. This means that the activities of the arbitrator's law firm and the relationship between the arbitrator and the law firm must be considered in each individual matter. If an arbitrator or his or her law firm regularly advises a party or an affiliate of that party, and the arbitrator or his or her firm derives significant financial income from that party, this must be disclosed as it is deemed as a waivable Red List.

In short, this means the arbitrator who will need to make such disclosure will be faced with a much higher likelihood of a challenge by an opposing party. This is one of the reasons why many eminent arbitrators have been leaving their larger law firms to join smaller firms or to form new small boutique law firms.

This problem of increased potential of conflict of interests has also increased for barristers who practise in large chambers.42 General Standard 7(b) of the IBA Guidelines on Conflict of Interest provides that each party is obliged to state the identity of its counsel as well as any relationship, if such exists, between its counsel and the arbitrator by virtue of being members of the same barristers' chambers. This disclosure must be made at the earliest possible opportunity and upon any change in its counsel team. The reason for such disclosure to be made at the earliest opportunity is to avoid the possibility of last-minute conflicts that may cause prejudice to the opposing party or may jeopardise the proceedings if the other party has to remove its counsel from the team of lawyers.

The English Bar Council has produced a guidance note dealing with the issue of barristers from the same set of chambers appearing as counsel and arbitrator in the same arbitration. The Bar Council has sought to explain the 'structure and culture of the English bar' and has also tried to explain that the 'valuable protection given to clients by the availability of the independent bar is not compromised'.43 The Bar Council has explained the position of the self-employed members of the Bar, who do not practise through employment, partnership or other structures. To address this concern of conflict of interests, the Bar Council guidance recommended that separate clerks be designated to deal with the matter on behalf of the arbitrator and the advocate, and that there should be 'state of the art arrangements' to ensure that communications destined for one member do not come into the hands of the other member. The Bar Council also recommended that there should be arrangements for the secure storage of papers. While one would prefer the test set out by the UK House of Lords, of identifying whether a 'fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased', the difficulty lies in deciding the term 'fair-minded' in cases of an international nature where parties, arbitrators and counsel all come from different legal backgrounds.

In the case of Hrvatska v. Slovakia (ICSID Case No. ARB/05/24A), a member of the tribunal was a door tenant in the same chambers as lead counsel for the respondent. As this was only disclosed two weeks before the final hearing, the claimant sought an order to prevent the respondent from using their selected counsel. The tribunal agreed and decided that the participation of the respondent's chosen counsel would create 'an appearance of impropriety and thus an unacceptable situation'. The Hrvatska v. Slovakia tribunal held that:

[19] This evolution has been observed in the Background Information on the IBA Guidelines on Conflicts of Interest in International Arbitration. Paragraph 4.5 of that Background Information discusses the question of barristers who practise as arbitrators, and states:

“While the peculiar nature of the constitution of barristers' chambers is well recognised and generally accepted in England by the legal profession and by the courts, it is acknowledged by the Working Group that, to many who are not familiar with the workings of the English Bar, particularly in light of the content of the promotional material which many chambers now disseminate, there is an understandable perception that barristers' chambers should be treated in the same way as law firms”.

The Hrvatska v. Slovakia tribunal went on to hold that:

[22] The ICSID Convention in Article 14 demands that arbitrators “be relied upon to exercise independent judgment”. ICSID Arbitration Rule 6 requires them to 'judge fairly'. The objection in this case is not predicated on any actual lack of independence or impartiality, but on apprehensions of the appearance of impropriety. In the interest of the legitimacy of these proceedings, the arbitrators consider that the Claimant is entitled to make this objection and that it is well founded.

The Hrvatska v. Slovakia tribunal explained that the ICSID Convention and Rules do not explicitly give the power to tribunals to exclude counsel, and held that as a general rule parties may seek such representation as they see fit as this is a fundamental principle. However, the tribunal came to the decision that:

[25] Even fundamental principles must, however, give way to overriding exceptions. In this case, the overriding principle is that of the immutability of properly constituted tribunals (Article 56(1) of the ICSID Convention).

It then went on to state that while a party was free to select its legal team as it saw fit prior to the constitution of a tribunal, it was not entitled to subsequently amend the composition of its legal team in such a fashion as to imperil a tribunal's status or legitimacy. The Hrvatska v. Slovakia tribunal concluded that it had:

to preserve the integrity of the proceedings and, ultimately, its Award. Undoubtedly, one of the 'fundamental rules of procedure' referred to in Article 52(1)(d) of the ICSID Convention is that the proceedings should not be tainted by any justifiable doubt as to the impartiality or independence of any Tribunal member. The Parties agree that the relevant perspective in that inquiry is that of a reasonable independent observer.

One would have to agree with the Hrvatska v. Slovakia tribunal that as a judicial formation governed by public international law, a tribunal has an inherent power to take measures to preserve the integrity of its proceedings. The Hrvatska v. Slovakia tribunal rightly held that in light of the fundamental rule enshrined in Article 56(1) of the Convention and given its inherent procedural powers confirmed by Article 44, the Hrvatska v. Slovakia tribunal logically decided that it 'would be inappropriate and improper' to allow counsel from the same barristers' chambers to appear.

Outside the UK and Hong Kong, it is now widely accepted that it would be very difficult for barristers from the same set of chambers to appear as arbitrator and counsel in the same case. The increasing tendency for barristers' chambers to market their services together as members from the same chamber and the trend for barristers to set up incorporated companies to run chambers have made it even more problematic for barristers from the same chamber to appear in the same arbitration as counsel and arbitrator. Despite the continued resistance by barristers in ICSID cases against the applicability of the IBA Guidelines on the conflict of interests applying to barristers' chambers, the risk of challenges will make it quite likely we will see more departures of leading counsel and arbitrators from larger sets of chambers to smaller chambers.

IX Rise in challenges to arbitrators in non-ICISD cases

According to a report by the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), between January 2016 and December 2018, there were 551 arbitral proceedings initiated at the SCC.44 Of these 551 cases, there was a total of 46 challenges filed against arbitrators. However, only three of these challenges resulted in the arbitrator stepping down, either voluntarily or because of an agreement of the parties. Of the remaining 43 challenge cases, 36 challenges were dismissed while seven challenges succeeded.45

The LCIA also published summaries of 32 decisions of the LCIA Court relating to challenges made against its arbitrators between 2010 and 2017. These decisions show that the challenge to an arbitrator or tribunal was rejected in 25 cases but upheld in six cases and partially upheld in a further case.46

One of the leading international arbitration centres in the world is the Hong Kong International Arbitration Centre (HKIAC). While it is known that challenges to arbitrators at the HKIAC is also known to be on the rise, because of the broad confidentiality provisions in the legislation and in the HKIAC's rules, it is not possible to obtain any published information that may identify ongoing or concluded proceedings. However, the decisions of challenges to arbitrators made by the HKIAC are completely transparent to the parties. The HKIAC issued a Practice Note in 2019 in relation to the challenge of an arbitrator under the HKIAC Administered Arbitration Rules or in an arbitration administered by HKIAC. The Practice Note sets forth very clear procedures as to how the parties and HKIAC are to deal with any challenge made to an arbitrator in such challenges.47

X Challenges of arbitrators in the covid-19 era

It would be apt to deal with new challenges that have been brought against arbitrators in the current covid-19 era. The pandemic has forced many in-person hearings to be substituted by virtual hearings or hybrid hearings. Challenges have been made against arbitrators across the world for imposing the holding of virtual hearings on a party that has insisted on a physical in-person hearing to take place. A challenge was made against the entire tribunal in the case of Landesbank Baden-Württemberg v. Spain.48 Spain brought a challenge against the tribunal for its refusal to conduct an in-person hearing that was originally scheduled to be held in The Hague but to instead conduct a virtual hearing in light of the covid-19 pandemic. Spain alleged that the tribunal had made 'serious misrepresentations and misleading statements' to justify its decision to hold a virtual hearing and that one arbitrator Oreamuno's reason of not being able to travel out of Costa Rica was dishonest because the Costa Rican government had already announced that its borders would open on 1 August and that its residents could travel abroad. Spain challenged Sir Christopher Greenwood's explanation of the requirement of completing a 14-day quarantine after his surgery and an extension of the quarantine period if there was any complication such as the discovery of a covid-19 case in the hospital or the need for additional surgery. Spain submitted that this was 'speculative and misleading' and that it evidenced the tribunal showing that it had 'prioritized their private interest' over Spain's basic procedural rights.

The World Bank's president David Malpass dismissed all of the challenges against the arbitrators. He held the tribunal had recognised that due process had to be accorded to the parties and that there was a duty to conduct the proceedings as expeditiously as possible. He held that the tribunal is 'best placed to assess and balance these risks and considerations'. He then held that 'Given the extraordinary circumstances and the multiple uncertainties created by the COVID-19 pandemic, the Tribunal's decision to conduct a risk assessment certainly does not show a lack of high moral character. Rather, in the eyes of an objective third party, it would appear to be the Tribunal's duty to do so.'

The pandemic has forced an inevitable shift in arbitration proceedings from in-person hearings towards virtual hearings. However, the right to due process is enshrined in Article V(1)b of the New York Convention, which provides that the recognition of an award may be refused where the party against whom the award is invoked proves that it 'was not given proper notice of the arbitration proceedings or was otherwise unable to present its case'. While there is no fixed international definition as to how due process should be observed in the arbitral process, there is also a globally accepted standard of fairness and equal treatment. Arbitrators should look at each situation in the light of its own factual circumstances and should consider asking parties to comment on procedural orders that address different aspects of virtual hearings or hybrid (part in person/part virtual) hearings.

XI Conclusion: major difference between ICSID standard and UNCITRAL standard

As far as challenges to arbitrators are concerned, one significant difference between challenges made under the ICSID system and the UNCITRAL system lies in the standards that are to be applied in the challenge. Article 58 of the ICSID Convention provides that the decision to the challenge made against an arbitrator shall fall on the shoulders of the other two remaining members of the tribunal and, where there is any disagreement between the two arbitrators, the chair of the ICSID Administrative Council shall make the ultimate decision. Similarly, in the event that the majority of the arbitrators are challenged, the chairman of the ICSID Administrative Council shall also decide the challenge. The accepted legal standards for challenges to arbitrators in ICSID cases are to be found at Articles 14 and 57 of the ICSID Convention. The term 'manifest' as contained in Article 57 is significant as it requires the challenging party to show 'evident' or 'obvious' bias. This means that it must be capable of being discerned with little effort and without requiring deeper analysis. In addition, the burden of proof for disqualifying an arbitrator is a heavy one as Article 57 imposes an objective standard based on a reasonable evaluation of the evidence by a third party, as opposed to the subjective perceptions or beliefs of the challenging party. Quite often, parties would refer to the Vivendi v. Argentina case, in which it was held that the challenging party must rely on established facts and not on mere speculation or inference.49

If the challenge is upheld and results in the disqualification of the challenged arbitrator, a replacement arbitrator is appointed using the same method by which the disqualified arbitrator had been appointed. The new appointment must be made and accepted within 45 days of the notification of the vacancy, and the replacement appointment shall be made by the chairman of the ICSID Administrative Council.

The International Bar Association Guidelines on Conflicts of Interest in International Arbitration 2014 (IBA Guidelines) are often referred to by parties, counsel, arbitrators, institutions and courts across the world as a helpful guide on best practices and what may amount to 'justifiable doubts'. While the IBA Guidelines do not have the force of law, they are widely respected and used by non-ICSID arbitral institutions and are often cited in challenges. It is important to highlight that the test for bias is an objective one and not a subjective test. The threshold is that of 'apparent bias' as opposed to actual bias that needs to be shown to trigger a reasonable challenge for the removal of an arbitrator. The SCC report is particularly useful as a guide as to how the SCC Board decided many challenges in which a party alleged that the arbitrator may be biased.50 Allegations of bias by an arbitrator because of a relationship with opposing counsel such as serving on the same tribunal in separate and unrelated proceedings or attending the same conferences or teaching at the same university were all dismissed. Such scenarios did not give rise to justifiable doubts as to the arbitrator's impartiality. The test under the IBA Guidelines is generally accepted by many courts as the accepted standard to decide impartiality. This can be contrasted with the less strict standard under English law.

The UK Supreme Court in Halliburton v. Chubb51 is now the prime English law decision on arbitrator conflicts. It had to deal with whether an arbitrator who had accepted appointments in multiple cases concerning the same or overlapping subject matter with only one common party would need to make disclosure. The Supreme Court emphasised that impartiality had always been a 'cardinal duty' for arbitrators. It reiterated that the correct legal test was 'whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased'. It held that an arbitrator is under a duty to disclose any facts and circumstances that might reasonably give rise to the appearance of bias. It also held that compliance with this duty has to be assessed with regard to the situation and circumstances at the time when the disclosure should have been made. In relation to multiple overlapping appointments with only one common party, depending upon the practice and customs of the nature of arbitration in issue, an arbitrator may have to disclose those multiple appointments. A failure to make disclosure will be one factor which a fair-minded and informed observer will take into consideration as to whether there was a real possibility of bias. The court held that a failure to disclose overlapping multiple arbitrations has the potential of exemplifying 'a lack of regard to the interests of the non-common party'. This can in certain circumstances constitute apparent bias on the part of the arbitrator. It is interesting to note that the actual challenge to remove the arbitrator failed in this case. The decision highlights the heavy burden in challenging an arbitrator on the basis of impartiality. The Supreme Court made a comment that challenges of this nature have 'rarely succeeded'. Importantly, the Supreme Court also observed that an objective observer who was dealing with the crux of the apparent bias test will be 'alive to the possibility of opportunistic or tactical challenges'.

The Halliburton decision can be contrasted with an ICC decision to an arbitrator challenge in a Geneva seated arbitration. In the case of Anaklia Development v. Georgia,52 Anaklia brought a challenge against Georgia's party appointed arbitrator, Klaus Sachs, on the basis that he had failed to disclose the second ICSID appointment53 made by Georgia in the ICC case. Anaklia took the position that Mr Sachs's concurrent appointment in the ICSID case may lead to a pre-judgment of similar issues in the ICC case. The submission was that any access to evidence and submissions in the ICSID case may cause Mr Sachs to lose his objectivity in assessing any overlapping facts and issues that had to be decided in the ICC case. Anaklia also submitted that this could also create an asymmetry of information with the other arbitrators. The ICC Court took the position that it was undisputed by the parties that both arbitrations were based on 'substantially the same factual background'. The ICC Court held that because there was a partial overlap in the legal issues, that fell to be decided in the two cases, it appeared probable that some common factual and legal issues will arise. The ICC Court acknowledged that it was difficult to predict how each arbitration would develop. However, it decided to remove Klaus Sachs on the ground that 'it suffices for a risk of prejudgment to exist that similar issues of fact or law exist in different proceedings that are pending at the same time involving the same arbitrators'.

In the case of the 2010 UNCITRAL Rules, the challenge is first decided by the Appointing Authority under Article 13(4) of the UNCITRAL Rules. Article 15 of the UNCITRAL Rules acts in a similar fashion to Article 58 of the ICSID Convention in the sense that, where an arbitrator is replaced, the proceedings shall be resumed at the stage where the arbitrator who was replaced ceased to perform his or her functions, unless the arbitral tribunal decides otherwise. However, where the challenge is unsuccessful and the arbitrator is not disqualified, in the event that the seat of the arbitration is located in a UNCITRAL Model Law jurisdiction and the local arbitration statute allows for it, there is still a final right for the challenging party to go to the local high court or its equivalent to review the challenge under Article 13(3) of the Model Law. This additional level of judicial challenge to an arbitrator who has not been removed by the contractually agreed appointing authority in the UNCITRAL Rules does not exist in the ICSID system.

While the UNCITRAL Standard tends to follow the guidelines set out in the IBA Guidelines on Conflicts of Interest, the ICSID Standard requires a higher standard of evidence. In the ICSID decision of Suez v. Argentina, ICSID ARB/03/17 & 19 (2007), the two remaining arbitrators decided [at 34] that:

At the outset, it must be recalled that Article 57 of the ICSID Convention requires a “manifest lack of the qualities required” of an arbitrator. The term “manifest” means “obvious” or “evident”. Christoph Schreuer, in his Commentary, observes that the wording manifest imposes a “relatively heavy burden of proof on the party making the proposal” to disqualify an arbitrator.

They went on to decide at 40 that:

Implicit in Article 57 and its requirement for a challenger to allege a fact indicating a manifest lack of the qualities required of an arbitrator by Article 14, is the requirement that such lack be proven by objective evidence and that the mere belief by the challenge of the contest arbitrator's lack of independence or impartiality is not sufficient to disqualify the contested arbitrator. Previous ICSID decisions on challenges to arbitrators support our position.

In summary, this means that the operation of Article 14(1) and 57 of the ICSID Convention effectively creates a rule that an ICSID arbitrator may only be challenged for bias if it is possible to prove that the arbitrator manifestly lacks the capacity to exercise independent judgement. This in itself is a very difficult burden to discharge.

While the ICSID Standard required to challenge an arbitrator is already high enough, a challenger in an ICSID matter will also face the lack of a right to an additional judicial challenge in the ICSID system. This is one of the reasons why it is generally considered to be comparatively much more difficult for a challenger to make a successful challenge to an arbitrator under the ICSID system than under the UNCITRAL system. On 1 May 2020, ICSID and UNCITRAL jointly released a draft code of conduct for adjudicators in investment arbitration disputes. ICSID and UNCITRAL received extensive input on the draft through consultation with both state delegates as well as other interested stakeholders. As a result of the feedback received on the first version, a second version of the Code was published on 19 April 2021.54 The draft code includes proposals on dealing with double hatting and imposes limitations on the number of cases that can be heard simultaneously and the penalties to be imposed for unethical behaviour. It sets out applicable principles addressing matters including independence and impartiality, as well as the duty to conduct proceedings with integrity, fairness, efficiency and civility. The second version of the draft code draws upon comparative review of standards found in codes of conduct in investment treaties, arbitration rules applicable to investor–state dispute settlement, as well as international courts. The draft code uses the term 'adjudicator' to encompass any person who adjudicates investor–state dispute settlement cases, including arbitrators, members of annulment committees and members of an appeal mechanism. It remains to be seen when this draft Code will be adopted as a definitive code, but when it is released, it would level the different standards between ICSID and UNCITRAL.


1 Colin Ong QC is Queen's Counsel at 36 Stone, Chartered Arbitrator and Counsel at Eldan Law LLP (Singapore) and senior partner at Dr Colin Ong Legal Services (Brunei).

2 See also the equivalent Article 7 of the 1976 UNCITRAL Rules of Arbitration.

3 Article 39 of the ICSID Rules provides that 'The majority of the arbitrators shall be nationals of States other than the Contracting State party to the dispute and the Contracting State whose national is a party to the dispute'.

4 Article 6(7) of the 2010 UNCITRAL Rules provides that: 'The appointing authority shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and shall take into account the advisability of appointing an arbitrator of a nationality other than the nationalities of the parties'.

5 See Redfern and Hunter on International Arbitration, 6th edn, 2015, paragraph 4.13.

6 In addition to decades of experience as a lawyer, there is also the expectation of fellowship courses and higher legal qualifications.

7 Article 5 of ICSID Convention designates the President of the World Bank to be Chairman of the Administrative Council of ICSID.

8 Article 14(1) of the ICSID Convention provides that 'Persons designated to serve on the Panels shall be persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment. Competence in the field of law shall be of particular importance in the case of persons on the Panel of Arbitrators.'

9 The 2006 amendment obliges arbitrators to make continuous disclosure throughout the arbitration.

10 Sergio Puig and Anton Strezhnev, 'Affiliation Bias in Arbitration: An Experimental Approach', Arizona Legal Studies Discussion Paper No. 16-31, Social Science Research Network, 2016,

11 The English High Court criticised the IBA Guidelines on Conflicts in W Limited v. M Sdn Bhd [2016] EWHC 422.

12 Tidewater Inc v. The Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/5 (2010) [Decision on proposal to disqualify Prof. Brigitte Stern].

13 Universal Compression International Holdings SLU v. The Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/9 [Decision on proposal to disqualify Prof. Brigitte Stern and Prof Guido Santiago Tawill].

14 See Paulsson, 'Moral Hazard in International Dispute Resolution', 25 ICSID Rev. F. Inv. L.J. 339 at 355, 2010.

15 See Brower, Pulos and Rosenberg, 'So Is There Anything Really Wrong with International Investment Arbitration as We Know it?', in The Fordham Papers 2012, (Rovine ed.), 2013.

16 OPIC Karimum Corporation v. The Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/14 (2014) [Decision on proposal to disqualify Prof. Philippe Sands].

17 See, e.g., Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA v. Argentine Republic, ICSID Case No. ARB/03/19. EDF International SA, SAUR International SA and León Participaciones Argentinas SA v. Argentine Republic, ICSID Case No. ARB/03/23 [Challenge Decision Regarding Professor Gabrielle Kaufmann-Kohler (25 June 2008)].

18 See, eg., Amco Asia Corporation and others v. Republic of Indonesia, ICSID Case No. ARB/81/1; SGS Societe Generale de Surveillance SA v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13.

19 Caratube International Oil Company LLP & Mr Devincci Salah Hourani v. Republic of Kazakhstan, ICSID Case No. ARB/13/13, Decision on the Proposal for Disqualification of Mr Bruno Boesch.

20 OPIC Karimum Corporation v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/14, Decision on the Proposal to Disqualify Prof. Philippe Sands.

21 Universal Compression International Holdings, S.L.U. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/9, Decision on the Proposal to Disqualify Prof. Brigitte Stern and Prof. Guido Santiago Tawil.

22 Canepa Green Energy Opportunities I, S.z r.l. and Canepa Green Energy Opportunities II, S.z r.l. v. Kingdom of Spain, ICSID Case No. ARB/19/4.

23 id. at [63].

24 See, e.g., Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA v. Argentine Republic, ICSID Case No. ARB/03/19; Electrabel SA v. Republic of Hungary, ICSID Case No. ARB/07/19; and Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20.

25 Examples could include the definition of 'investment' or 'investor'. It could include whether a most favoured nation clause in a bilateral investment treaty should be interpreted to also extend to procedural rules.

26 For example, in the UNCITRAL case of Murphy Exploration & Production Company International v. Republic of Ecuador, PCA Case No. AA434, after Professor Brigitte Stern was challenged by the on the basis of her 'remarkable' record of appointment by states and alleged prejudgment of the subject matter of the dispute, she resigned from the case.

27 See also Highbury International AVV v. Bolivarian Republic of Venezuela (ICSID No. ARB/14/10), where the claimants brought a challenge against Professor Stern alleging that she was in 'issue conflict' because she had also sat as arbitrator on other ICSID tribunals that subsequently refused to allow claims brought under Venezuela's 1999 law on foreign investment.

28 Ickale Insaat Limited Sirketi v. Turkmenistan (ICSID Case No. ARB/10/24).

29 Pia Eberhardt and Cecilia Olivet, Profiting from Injustice. How Law Firms, Arbitrators and Financiers Are Fuelling an Investment Arbitration Boom. Corporate Europe Observatory (CEO) and the Transnational Institute (TNI), 2012, .org/files/download/profitingfrominjustice.pdf.

30 See Appointing Authorities and the Selection of Arbitrators in Investor-State Dispute Settlement: An Overview Compilation of Initial Comments Received, March 2018,

32 See Appointing Authorities and the Selection of Arbitrators in Investor-State Dispute Settlement: An Overview Compilation of Initial Comments Received, March 2018, page 9.

33 See the Permanent Court of Arbitration web-based Case Repository at See also Sarah Grimmer, 'The Expanded Role of the Appointing Authority under the UNCITRAL Arbitration Rules 2010', 28(5) Journal of International Arbitration, 2011, 501–517.

34 id. 32 at page 6, paragraph 50.

35 id. 32 at page 15.

36 See Colin Ong, 'Case Strategy and Preparation for Effective Advocacy', The Guide to Advocacy (4th edn, 2019).

37 Grupo Unidos Por El Canal, S.A. (Panama) and 3 others v. Authoridad Del Canal De Panama (Panama).

38 See Langford, Behn and Lie 'The Revolving Door in International Arbitration',

39 Telekom Malaysia Berhad v. The Republic of Ghana, PCA Case No. 2003-03 UNCITRAL.

40 Consortium R.F.C.C. v. Kingdom of Morocco, ICSID Case No. ARB/00/6, Decision on Annulment (18 January 2006).

41 Republic of Ghana v. Telekom Malaysia Berhad, Hague District Court, Challenge No. 13/2004, Petition No. HA/RK 2004.667, 18 October 2004; Challenge 17/2004, Petition No. HA/RK/2004/778, 5 November 2004.

42 While the explanatory note to General Standard 6(a) provides that barristers' chambers should not be equated with law firms for the purposes of conflicts, disclosure may be required where there is a closer relationship among barristers, solicitors or parties.

45 The SCC released a practice note on those challenges to its arbitrators,

48 Landesbank Baden-Württemberg and others v. Kingdom of Spain (ICSID Case No. ARB/15/45).

49 Compania de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on the Challenge to the President of the Committee dated 3 October 2001.

51 Halliburton Company v. Chubb Bermuda Insurance Ltd [2020] UKSC 48.

52 Anaklia Development Consortium v. Georgia (ICC Case No. 25542/HBH).

53 Bob Meijer v. Georgia (ICSID Case No. ARB/20/28).

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