[B]arbers and taxidermists are subject to far greater regulation

than arbitrators.

Richard Reuben^*

In the US, an arbitrator can be disqualified for using

‘the same hairdresser as the counsel of one of the parties.’

Otto L.O. de Witt Wijnen^**

2.01  No one seems to agree about whether international arbitrators are over-regulated or under-regulated. Some commentators contend that international arbitrators are virtually unregulated, or at least less regulated than their haircutting counterparts.¹ Others take the view that international arbitrators are so over-regulated, they can be disqualified simply for having ‘the same hairdresser as the counsel of one of the parties’. These two opposing views seem to converge only on their facetious use of coiffeurs as a baseline for comparison. This chapter analyses how both assessments are at least partially true.

2.02  Those who are concerned about under-regulation of international arbitrators focus on the apparent absence of traditional forms of professional regulation.² Arbitrators are not required to have any special training, certification, or licensure.³ As a result, they are not subject to the (p. 58) direct oversight, discipline, or sanctions that traditionally regulate other organized professions. Also, unlike other legal professionals, international arbitrators generally enjoy almost complete immunity from professional malpractice liability, even for allegedly egregious errors.⁴

2.03  In addition to an absence of formal sanctions, international arbitrators are largely insulated from market-based regulation.⁵ International arbitration is an ostensibly private process. As a result, international arbitrator conduct is largely insulated from public scrutiny and broad-based reputational sanctions. Meanwhile, significant barriers to entry into the market for arbitrator services ensure that international arbitrators cannot be easily replaced or the pool of arbitrators easily expanded.⁶ The absence of an effective market has led some to refer to arbitrators as a ‘cartel’.⁷ The favour-trading that occurs within this elite echelon of the community of leading arbitrators and arbitration specialists (described in greater detail later) has led others to characterize arbitrators as a ‘mafia’.⁸

2.04  Even though conventional forms of professional regulation are absent, it would be a mistake to conclude that arbitrators are not regulated at all. A flood of new sources aim at regulating the conduct of international arbitrators. Various international bodies have promulgated new ethical rules, guidelines, procedural rules, and other criteria to manage and evaluate the conduct of international arbitrators. These sources supplement the arbitral rules and national laws that already govern the selection, appointment, and challenge of arbitrators.

2.05  National judicial decisions reviewing challenges to arbitrators and their awards add to these various sources of ethical standards, though not always in a consistent or coherent manner. In some instances, national bar authorities and national legislatures have also promulgated (p. 59) new rules and laws.⁹ Some commentators object that the proliferation of new rules has not led to clearer standards, but instead has created a trap for vigilant arbitrators and increased opportunities for gamesmanship by unscrupulous parties.¹⁰

2.06  Proponents of the view that arbitrators are over-regulated point not only to the increase in sources, but also to an apparent increase in the number of challenges to arbitrators in recent years.¹¹ To the extent that new rules and standards are developed under national regimes, they may be inapposite or even seem absurd to practitioners from other national legal systems. That is why a European might not discern that it is only playful hyperbole to suggest that an arbitrator can be disqualified in the United States for using the same hairdresser as a party.¹²

2.07  Debates about arbitrator regulation almost reflexively focus on the substance of the rules—are disclosure standards too exacting or not exacting enough?¹³ What categories of disclosure information should necessarily result in disqualification? What other ethical obligations do arbitrators have? Should so-called issue conflicts be a basis for disqualifying arbitrators? Are party-appointed arbitrators subject to the same impartiality obligations as arbitral (p. 60) chairpersons? This almost exclusive focus on the substance of arbitrator obligations obscures larger questions that are critical for regulating arbitrators and for the future of professional regulation of international arbitration: Who should have primary responsibility for determining the appropriate standards? How should those standards be enforced? And which institutions and processes should have primary regulatory authority?

2.08  The thesis of this book is that the ethical obligations of arbitrators, and other participants in international arbitration, should be determined and enforced through a regime of self-regulation. The nature of that self-regulatory regime is analysed in Chapter 6. This chapter instead provides a survey of the practical context in which issues of arbitrator ethics and arbitrator regulation arise.

2.09  Section A begins with a profile of international arbitrators and an overview of how the selection process operates in the modern market for international arbitrator services. This background provides important predicates for analysing the state of arbitrator regulation and illuminates why informal means, such as vague, open-ended disclosure standards and informal reputational sanctions, are no longer a sufficient substitute for formal regulation. An overview of the selection process also provides essential background for topics that are taken up later in Chapters 8 and 9, such as proposals to eliminate unilateral party-appointment of arbitrators, the effect of so-called issue conflicts, and the role of arbitrators as something more than mere service providers.

2.10  After this background in Section A, Section B surveys the various sources of arbitrators’ obligations and provides an overview of how and when they apply to arbitrators. Finally, Section C of this chapter surveys the substantive obligations that the various sources described in Section B impose on arbitrators.

2.11  Arbitrators are selected and appointed from a market for international arbitration services. As described in Chapter 1, international arbitration has become a high-stakes and a highly competitive marketplace, though not an entirely efficient marketplace. This section provides an essential overview of that market and the processes for selecting and appointing arbitrators from that market. The ultimate conclusion of this section is that the inefficiencies and opacity in the modern marketplace for arbitrators are inconsistent with increasing transparency and related demands for accountability in international arbitration more generally.

2.12  International arbitrators are exceptionally talented individuals. Most speak multiple languages.¹⁴ They boast rich and multi-national educations from the world’s most prestigious (p. 61) universities¹⁵ and often have experience in the highest echelons of diverse legal systems. Their multi-faceted, multi-cultural legal experience is often supplemented by technical or industry-specific expertise. These cumulative credentials are often leveraged in scholarly research¹⁶ and enhanced by university professorships. The most experienced of these arbitrators are appointed and re-appointed to the most important international disputes.¹⁷ Leading arbitrators are called on to resolve everything from delicate matters of diplomacy, to controversies involving sums larger than the annual operating budget of some smaller nations, to issues at the edge of the legal frontiers of international and transnational law.¹⁸

2.13  Historically, as described in Chapter 1, arbitral justice was more rough-hewn, Euro-centric, and equity-driven. International arbitrators in that era were a small, intimate group of European ‘grand notables’ or ‘Grand Old Men’.¹⁹ Individuals were trusted as arbitrators because they reputedly shared a sense of duty about what it means to perform their function.²⁰ This perspective is captured in one arbitrator’s comment that they viewed their role as ‘a duty, not a career’.²¹ It also may account for why the New York Convention does not even mention the possibility that arbitrators may engage in misconduct—arbitrators’ internal ethos was presumed to be a sufficient means of regulating their conduct.

2.14  Demographically, the body of international arbitrators is, still today, overwhelmingly dominated by men²² from North America and Europe. The figures are startling,²³ although the (p. 62) composition of the field is slowly changing. As described in Chapter 1, the expansion and diversification of international arbitration cases have brought new parties and some new individuals to the ranks of international arbitrators. These changes bring new challenges for a group that still considers itself a closed ‘circle’ that ‘deliberate[s] within an intellectual zone of shared confidence’.²⁴

2.15  In addition to new arrivals bringing different ethical assumptions and potentially disruptive new practices, they also bring new scepticism about prevailing practices. Parties and participants from outside the inner circle may have different views about the acceptability of prevailing practices among insiders and they may more generally question the absence of a full range of diverse backgrounds among arbitrators as compared to the parties and participants over which they preside.²⁵ In addition, new parties and practitioners may not have adequate information to make effective decisions during the arbitrator selection process, which in itself may raise questions about fairness.

2.16  One example of disruptive practices introduced by newcomers was the introduction, already mentioned in Chapter 1, of the now largely defunct domestic US arbitration practices with respect to party-appointed arbitrators. Until recently, parties and their counsel in domestic US arbitrations communicated throughout arbitral proceedings with their party-appointed arbitrators.²⁶ Parties, counsel, and arbitrators from most other systems find such ex parte communication wholly unacceptable.²⁷ After considerable debate and (p. 63) consternation,²⁸ various sources now specify that all arbitrators are subject to the same duties of independence and impartiality. Chapter 8 examines how this rhetorical reaction to the historical American practice may have actually caused confusion of its own.

2.17  Another example of newcomers challenging the status quo is illustrated by in Hrvatska Elektroprivreda, d.d. v The Republic of Slovenia.²⁹ In that case, the respondent retained an English barrister who was a member of the barristers’ chambers in which the Tribunal’s President was a door tenant.³⁰ The respondent contended that there was no conflict of interest because it was accepted in English practice to have a barrister from the same chambers on opposing sides of the same case or acting as an arbitrator and party representative counsel in the same case. In response, the Croatian claimant argued, ‘the community of participants in ICSID arbitrations is much broader than the English bar, and what may not, apparently, be cause for concern in London may well be viewed very differently by a reasonable third person from Africa, Argentina, or Zagreb, Croatia’.³¹ The tribunal decided that distrust ‘from the claimant’s cultural perspective’ about practices considered perfectly acceptable among the English Bar instead caused what it deemed were ‘justified’ or even ‘unavoidable’ doubts about the impartiality of arbitrators in that case.³² While this particular case involved issues of arbitrator conflicts in barrister chambers, perceptions by newcomers have also raised other concerns regarding the arbitrator’s role, particularly in investment arbitration, a subject that will be taken up expressly in Chapters 8 and 9.³³

2.18  Stepping back from arbitrators themselves, in the last 20 years, international arbitration has matured, becoming more sophisticated and diversified in a range of categories. Modern international arbitration involves a constellation of parties, counsel, and disputes from legal cultures that span the entire globe. The transnational legal environment has also become more (p. 64) complex as a host of regulatory issues, such as antitrust, securities fraud, anti-corruption and anti-money laundering laws, and intellectual property, are now routinely implicated in arbitral disputes.³⁴

2.19  As the nature and range of disputes have expanded and diversified, arbitrators have adjusted to the new environment. The new generation of arbitrators can no longer invoke ‘grand principles of law’ or vague notions of equity with the same innate sense of legitimacy on which the earlier generation relied.³⁵ Instead, they have adopted a more technocratic and procedurally rigorous approach to arbitral decision-making.³⁶ This more technocratic and managerial approach appeals to modern parties, who are drafting increasingly complex and detailed contracts,³⁷ which they want enforced with legal precision.

2.20  The effect of these overlapping trends is that the opaque compromise-oriented decision- makings of the past have been largely displaced by more meticulous reasoning based on the law selected by the parties. Arbitral procedures for gathering and presenting evidence and argumentation had traditionally been open-textured, subject to improvisation, and, as a practical matter, crafted on a case-by-case basis to suit the predilections of individual arbitrators in the absence of party agreement. In recent years, rules for procedure and evidence gathering have become more formal. The purpose of this formalization is to bring greater predictability for parties. Relatedly, however, it also precipitates a shift in the role of arbitrators. As James Carter explains:

[N]ew international arbitration ‘players’ [sought] transparency in the rules, procedures and institutional arrangements [because they were] impatient with customs and understandings not accessible to them, and they [were] suspicious of the idea that there [was] or [might have been] an inner ‘club’ of practitioners and arbitrators from which they [were] excluded.³⁸

(p. 65) Modern developments have substantially harmonized and standardized international arbitration procedures:

The arbitration world … has … articulate[d] and standardize[d] many of the aspects of international proceedings, so that newcomers will be able to find their way without undue difficulty … [T]he ‘unwritten’ procedures—those typically followed but not written into the formal rules and previously often passed down in internal administrative form—now appear in guidelines of all sorts available to the reader with access to a decent arbitration library.³⁹

These international standards are reflected in the International Bar Association’s Rules for the Taking of Evidence in International Arbitration, as well as other practice guidelines and protocols.⁴⁰ Despite efforts at harmonization and increased transparency, parties, counsel and arbitrators continue to bring a diversity of preferences and perspectives to arbitral proceedings.⁴¹ As a consequence, in addition to effective legal reasoning and case management skills, experienced modern arbitrators have also become skilled at a more cosmopolitan approach to decision-making. Arbitrators must fashion ‘arbitral procedures that do not mimic those of either party’s or counsel’s home jurisdiction, but that instead provide an internationally-neutral procedural framework’ and ‘(properly) avoid merely “splitting the difference” between competing procedural desire and proposals’.⁴² One side effect of more precise contracts selecting national law, and more elaborate fact-finding procedures, is a resulting increase in the length of proceedings and of the awards they produce.⁴³ Increased transparency facilitates increased attention on the details of arbitral procedures and outcomes. Parties are more focused on procedural opportunities to prove the details of their cases, and better able to evaluate the quality of arbitral decision-making by assessing how closely the reasoning of an award hews to proffered evidence and applicable legal rules. These developments, in turn, have increased focus on who international arbitrators are and how they decide cases.

2.21  In addition to these developments in international commercial arbitration, the increasing number of disputes involving States, particularly the rise of investment arbitration, has had similar effects. Investment arbitration has dramatically raised both the stakes and challenges regarding international arbitral procedure and arbitral decision-making.⁴⁴ The high-stakes and often highly politicized nature of these disputes has brought intense focus on investment arbitrators, their suitability, and potential biases in resolving these types of disputes. (p. 66) According to some, international arbitrators bring to investment arbitration a unique skill set in international fact-finding and managing complex cross-cultural disputes that may be lacking in more traditional public international tribunals.⁴⁵ According to other commentators, the fact that international arbitrators operate in a private marketplace and are selected on an ad hoc basis raises questions about their suitability for deciding investment disputes. Some critics have suggested that investment arbitrators intentionally make expansive jurisdictional rulings in an effort to increase the size of the market for their services,⁴⁶ while others have accused them of being superficial (if not disingenuous) in their interpretation and application of the Vienna Convention on the Law of Treaties.⁴⁷

2.22  It is not surprising that so much attention in investment arbitration is focused on the arbitrators themselves.⁴⁸ Investment treaties established the framework of substantive protections for foreign investors and the skeletal outlines for arbitration jurisdiction and procedures. International arbitrators, however, are the ones who have to put the meat on those bones. That power is exercised in a high-stakes environment in which the law is still evolving. There are deep disagreements about various policy issues that animate that evolution. In addition, a growing body of empirical research provides increasingly extensive data about investment arbitrators and the cases they decide.⁴⁹

2.23  With this background about the field of international arbitrators and their role in both individual arbitral proceedings and the development of arbitration law, it becomes apparent that the process for selecting arbitrators is a critically important moment in an arbitration case. Despite its critical importance, however, there are sometimes significant asymmetries and ambiguities that can undermine the fairness of the arbitrator selection process.

2.24  Gary Born has explained that the process of selecting arbitrators is ‘an historical, and distinguishing, feature of arbitration’ that ‘offer[s] peculiar opportunities to the parties’ and remains ‘one of the fundamental attractions of the arbitral process.’⁵⁰ In a more playful description, William ‘Rusty’ Park advises that ‘Just as in real estate the three key elements are “location, location, location,” so in arbitration the applicable trinity is “arbitrator, arbitrator, arbitrator.”’⁵¹

(p. 67) 2.25  In very real terms, selecting an arbitrator is the ultimate ‘forum shopping’.⁵² Conventional forum shopping aims to select the courts or a jurisdiction in order to access certain procedural and substantive laws⁵³ or decision-makers who are anticipated to be more favourable to a party’s case.⁵⁴ By contrast, arbitrator shopping can be a more direct and effective means than traditional forum shopping of targeting procedural and substantive rules, as well as desirable features in the decisionmaker.⁵⁵

2.26  Techniques for achieving these aims in the arbitrator selection process are often described as more of an art than a science. Nevertheless, the process is governed by established rules and practices. At the same time, some of those rules and practices remain subject to debate and even confusion. More importantly, they operate in a marketplace that is often subject to profound information asymmetries.

2.27  Under most arbitral rules and national laws, parties can choose the number of arbitrators and determine the mechanisms for how they will be appointed.⁵⁶ Some parties or arbitral rules provide for a sole arbitrator when smaller amounts are at stake.⁵⁷ In most sizable disputes,⁵⁸ almost always in investment arbitration, and by default under some institutional rules, the tribunal is comprised of three arbitrators. The popularity of tri-partite tribunals is in part because they permit a diversity of national, legal, and cultural backgrounds, which ensures greater neutrality than a sole arbitrator.⁵⁹ There is also a perception that three arbitrators working together are less likely to err than a sole arbitrator working alone,⁶⁰ an important consideration since there is no substantive appeal process to correct errors.

(p. 68) 2.28  Another critical reason for preference of a three-person tribunal is that parties have much greater ability to shape the composition of the tribunal. In the case of a sole arbitrator, parties are rarely able to agree on the appointment of a single individual.⁶¹ With a three-person tribunal, each party has the opportunity to nominate or appoint one of the two co-arbitrators.⁶²

2.29  The first step in selecting an arbitrator is developing a list of potential candidates. If a party has retained one of the leading international arbitration firms, that initial list would likely be generated by the firm based on its experience in the field and familiarity with the pool of potential arbitrators. Some parties that do not retain specialized international arbitration firms⁶³ and are unfamiliar with the pool of potential arbitrators may resort to one of several services to generate an initial list. Organizations, such as iaiparis.com, have created registers or rosters of eligible international arbitrators from which a shortlist of possible candidates can be identified.⁶⁴ While these resources can be very useful for initially identifying prospective arbitrators, they operate more like a form of publicity for international arbitrators than a tool for determining which candidate is optimal for a particular dispute. These sources help sort candidates by linguistic ability, legal training, and arbitration experience. The most important information about a potential arbitrator, however, is not available in these sources.

2.30  Once potential arbitrators have been identified, parties and their counsel generally gather information about prospective arbitrators. Some of this information is derived from formal, publicly available sources, such as publications authored by the candidates, publicly (p. 69) available awards authored by the candidate, or national court cases involving their awards. The problem is that this information is not always readily available, even with diligent research. Moreover, as discussed in greater detail later,⁶⁵ the information that exists is not equally available to all parties.

2.31  Despite difficulties in gathering information, research into an arbitrator’s background is a critical phase of the arbitrator selection process. After gathering information, parties sometimes also interview a prospective arbitrator, though this process is also, as described later, subject to some uncertainties. As a result of all this vetting, subject to institutional confirmation (when applicable) and challenge standards, party-appointed arbitrators are unilaterally selected based on their presumed qualities and perspectives as an arbitrator. They are, in other words, an almost ‘pure’ expression of a party’s preference in a decision-maker.

2.32  Arbitral chairpersons, meanwhile, are usually selected either by agreement of the parties or, more usually, by the two party-appointed arbitrators. Parties are, therefore, able to influence selection of the arbitral chairperson.⁶⁶ Party preferences regarding chairpersons are limited, however, by their ability to secure agreement either from the opposing party or their party-appointed arbitrators. These processes may seem like they provide fair opportunities for both selecting party-appointed arbitrators and added protections to ensure the neutrality of arbitral chairpersons. Ambiguities in the procedures and related ethical norms that apply to arbitrator selection, however, suggest there is room for doubt.

2.33  Considerable disagreement still exists within the international arbitration community regarding what constitutes proper conduct during arbitrator selection. According to some commentators and sources, it is impermissible or at least unseemly to engage in any pre-appointment communication with party-appointed arbitrators, unless the other party is present.⁶⁷ Other sources suggest that limited enquiries about an arbitrator’s availability and experience are permissible, but not discussions about other topics, such as prospective chairpersons. Still other sources suggest that, short of discussion of the merits of the case, interviews are permissible and advisable, including discussions about potential arbitral chairpersons.⁶⁸ Finally some parties—particularly those new to arbitration or who are not represented by experienced arbitration counsel—simply do not have any meaningful strategy for how to select arbitrators.⁶⁹

(p. 70) 2.34  These disagreements about the process for appointing the tribunal are much more problematic than the oft-noted disagreements about arbitral procedures.⁷⁰ Disagreements about internal arbitral procedures can be submitted to the tribunal to resolve during the normal course of an arbitration. In this respect, the disagreements are transparent and subject to fair resolution. Disagreements about the arbitrator appointment process, by contrast, often remain masked in the opaque phases that precede commencement of an arbitration and appointment of the tribunal. A party may never know whether its opposing party engaged in interviews or exchanged views with its party-appointed arbitrator about the selection of the arbitral chairperson. If one party is carefully vetting prospective arbitrators, while the other is assiduously avoiding any communication with them, the process may be producing a lopsided tribunal, including a chairperson that is deliberately but covertly more preferable to one party than the other. The importance of these inconsistent practices becomes all the more troubling in light of the strategic considerations that help determine a party’s preferences in an arbitrator and asymmetries in the market for arbitrator services.

2.35  In a recent survey, nearly 90% of respondents designated ‘reputation’ as the single most important factor in selecting an arbitrator.⁷¹ In part, these respondents were commenting on an arbitrator’s overall reputation for integrity, intelligence, diligence, and acumen. They were also, however, likely commenting on an arbitrator’s reputation regarding the particular sub-issues that are relevant to their individual case strategies.

2.36  These sub-issues might include whether an arbitrator is willing to allow or disallow certain procedures (such as interim relief, joinder of third parties,⁷² and document exchange), has strong case management skills, adopts a strict constructionist (or a more flexible) approach to contract interpretation, is willing to assert (or reject) an expanded view of arbitral jurisdiction, and the like. At a more general level, parties generally understand that the right arbitrator can affect such pivotal issues as the seat of the arbitration (in the absence of party (p. 71) agreement),⁷³ the choice of substantive law,⁷⁴ the nature and extent of hearings,⁷⁵ and the allocation of costs.⁷⁶

2.37  Tribunals, of course, ultimately decide the substantive outcomes of the case. Particular features of their personal background and experiences or views on policy might also therefore be highly relevant, particularly in investment arbitration cases or cases that otherwise implicate policy issues. A party’s preference among otherwise competent arbitrators inevitably turns on the perceived strategic advantages implicated by these different considerations.

2.38  Some observers may consider it unseemly to discuss strategic considerations in the arbitrator selection process. A very real tension exists between intentionally strategic behaviour in selecting arbitrators and the requirements that individual arbitrators be impartial and that the wholly constituted tribunal be fair and neutral. The nature of the apparent tension, and related conceptualizations of impartiality, are analysed later in Chapter 8. This chapter focuses on the existing state of international arbitration practice. Any examination of existing practices cannot ignore or deny the strategic considerations and behaviour that occur in virtually every arbitration.

2.39  As already noted, the opportunity to affect the constitution of the tribunal is one of the primary reasons parties agree to arbitrate in the first place. The ability to intentionally select the individuals who will serve as arbitrators is a benefit that parties are generally unwilling to relinquish, even in light of procedures that permit tribunals to be appointed by an arbitral institution or other appointing authority.⁷⁷

2.40  While international arbitration has grown and the number of arbitrators has expanded, several factors hinder the development of a competitive and open market for arbitration services.⁷⁸ First, even with expansion, the field continues to be dominated by an elite group of insiders. These individuals effectively control all the most prominent arbitration organizations and associations through which aspiring arbitrators gain prominence. The rise of young arbitrator groups, such as Young ICCA, the ICC Young Arbitrators Forum, and the Paris Very Young Arbitration Practitioners, as well as intentional efforts from within, have improved diversity in professional opportunities available to aspiring arbitrators. But international arbitration events still thrive on the participation of revered icons. It is their presence and pronouncements that tend to capture attention and headlines.

2.41  In addition to the significant barriers to entry, there are also severe information asymmetries that prevent the market for arbitrator services from being functionally competitive and efficient. While there is a notable trend toward greater transparency,⁷⁹ most arbitration is confidential, most awards are not published, and until recently most institutional decisions regarding challenges to arbitrators are rendered without reasoned explanation and without publication.⁸⁰ The combined effect of these features is an opacity about critical information that parties need to make fully informed decisions in selecting arbitrators.⁸¹

2.42  For example, information about an arbitrator’s past decisions or challenges may become ‘public’ when an arbitrator is challenged in a judicial proceeding or at the award enforcement stage. Even if judicial proceedings are technically available to the public (and they are not in all legal systems), they are not necessarily readily accessible to most parties. In the United States and most other common law jurisdictions, judicial opinions are published and (particularly in the United States) are electronically searchable. As a result, if an arbitrator candidate’s conduct or work product had been the subject of challenge in a US court, an English-speaking party (or their English-speaking counsel) has easy access to the relevant information. Absent these preconditions, however, linguistic, cultural, and practical barriers present formidable obstacles to the decisional history and past conduct of arbitrator candidates.

(p. 73) 2.43  Some of the best and most reliable information about an arbitrator is derived from direct participation with that person in arbitral proceedings. The value of such information is one reason why service as an arbitrator is a valuable tool for developing business as a lawyer as it gives the lawyer unique insights about the qualities of arbitrators who served on the same tribunal. These sources of information about an arbitrator’s conduct and decisional track record are by definition most available to a relatively small group of arbitration insiders who, not surprisingly, treat this valuable information as proprietary.⁸²

2.44  One effect of this largely closed marketplace is that it is easier to find critical information about insiders and more difficult to assess new arbitrators. The difficulties in obtaining information combine with the fact that prior service as an arbitrator is the pre-eminent qualification for an arbitrator-candidate⁸³ to create a relatively closed circle of arbitrators that is difficult for aspiring new arbitrators to penetrate.⁸⁴

2.45  Market imperfections usually signal a need for correction through some form of regulation. The response to existing imperfections in the international arbitrator market, however, has to date been largely private and ad hoc. Major law firms and corporations (as well as arbitral institutions) maintain private, internal databases that catalogue essential information about arbitrators. These private libraries of information about arbitrators exacerbate the existing information asymmetries and the advantages that insiders gain from practical experience.

2.46  While to date information asymmetries have predominantly benefitted arbitration insiders, an ‘outsider’s revenge’ may be in the making. As described in Chapter 1, the largest growth in new cases filed is occurring in regional arbitration centres. Moreover, a long-term solution to perceptions of bias and concerns about lack of diversity among arbitrators will necessarily mean appointments of new arbitrators from outside the well-worn North American and European circles.⁸⁵ As newer arbitrators arrive from outside the major cities in Europe or North America, international arbitration insiders may find themselves on the wrong end of information asymmetries, unable to find reliable public information about potential arbitrators.

2.47  Regardless of whether or when an ‘outsider’s revenge’ emerges, the existing information asymmetries, combined with procedural asymmetries discussed in the last section, have a number of negative consequences. They unnecessarily raise costs in a process that is already (p. 74) criticized for being too expensive. They hinder the growth and development of new arbitrators at a time when the leading arbitrators are arguably over extended and (reputedly) turning down cases with some frequency. Most importantly, these information asymmetries squander international arbitration’s precious legitimacy and perceptions of its efficacy and fairness.

2.48  In response to these and other concerns about arbitrator conduct, a number of new sources have emerged to guide and regulate arbitrator conduct. The next section surveys those sources, while Chapter 6 assesses how they developed over time and fit into a larger regime of self-regulation of international arbitrators. Chapter 8 meanwhile proposes reforms to redress existing information asymmetries, including a new resource called Arbitrator Intelligence.

2.49  Historically, the primary if not only source of arbitrators’ ethical obligations was their internal and shared sense of duty. The expansion and diversification of the field of international arbitrators, described earlier, has broken down traditionally shared assumptions about professional conduct. At the same time, disputes, as well as law firms and corporate parties, have become larger and their structures more complex. This increased size and complexity has led to new and more subtle questions about what might constitute a conflict of interest.⁸⁶ Just as questions about arbitrator ethics are becoming more complex and challenging, increased formality and transparency in international arbitral procedures has raised parties’ expectations. Today, parties are unwilling to leave delicate issues of impartiality to arbitrators’ unchecked personal discretion. The arrival of third-party funders, and ambiguities about their participation in arbitral processes, have also raised new issues and magnified existing concerns.

2.50  Two main themes emerge out of the shift to more formalized mechanisms. On the one hand, more sources of regulation do not in themselves necessarily lead to clearer standards. The content of specific standards regarding arbitrator ethics and the need for clearer concepts and definitions will be explored in greater detail later in this chapter and again in Chapter 8. The remainder of this section surveys and compares the sources of arbitrator ethical duties.

2.51  A second theme that emerges out of this survey of sources, and will be further explored in Chapter 6, is that the most effective regulation occurs at the international level and operates within arbitration processes. The most precise and effective ethical norms were developed through actual practices by international bodies and institutions. National standards and enforcement mechanisms operate as a limited, final backstop. In this respect, arbitrator (p. 75) regulation illustrates a form of ‘self-regulation’ that will provide a model for regulation of other participants in later chapters.

2.52  Arbitral rules drafted by arbitral institutions to govern the arbitration proceedings necessarily include procedures for appointing and challenging arbitrators. Some other organizations and professional arbitration associations⁸⁷ also provide administrative support and resources for parties resolving their disputes under the auspices of their rules.

2.53  Arbitral rules generally provide for when and how parties may select arbitrators, for what happens when a party fails to nominate or appoint an arbitrator, and for procedures when the parties cannot agree about the appointment of an arbitrator. All arbitral rules also impose on arbitrators an obligation that they be independent from the parties, impartial, or both.⁸⁸ For example, Article 11 of the ICC Arbitral Rules provides that ‘every arbitrator must be and remain impartial and independent of the parties involved in the arbitration.’⁸⁹ Similarly, Article 5(2) of the London Court of International Arbitration (LCIA) Rules provides that ‘all arbitrators conducting an arbitration under these Rules shall be and remain at all times impartial and independent of the parties[.]’⁹⁰

2.54  Obligations of independence and impartiality are enforced through requirements in most arbitral rules that arbitrators disclose potential conflicts prior to appointment⁹¹ and, in some institutions, affirm their independence by signing a statement attesting to such independence.⁹² Even the most recent version of the United Nations Commission on International Trade Law (UNCITRAL) Rules now includes a model statement of independence that arbitrators are required to complete.⁹³

2.55  Some institutions also require that, concomitant with their duty to disclose, arbitrators have a duty to investigate potential conflicts of interest.⁹⁴ The primary purpose of disclosure (p. 76) obligations and statements of independence are to enable institutions and ‘parties to ascertain whether prospective arbitrators satisfy applicable standards of independence and impartiality’ and for parties ‘to exercise their challenge rights if they believe that these standards are not satisfied.’⁹⁵

2.56  Although ‘independent’ and ‘impartial’ are terms that have remained constant in arbitral rules, the meaning and mechanisms for enforcing those standards have evolved over time, largely in response to perceived changes in party expectations and the market for dispute resolution services. These changes are represented both in how the standards are articulated in the arbitral rules, as well as what arbitrators are required to disclose during the appointment process.

2.57  One of the most dramatic shifts was in the revisions in 2004 to the American Arbitration Association and the American Bar Association Code of Ethics for Arbitrators in Commercial Disputes (AAA/ABA Code of Ethics) and the AAA arbitral rules. These revisions were in response to recognition that the former standards, which permitted non-neutral party-appointed arbitrators, were ‘no longer useful or realistic.’⁹⁶ The AAA/ABA Code of Ethics and AAA Commercial Arbitration Rules were revised to impose the same ethical obligation of neutrality on all arbitrators, including co-arbitrators,⁹⁷ unless the parties agreed to the contrary.⁹⁸

2.58  The ICC Rules were also subject to extensive revisions to arbitrators’ duty of independence and related disclose obligations. Originally, the ICC Rules had no express requirement that an arbitrator disclose any potential conflicts of interest.⁹⁹ The lack of disclosure continued all the way through the 1975 revision.¹⁰⁰ Then, in the 1988 version of the ICC Rules, this omission was replaced by a rule that required only that an arbitrator disclose information that the parties believe called his or her independence into question.¹⁰¹The 1988 version of the ICC Rules required that arbitrators disclose any facts or circumstances that ‘might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties.’¹⁰² The 1998 ICC Rules placed the same disclosure requirements on arbitrators as the 1988 Rules.¹⁰³ The legislative history of the ICC Rules make clear, however, that omission of an express ‘impartiality’ requirement did not imply that arbitrators could (p. 77) be partial.¹⁰⁴ The 2012 ICC Rules brought additional changes, which now provide that ‘every arbitrator must be and remain impartial and independent of the parties involved in the arbitration’.¹⁰⁵

2.59  The 2012 ICC Rules also impose expanded requirements for disclosure. Under the rules, arbitrators must ‘disclose in writing to the Secretariat any facts or circumstances which might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to the arbitrator’s impartiality’.¹⁰⁶ The ICC’s revised statement of independence (now titled ‘Statement of Acceptance, Availability, Impartiality and Independence’) also requires disclosure by an arbitrator of his/her or other professional commitments. Among other things, the ICC form specifically requires disclosure of the prospective arbitrator’s pending caseload, including numbers of arbitrations as counsel, co-arbitrator, and sole or presiding arbitrator.

2.60  Critics have suggested that disclosure of this information provides limited and potentially misleading reassurance to the ICC and parties. They argue that the decisive issue is the arbitrator’s capacity to handle the matters in question, which is seldom reflected in abstract statistics about caseload. These progressive amendments to the ICC Rules, however, both expand the scope of disclosure and, implicitly, reduce arbitrator discretion in determining what to disclose.

2.61  One of arbitral institutions’ most critical functions is in their control over the processes for appointing and challenging arbitrators. The mechanics of arbitrator challenges are managed primarily by arbitral institutions, which apply their own substantive and procedural rules.

2.62  As Gary Born explains, control over the challenge process by arbitral institutions and appointing authorities is ‘generally preferable to decisions by national courts … because they are resolved very expeditiously (which minimizes possible delays or uncertainties to the proceeding) by persons with substantial experience in such matters (which makes decisions more reliable and predictable)’.¹⁰⁷ More directly and immediately than national courts, arbitral institutions have a vested interest in ensuring that their decisions on challenges protect the integrity of the arbitral process and ensure the enforceability of resulting awards.¹⁰⁸

2.63  Although procedures vary somewhat among institutions, typically, a party challenging an arbitrator must provide notice to the institution,¹⁰⁹ which is either accepted by the opposing party or the arbitrator, or supplemented in writing. Both the opposing party and the challenged arbitrator typically submit responses.¹¹⁰ The institution generally decides the challenge quickly and issues its decision without reasons in a letter that purports to be final (p. 78) and binding on the issue.¹¹¹ As described in further detail later, national courts may conduct an independent review of the same basis for challenge, but that review is usually under national law, not the standards and procedures established and applied by arbitral institutions. The expedited treatment of challenges by appointing authorities reflects the fact that ‘the potential for abuse of the challenge proceedings is great and thus manifestly deficient challenges should simply and quickly be declared inadmissible’¹¹² and that the existence of pending challenges can delay the arbitral proceeding.

2.64  Notwithstanding the important role of arbitral institutions in managing arbitrator appointments and challenges, there is a pervading lack of transparency. That lack of transparency has raised some concerns, but also prompted responses to those concerns.

2.65  The decision of whether and how to challenge an arbitrator can implicate difficult strategic considerations for the parties. If the challenge is unsuccessful, the challenged arbitrator remains on the tribunal to decide the merits of the dispute. The system is premised on an assumption that arbitrators’ sense of professionalism precludes them from maintaining a grudge in subsequent proceedings. At a human level, it is difficult to imagine that the spectre of a failed challenge does not linger in the minds of either the party or the arbitrator. A party’s concerns about partiality, therefore, may be heightened after an unsuccessful challenge.¹¹³ For arbitrators, being challenged is generally an uncomfortable process. Their conduct and potentially their integrity are being questioned in front of their colleagues. The prospect of professional embarrassment can be quite real, even for the most esteemed and established arbitrators.

2.66  An unsuccessful challenge may also raise questions about whether a party was acting based on a good faith concern or on a bad faith effort to delay the proceedings. Whatever residue might remain from a failed challenge is all the more palpable if a party preserves the basis for the challenge to potentially reassert it later in a challenge to the award.

2.67  The most effective way to reduce unsuccessful challenges and their potential for unpleasant side effects is to make outcomes of potential challenges more predictable by clarifying standards. There have been some important efforts in this regard. As described previously, several institutions have expanded the scope of disclosure obligations. The standards under institutional rules, however, remain vague, qualitative standards. One exception is in arbitration administered by the AAA, where arbitrators are required to abide by the AAA/ABA Code of Ethics. As analysed in greater detail here, the AAA/ABA Code specifies arbitrator obligations using more quantitative specifics about the types of relationships and time frames that require disclosure or disqualification. In contrast, the meaning of terms such as ‘independence’ and ‘impartiality’, as well as common modifiers such as ‘justifiable doubts’ and ‘in the (p. 79) eyes of the parties’, do not always provide clear guidance in light of particular facts, especially in cross-cultural settings.

2.68  One important response by institutions to increased criticism from commentators and parties about the lack of transparency,¹¹⁴ is increasing trend efforts to publish the reasoning behind institutional decisions on arbitrator challenges. The most important development is the publication in 2011 of abstracts of LCIA decisions on arbitrator challenges between 1996 and 2010.¹¹⁵ It was a difficult task because the decisions were necessarily published in redacted form. Publication decisions required a delicate balance between providing enough information so that the nature of the challenge and ruling could be understood, and protecting parties’ interests and expectations of confidentiality.

2.69  Even among experienced counsel and arbitrators, this effort was extolled as a ‘landmark decision’¹¹⁶ that would provide a ‘treasure trove of learning on how the somewhat abstract standards of independence and impartiality have been applied in practice’.¹¹⁷ As one arbitration specialist explains, the publications ‘will help parties make informed challenges, rather than doing it on the blind’, and ‘remove a lot of supposition and guesswork’ in determining whether it is practical to make a challenge.¹¹⁸ In addition to providing needed guidance to parties, the effort is also regarded as promoting confidence in the LCIA’s decision-making on challenges, discouraging purely tactical challenges, and providing arbitrators with clearer guidance for their own conduct.

2.70  The ICC stands out in its continued resistance to providing any reasons or explanations to the parties about the basis for rulings on challenge decisions. The stated reason for this reluctance is that challenge decisions are based on a vote by the Court of Arbitration, which has over 100 members. While they are all presented the same report by the Secretariat regarding a particular challenge, the ICC maintains that it is not possible to explain the actual basis of a collective decision by so many court members. Rather than satisfying critics, this explanation seems to beg the question of why the ICC continues to subject these decisions to a vote by such a large and unaccountable body, particularly when there are some anecdotal reports of past efforts to improperly ‘lobby’ court members regarding certain challenge decisions.

2.71  Nevertheless, even the ICC has felt pressure to clarify the bases for its rulings on arbitrator challenges. As a result, the ICC has published a series of progressively more detailed reports about its decisions on arbitrator challenges.¹¹⁹ The ICC’s report in 2008 (shortly after the (p. 80) LCIA announced that it would be publishing redacted versions of its challenge decisions) is by far the most detailed, providing summaries of circumstances and decisions in selected cases. The Stockholm Chamber of Commerce has also been publishing summary reports of its challenge decisions.¹²⁰

2.72  Under most institutional rules, institutions’ rulings on appointment of and challenges to arbitrators are deemed to be ‘final’ or ‘conclusive.’¹²¹ Some courts and commentators have interpreted these provisions (finality clauses) as reserving for institutions the exclusive power to make rulings on arbitrator appointments and challenges, or as a party agreement to preclude interlocutory intervention by national courts with respect to arbitrator challenge and appointment. Under this interpretation of finality clauses, there is still a question of whether they will be treated as effective by national courts. For example, based on this interpretation of the ICC finality clause, the English court in AT&T Corp. v Saudi Cable Co. answered the question in the negative: ‘I do not accept the view … [that] the finality provision [in Article 7(4) of the 1998 ICC Rules] means that the English courts have no power to review the decision of the ICC Court’ in a challenge to an arbitrator.¹²² The court also indicated that the conclusions of an arbitral institution in challenge proceedings would ordinarily be accorded substantial deference.¹²³ This analysis is amiss both in its suggestion that the court will ‘review’ the ICC’s decision, as opposed to the underlying facts giving rise to questions of impartiality, and that it should ‘defer’ to that decision. The origin of the problem is that the court both overreads the finality clause and misconstrues the effect of the ICC’s decision on its own review.

(p. 81) 2.73  A better view is that finality clauses in arbitral rules give institutions the final say on interpretation and application of their rules.¹²⁴ Thus, a national court could later evaluate a challenge based on arbitrator conduct under national law in an interlocutory procedure or in annulment proceedings, or under the New York Convention in award enforcement proceedings. In those contexts, however, a national court would not be reviewing the institution’s findings per se, and therefore could not ‘defer’ to the institution’s ruling. It would be separately evaluating under national law or the New York Convention the same facts and circumstances underlying the institution’s ruling. One important consequence of this distinction is that a national court could not find non-compliance with institutional rules if an institution whose rules included a finality clause had already determined that its rules had been complied with.

2.74  The practical implications of this distinction are potentially significant. For example, an institution’s determination that certain information was not required to be disclosed under its rules would preclude a party from later challenging an award under Article V(1)(d) of the New York Convention on the ground that the non-disclosure violated the parties’ agreement. A party could still challenge the award under Article V(1)(b) on the ground that the conflict of interest arising out of the undisclosed information precluded it from presenting its case, or Article V(2)(b) that the undisclosed conflict violated public policy. But in agreeing to arbitral rules that include a finality provision, a party not only agrees to the substantive provisions of those arbitral rules, but also to having their content determined finally and exclusively by the institution.

2.75  Another perhaps even more important consequence of finality clauses is that they ensure that the standards for impartiality articulated in institutional arbitral rules will not be subject to inconsistent interpretation and application by national courts. Direct judicial review of an institution’s decision regarding an arbitrator challenge, regardless of the deference afforded, creates a risk of fragmented interpretation of the institution’s arbitral rules. Consider, for example, the issue in J&P Avax SA v Tecnimont SPA. The ICC Court of Arbitration rejected a challenge to an arbitrator based on an undisclosed conflict on the grounds that it was brought after the 30-day period permitted under the ICC Rules. The judges in the Court of Appeal of Reims nevertheless set aside the award despite the fact that more than 30 days had passed when the challenge was made. The Reims Court of Appeal reasoned that ‘a challenge before the ICC and an application to a judge to set aside the award are separate proceedings, which do not serve the same purpose and are not controlled by the same authority’.¹²⁵

(p. 82) 2.76  Consider for a moment if the Reims Court of Appeal had instead decided to review the ICC Court’s decision, even deferentially, as the London court did in AT&T v Saudi Cable Co. If it engaged in such review, to reach the same result the court could have, for example, interpreted the 30-day period as having an implicit exception for ‘excusable neglect’ or as being wholly inapplicable in cases involving ‘serious conflicts’. While these might be reasonable possible interpretations of the ICC’s 30-day period, they are not the ICC Court of Arbitration’s interpretation of its rules. If national courts adopted this approach, the 30-day period in the ICC Rules could be given different meanings by courts in Paris, Bombay, Sao Paolo, San Francisco, and London.

2.77  A national court decision reinterpreting an institution’s arbitral rules would also effectively be deciding that the institution had misinterpreted its own rules. That decision would fundamentally undermine the authoritativeness of an institution’s internal decision-making and risk fragmentation of standards in arbitral rules. By contrast, a judicial determination that an institution’s decision was contrary to national law or national interpretation of Convention standards instead recasts the different outcomes as the consequence of different standards being applied by different decision-makers. To be sure, institutions have an interest in minimizing the number of occasions in which national courts reach different outcomes to ensure the efficacy of their decisions. They arguably have an even greater interest, however, in precluding national courts from reinterpreting their rules in a manner inconsistent with other courts and the institution itself.

2.78  In addition to the exclusive opportunity to interpret their own rules, several institutions also reserve to themselves the right to refuse to appoint an arbitrator that the institution deems is unsuitable, even if the parties have agreed to the appointment.¹²⁶ This right is another sign that the interests and functions of arbitral institutions are beyond mere facilitation of party preferences. The power to refuse appointment of a mutually agreed-upon arbitrator is a signal of institutions’ regulatory function and ensures that institutions are not obliged to administer arbitrations that are likely to produce unenforceable awards or otherwise lack legitimacy.

2.79  Several codes of ethics for arbitrators have been developed by a range of entities. A few codes have been introduced by certain arbitral institutions, which have appended codes of ethics to their arbitral rules. The most extensive and detailed code promulgated by an institution is the AAA/ABA Code of Ethics, which was originally promulgated in 1977 and extensively reworked in 2004.¹²⁷ The AAA/ABA Code pertains to both domestic and international arbitrators, and its reworking includes significant changes to bring US practice more in line with international standards.¹²⁸

(p. 83) 2.80  Other institutions have promulgated similar ethical codes, including the Milan Chamber of National and International Arbitration,¹²⁹ the Singapore International Arbitration Centre,¹³⁰ the Cairo Regional Centre for International Commercial Arbitration,¹³¹ the Court of Arbitration at the Polish Chamber of Commerce, the Permanent Court of Arbitration attached to the Chamber of Commerce and Industry of Slovenia, and the Latvian Chamber of Commerce and Industry. Some of these institutions expressly condition appointment of arbitrators on compliance with their codes,¹³² while others leave compliance as an implicit obligation.

2.81  Notably, the two most historically important institutions, the ICC and the LCIA, have not adopted codes for arbitrators. This omission may signal the relative brand strength in the market of these institutions as compared to newer regional institutions that seek to establish their legitimacy through formal and express guarantees of quality, including with regard to arbitrator conduct in their cases. Still, despite market strength, even the ICC and LCIA have been adopting new rules and procedures to address certain conduct by arbitrators. For example, the new ICC form that arbitrators must complete for appointment requires disclosure of the total number of arbitrations in which the candidate is sitting to ensure that the arbitrator has sufficient time to commit to the new case.¹³³ Reportedly, dereliction or delay by arbitrators may also be redressed by a reduction of fees by the ICC.

2.82  Whatever internal rules or practices exist, however, most institutions do not generally publicize any formal sanctions for non-compliance. Apart from informal reports of ICC practices regarding fees, apparently only two institutions publicise sanctions they impose for arbitrator misconduct. The Milan Chamber of National and International Arbitration has a published rule for replacing arbitrators based on violations of its Code of Ethics.¹³⁴ The other exception is the AAA, which touts a ‘one-strike-you’re-out’ policy. Under this policy, any arbitrator whose award is challenged for improper non-disclosure goes on inactive status and will not (p. 84) be nominated to future arbitrations while the judicial challenge is pending.¹³⁵ Even after a final judicial decision, the AAA apparently makes a separate determination of whether the arbitrator should ever be restored to active status on the roster. For those institutions that do not have formal or published enforcement policies, they inevitably take into account perceived ethical transgressions when making future appointment decisions.

2.83  In addition to codes implemented by arbitration institutions, other organizations in the international arbitration field have promulgated ethical rules for arbitrators. These rules may become applicable to arbitrators if they belong to an organization that has implemented the rules or if the parties contractually incorporate the rules into their arbitral agreement. For example, organizations such as the Chartered Institute of Arbitrators (the CIArb) and the Society of Maritime Arbitrators and US-based Reinsurance and Insurance Arbitration Society (ARIAS-US) each have codes of ethics that apply to arbitrators who are members or, in the case of the CIArb and ARIAS-US, who are certified by them.¹³⁶ In addition to promulgating codes, these organizations also train members, set admission requirements, and condition membership on adherence to their rules of ethics.

2.84  In a similar vein, the International Bar Association (IBA) has also published the IBA Rules of Ethics for International Arbitrators (the IBA Rules of Ethics)¹³⁷ and later the 2004 IBA Guidelines on Conflicts of Interest in International Arbitration (the IBA Guidelines).¹³⁸ Despite its name, the IBA does not license attorneys or arbitrators. As a result, these rules and guidelines are not formally applicable to arbitrators or in arbitral proceedings unless they are incorporated into the parties’ arbitration agreements.¹³⁹

2.85  There are a few important features that the IBA Guidelines and the AAA/ABA Code have in common and that set them apart from the other arbitral institutions’ codes discussed previously. On the substance, both sources impose on arbitrators a duty to investigate potential conflicts before making required disclosures.¹⁴⁰ Another feature is that most other national and international sources focus on articulating qualitative standards to define the nature of impartiality. The AAA/ABA Code and the IBA Guidelines seek to delineate quantitative categories of information to determine the meaning of standards of ‘impartiality.’ The (p. 85) significance of identifying categories of information for disclosure, rather than relying on qualitative standards, will be discussed later in Chapters 6 and 8. In the meantime, it is worth noting that these unique features of the ABA/AAA Code and the IBA Guidelines were promulgated as a result of committee drafting and vetting through international bodies that are dedicated to guiding legal professionals in their professional conduct as arbitrators.¹⁴¹

2.86  When the IBA Guidelines first came out, they were decried by many as misguided and overly burdensome.¹⁴² The outcry has largely (though not entirely) died down, even if there is still interest in revising the IBA Guidelines.¹⁴³ The reasons why, despite initial scepticism, the Guidelines have commanded such respect will be discussed in more detail later in Chapter 6. The important point for the present discussion is that the IBA Guidelines are now a go-to resource for arbitrators considering whether to make a disclosure or rule on a disqualification, for counsel and parties assessing whether to pursue a particular challenge, and slowly but increasingly for courts ruling on challenges to arbitrators and awards.¹⁴⁴

(p. 86) 2.87  Perhaps the best measure of the Guidelines’ success is that even arbitral institutions that originally disclaimed any reliance on the IBA Guidelines now admittedly consult them as a meaningful touchstone in ruling on challenges.¹⁴⁵ National court reliance on the IBA Guidelines is arguably more limited, mainly because courts have struggled to accord party agreement about ethical standards with existing standards under national statutes and the New York Convention.¹⁴⁶ The relationship between consent, ethical rules, and statutory and Convention standards regarding arbitrator conduct is taken up later in Chapter 9. In the meantime, it is helpful to contrast the various sources and procedures described earlier, developed and implemented by international institutions and organizations, with efforts to regulate arbitrators through national sources and institutions.

2.88  National arbitration laws also contribute to defining the ethical obligations of international arbitrators, and national courts rule on interlocutory challenges to arbitrators or challenges to awards based on alleged misconduct of arbitrators. Although they provide an essential safety net, there are also problems with national laws and national courts applying their own standards. Independent evaluation under national standards does not necessarily bring greater clarity to questions of what constitutes appropriate arbitrator conduct; instead it contributes to what has been called a ‘global judicial cacophony’ on these issues.¹⁴⁷

2.89  While not addressed in detail here, national laws and court decisions employ a range of tests and analytical frameworks for evaluating alleged arbitrator misconduct and resulting awards. In applying these standards, national courts have been developing an increasingly detailed jurisprudence in an attempt to clarify arbitrator obligations, most specifically with regard to the nature of impartiality and/or independence, and the level of proof required to establish a violation.

2.90  The New York Convention has no express provisions directly addressing arbitrators’ obligations. In the absence of any express provisions, parties seeking to challenge an award based on alleged arbitrator misconduct must argue that the conduct at issue implicitly violates one of the exceptions for enforcement of an award. The two provisions most often invoked are that alleged arbitrator partiality or non-disclosure has meant that the tribunal was not constituted in accordance with the parties’ agreement or, failing agreement, the law of the arbitral seat (Article V(1)(d)), or that it violated the public policy of the enforcement jurisdiction (Article V(2)(b)). A party could also argue that an arbitrator’s alleged partiality prevented it from presenting its case (Article V(1)(b)), and certain types of alleged abuses may also be framed as outside the scope of an arbitrator’s power (Article V(1)(c)). The most common ground, however, is that the alleged arbitrator misconduct violates the public policy of the enforcement jurisdiction.

(p. 87) 2.91  Theoretically, what constitutes a violation of public policy or the Convention’s procedural safeguards and what constitutes a violation of national arbitration law standards for impartiality are not coterminous. In practice, however, courts interpreting the New York Convention’s public policy exception often look to definitions of impartiality and independence in the domestic arbitration laws as previously described. As a result, even under the Convention, nationally defined notions of impartiality may be applied.

2.92  External to the international arbitration system and the rules that ordinarily govern its procedures and participants, a small but apparently growing number of national bar associations are seeking to impose ethical obligations on attorneys who are licensed by them and act as arbitrators. For example, Article 55 of the Italian Codice Deontologico Forense specifically requires, among other things, that Italian lawyers who serve as arbitrators remain independent, disclose certain information about relevant contacts, and preserve the trust parties have placed in them.¹⁴⁸ These obligations sound rather generic and are framed in terminology that is similar if not the same as that used in other international sources. These generic terms, however, will be given specific content when Italian courts and authorities interpret and apply them in specific cases. When these terms are interpreted by national authorities, it is unlikely that those interpretations will necessarily match up precisely with meanings ascribed to other national or international standards.

2.93  Similarly, in the United States, there is a proposed Model Rule for Lawyers Acting as Third Party Neutrals.¹⁴⁹ It has not been adopted by bar associations, but apparently has some support. By way of example of how the proposed Model Rule might expand disclosure or disqualification standards for arbitrators, under the Rule, any existing or past financial, business, professional, family or social relationship with any of the parties, including, but not limited to, any prior representation of any of the parties, their counsel and witnesses, or service as an ADR neutral for any of the parties’ and analysis of these disclosure obligations ‘extend[s] to those of the lawyer, members of his or her immediate family, his or her current employer, partners or business associates.¹⁵⁰ These standards, if adopted, would expand considerably disclosure obligations beyond what is currently required under the IBA Guidelines on Conflicts, and the national law of most other jurisdictions.

2.94  The difference between these national bar rules and the AAA/ABA Code of Ethics is that the latter was developed by a bar association, in conjunction with several arbitration institutions and organizations, and was specifically for the regulation of arbitrators as arbitrators. The former bar rules are an effort by bar authorities to apply lawyer regulation frameworks to arbitrators who also happen to be lawyers. Bar authorities do not presume to apply their rules and disciplinary regime when an attorney they have licensed is serving, for example, as (p. 88) an umpire in a children’s Little League baseball game or youth football game.¹⁵¹ Those bar authorities seem similarly out of their league, so to speak, in extending their disciplinary authority to an attorney’s service as an arbitrator on the premise that serving as an arbitrator is simply another category of legal services.

2.95  National bar authorities may be justified, and have an important function, in extending their regulatory reach to domestic arbitrators. If national bar authorities systematically reach out to regulate international arbitrators, however, the consequences are quite different. Nationally developed ethical standards that apply directly to international arbitrators through bar authorities risk fragmenting at the national level the meaning of international obligations, such as impartiality. Fragmentation of arbitrators’ individual professional obligations is different, and potentially much more problematic, than fragmented national law standards for challenging arbitrators or awards. National laws pertaining to arbitrator challenges and awards are applied through the framework of the Convention, either by courts in the legal seat or jurisdictions in which recognition and enforcement is sought. National standards for arbitrators’ professional obligations developed by bar authorities, meanwhile, would be applied by bar authorities or courts in the jurisdictions where arbitrators are licensed (assuming they are licensed attorneys). The result would be that individual arbitrators on the same tribunal could be subject to different ethical obligations. These obligations could, in turn, be different from the standards applied by courts in the seat or enforcement jurisdictions in ruling on challenges during arbitral proceedings or to the award based on the same alleged misconduct by the same arbitrator.

2.96  Another important difference between regulation of arbitrator conduct and attorney conduct is professional liability or malpractice liability. Although malpractice claims are most often referenced as a form of liability, as explored in greater detail in Chapter 6, they effectively function as a form of professional regulation. ‘Liability controls,’ to borrow Professor David Wilkins’ term, operate much the same as formal professional discipline in that they are based on ex post complaints by injured parties.¹⁵² The main difference is that malpractice claims or ‘liability controls’ provide compensation to the injured party but do not in themselves affect a lawyer’s right to practice law.

2.97  With arbitrators, malpractice as a form of regulation is generally off the table. ‘Most national arbitration regimes provide arbitrators with statutory or common law immunities from civil claims against them based on the performance of their adjudicative functions.’¹⁵³ Jurisdictions also vary as to whether the immunity is absolute or qualified.¹⁵⁴ At the international level, (p. 89) the IBA Code of Ethics provides in its introduction that ‘international arbitrators should in principle be granted immunity from suit under national laws, except in extreme cases of willful or reckless disregard of their legal obligations.’ Most arbitral rules also affirm, and thereby create a contractual basis for, arbitrator immunity.¹⁵⁵ The International Centre for Settlement of Investment Disputes (ICSID) Convention goes even further than most arbitral rules, providing a more absolute form of immunity that insulates arbitrators from any national court jurisdiction.¹⁵⁶

2.98  Under these various provisions, arbitrators can only be held liable in narrow situations that touch on the most extreme forms of professional malfeasance. Accordingly, they generally cannot be held liable for failure to disclose a conflict of interest, even if that failure ultimately results in the vacatur or non-enforceability of the final award.¹⁵⁷ Some other categories of misconduct, such as failure to render a timely award or to render any award,¹⁵⁸ or bad faith acts, fraud or gross negligence, might be actionable.¹⁵⁹ In sum, there is a general presumption that arbitrators are entitled to immunity for their professional decisions.¹⁶⁰

2.99  There are solid reasons for this immunity. Immunity avoids the risk that claims against the arbitrator may be used as a substitute for a substantive appeal of the award by disgruntled losing parties. Relatedly, immunity also insulates arbitrators from undue pressures that might press them into making rulings to avoid potential liability. The effect of these protections against liability is that only rare examples of arbitrator misconduct are actionable.¹⁶¹

(p. 90) 2.100  Despite the general consensus that arbitral immunity is a necessary protection for arbitral decision-making, a growing number of commentators have challenged this view. Many of these commentators consider themselves very ‘arbitration friendly,’ and some even serve as arbitrators. They argue, however, that liability for arbitrators could ‘harness market forces to produce good results in arbitration.’¹⁶² They also argue that there is little justification for treating arbitrators differently from other professions, such as doctors, lawyers, or accountants, or other service providers such as exterminators, taxidermists, or hairdressers. These arguments raise implicit questions about the nature of international arbitrators’ role, and whether they are simply providers of contractual services, or something more, a topic taken up in Chapter 9.

2.101  Despite the range of sources and the variations in their application, there is surprisingly broad agreement about the general substance of arbitrators’ ethical obligations, at least at the most abstract levels. Arbitrators’ principal ethical obligation is to be, and to behave, impartially and/or independently. While impartiality is the most fundamental of arbitrators’ obligations, it is also the one that is most complex and hence subject to the most intense discussion and confusion. Chapter 8 provides a nuanced examination of what these obligations really mean. The remainder of this chapter provides a general overview of its basic tenets, as well as arbitrators’ other ethical obligations, including the obligation to conduct hearings fairly, to act competently, to refrain from inappropriate ex parte contacts, to maintain the confidentiality of the proceedings, and to render an award in a timely fashion.

2.102  The obligation of arbitrators to be impartial or independent is both obvious and imperative. Arbitrators, after all, take the place of judges and the act of adjudicating necessarily requires a neutral third-party decision-maker. But the nature of impartiality is not nearly as simple as definitions might suggest, particularly when it intertwines with notions of party preference and party autonomy, a topic taken up later in Chapter 8.

2.103  One complication in understanding arbitrator ethics is terminological. Some sources, such as the 1996 English Arbitration Act, refer to an arbitrator’s duty to be ‘impartial’. The ICC Arbitration Rules and the Swiss Law on Private International Law, on the other hand, refer to ‘independence’, while others, such as the UNCITRAL Model Law, frame their standard in terms of both ‘independence’ and ‘impartiality’. Still other sources refer to an obligation of arbitrators to be ‘neutral’.¹⁶³ Many commentators have sought to parse the meaning of and distinctions among these terms.¹⁶⁴ To the extent some logical or linguistic distinction can be made, however, in practical terms it appears to be largely a distinction without a difference. These terms are used more or less interchangeably by institutions and courts, and their true meaning is determined more in their application than in their phraseology.

2.104  Obligations of impartiality and/or independence are often embedded in broader standards, which determine how to establish and evaluate allegations of bias in the context of arbitral proceedings. These tests are also variegated and apply at different stages and in different contexts. The UNCITRAL Model Law, which has been adopted by over 60 jurisdictions and has influenced the national legislation of many others, provides that arbitrators can be challenged if there are circumstances that give rise to ‘justifiable doubts’ about their impartiality or independence. Meanwhile, Section 10(a)(2) of the US Federal Arbitration Act permits challenge to an award when ‘there was evident partiality or corruption in the arbitrators, or either of them’. In England, recent case law has established that removal of an arbitrator requires a showing of a ‘real danger of bias’.¹⁶⁵

2.105  Even with this variation, these standards share a few common elements. First, they do not generally require proof of actual bias, partiality, or lack of independence by an arbitrator, but instead require some showing of risk, potential, or appearance of bias. There are two reasons for this lower threshold of proof. On the one hand, because actual bias is a mental state, it is exceptionally difficult to prove, particularly with the limited types of circumstantial evidence that are usually available.¹⁶⁶ More importantly, however, parties’ satisfaction with and confidence in the arbitration process may be adversely affected by behaviour that seems to indicate bias, or creates a real risk of bias, regardless of the arbitrator’s actual underlying mental state.

2.106  Another feature that these standards have in common is that their perimeters are not self-evident. Instead, the requirements of each has been fleshed out or elaborated through interpretation by national courts, though they have not always done so with the greatest clarity. For example, in the United States, there is a split among the various federal appellate courts about what the ‘evident partiality’ test means. The US Supreme Court has not addressed the issue since the 1960s in a confused and confusing decision.¹⁶⁷ Some lower US courts have (p. 92) interpreted Section 10(a)(2) as being satisfied when there is a ‘mere appearance of bias’,¹⁶⁸ while courts have required clear proof of ‘so intimate [a relationship] as to cast serious doubt on the arbitrator’s impartiality’.¹⁶⁹ Meanwhile, still other courts have staked out something of a middle ground, holding that the test is satisfied with proof such that ‘a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration’.¹⁷⁰

2.107  In interpreting the ‘justifiable doubts’ standard, courts in jurisdictions that have adopted the Model Law have also offered varied tests, but most courts and commentators agree that it is an objective test that requires something more than a mere appearance of partiality.¹⁷¹ While these various judicial elaborations and interpretations provide some additional guidance, the real meaning of these judicial interpretations derives from application on a case-by-case basis. When these cases are aggregated, some discernible categories have emerged, though often even seemingly clear categories are subject to exceptions in particular factual contexts. These categories include some obvious types of misconduct, like direct financial stakes and business dealings with one of the parties, although even here the category is not absolute since minor shareholdings in one of the parties generally does not constitute proof of unacceptable bias.¹⁷² On the other hand, aggressive questioning of a witness or expressions of opinion during proceedings are generally not considered sufficient to support a challenge, but on occasion have contributed to findings of partiality.¹⁷³

2.108  As already examined, the obligation of impartiality is the duty to disclose. Today, virtually all ethical codes, national laws, and arbitral rules impose on arbitrators an obligation to disclose information as part of the arbitrator appointment process. The purpose of this obligation is twofold. At a practical level, they assure that parties and administering institutions have information that might be the basis for challenging or evaluating challenges regarding the ability of an arbitrator to serve. At a more general level, disclosures promote transparency and confidence in the process by ensuring that every participant in the process (the arbitrators, attorneys, parties, and arbitral institution, if any) is aware of contacts, experiences, and relationships that may materially affect the actual or perceived decision-making impartiality of the arbitrator. At a more practical level, disclosure facilitates parties’ ability to challenge arbitrators.

2.109  Some sources mistakenly treat disclosure standards and disqualification standards as synonymous, but their distinct purposes reveal the better view. In contrast to the purposes of disclosure described earlier, the purpose of disqualification is to remove an arbitrator who is not sufficiently impartial to serve. Given the broader purposes of the duty to disclose, it follows that the body of information that must be disclosed should be understood as broader than the information that can constitute a basis for disqualification of an arbitrator. In other (p. 93) words, not every disclosure that is made should necessarily result in a disqualification, while the fact that information would not be sufficient to disqualify an arbitrator does not suggest that it need not be disclosed.

2.110  This distinction is reflected in the UNCITRAL Model Law, which requires in Article 12(1) disclosure of facts that are ‘likely to give rise to justifiable doubts’ as to the arbitrator’s impartiality or independence, but provides in Article 12(2) for disqualification only when circumstances ‘give rise to justifiable doubts’ about an arbitrator’s impartiality and independence. A broad, cautious approach to disclosure also has the benefit of reducing reactions to information that seems benign if disclosed in a timely manner, but can raise suspicions if inadvertently discovered later (particularly after an adverse decision by the tribunal).

2.111  Notably, under some authorities, a failure to disclose information can in itself be evidence of partiality or improper intent. For example, Article 4.1 of the IBA Rules of Ethics state that ‘Failure to make such [a required] disclosure creates an appearance of bias, and may of itself be a ground for disqualification even though the non-disclosed facts or circumstances would not of themselves justify disqualification’. Some national courts have also reasoned that a non-disclosure ‘is itself an act suggestive of bias’,¹⁷⁴ while other courts have refused to consider the act of non-disclosure independently from the content of the underlying information.

2.112  With regard to their substance, over the years disclosure obligations have evolved significantly. As previously noted, the 1975 ICC Arbitration Rules required only that arbitrators disclose circumstances that, ‘in their opinion’, might call into question their independence ‘in the eyes of the parties’.¹⁷⁵ Over the years, the subjective judgment of arbitrators about what to disclose gave way to the objective standards that now prevail in most arbitral rules and national laws.¹⁷⁶ In addition to shifting to an objective standard, also as previously noted, new standards in arbitral rules also now include more expansive disclosure requirements. Even still, however, disclosure obligations articulated using vague terms, like ‘independence’ or ‘impartiality’ are subject to interpretation by arbitrators. As a result, as a practical matter they end up leaving arbitrators considerable room for discretion in deciding what types of information to disclose.¹⁷⁷

2.113  In the wake of increased challenges and the related need for more specific direction, there has been a move from objective but qualitative disclosure and disqualification standards to quantitative, categorical descriptions of the specific content that must be disclosed. For example, instead of simply requiring that arbitrators disclose information that ‘may give rise to justifiable doubts’, the new AAA/ABA Rules and the IBA Guidelines describe specific relationships and circumstances. In formulating these categories, a number of drafts were extensively discussed and commented on, but the IBA Guidelines have still been criticized (p. 94) on several grounds.¹⁷⁸ Whatever else might be said, they offer the distinct advantage of reducing arbitrator discretion in evaluating whether specific information fits within a qualitative disclosure obligation. In this respect, categorical descriptions of specific types of information may reduce the risk that an institution or national court will reach a different conclusion than the arbitrator did during the appointment process about whether a disclosure was necessary.

2.114  Categorical descriptions of information to be disclosed may also reduce an internal conflict of interest that prospective arbitrators arguably face when they are deciding whether to disclose information. On the one hand, at least in the short term, candidates may have an interest in securing an appointment, and disclosing a potential conflict might jeopardize that interest. In the longer term, of course, arbitrators have a much greater interest in avoiding challenges. Even in an imperfect marketplace for information, some challenges become highly public and can result in damage to an arbitrator’s reputation. When prospective arbitrators confront situations that are either not addressed by, or are apparently permitted by the various rules, but nevertheless seem capable of raising concerns about impartiality, most sources encourage them to err on the side of disclosing possibly relevant information.

2.115  Related to the question of disclosure is the question of whether arbitrators have a duty to investigate potential conflicts of interest as part of their disclosure obligations. Judicial authority, particularly in the United States, is mixed regarding the effect of an arbitrator’s lack of knowledge.¹⁷⁹ Some courts have found that an arbitrator cannot be biased if he or she does not know about an alleged conflict, and therefore has no duty to investigate unknown facts,¹⁸⁰ while other courts have reasoned that, since the standards for impartiality are framed to also prevent perceptions of bias, potential arbitrators must investigate potential conflicts.¹⁸¹ Notwithstanding judicial uncertainty, as explored in greater detail in Chapter 6, the duty to investigate originated and is firmly established in international arbitral rules and international codes of ethics.

2.116  Nationality and arbitrator impartiality have a somewhat strange relationship. As one commentator has noted, ‘[i]t is both the peculiarity and the essence of the arbitration method that allow – in the very same setting – national commonality to perpetuate and nationalistic favoritism to be neutralized’.¹⁸² On the one hand, international arbitration exists primarily (p. 95) to ensure that parties will not be subject to the presumed bias of their opponents’ national courts. On the other hand, parties often nominate arbitrators who share their nationality, on the assumption that common cultural and legal backgrounds will ensure that their perspectives are understood by the tribunal.¹⁸³

2.117  Even if parties can and do choose to nominate party arbitrators who share their nationality, however, there is a general presumption against a chairperson or sole arbitrator sharing the nationality of one of the parties (absent contrary agreement). This presumption is reflected in the rules of various institutions, such as Article 9(5) of the ICC Arbitration Rules, which provides that a sole arbitrator or chairperson appointed by the ICC ‘shall be of a nationality other than those of the parties’. Notably, the Rules also provide for an exception ‘in suitable circumstances’ and when neither party objects.¹⁸⁴

2.118  In investment arbitration, concerns about nationality have led to more restrictive rules and practices.¹⁸⁵ For example, the ICSID Rules of Procedure for Arbitration Proceedings (the ‘ICSID Rules’) provide that ‘[t]he 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’. Application of this rule means that in a typical two-party arbitration with a tri-partite panel, all three of the arbitrators must be from States different from those of the parties. The ICSID Rules allow the parties to override this provision by agreement, but some investment arbitration provisions, such as those in the Softwood Lumber Agreement Between the Government of Canada and the Government of the United States of America, expressly disallow any member of the tribunal to be a citizen or resident of the same country as one of the parties.¹⁸⁶

2.119  In a globalized world, and especially among a group as internationally mobile and cross-cultural as international arbitrators, nationality and residency are not always an accurate proxy for cultural or political empathies. Particularly in disputes involving parties from certain regions or nations with historical enmities, ethnic or religious affiliations may be more important than national identity.¹⁸⁷ This distinction is acknowledged in the ICC Arbitration Rules, which provide that in addition to nationality, in making confirmations or appointments, the ICC Court will consider not only nationality, but also ‘residence and other relationships with the countries of which the parties or the other arbitrators are nationals’.¹⁸⁸ In fact, ICC national committees and other appointing authorities routinely consider such ‘other relationships’ when making appointments involving parties from regions or backgrounds that may trigger sensibilities.

2.120  While the duty to act impartially is the most frequently discussed ethical obligation of arbitrators, a range of other obligations also apply to them. The remainder of this chapter briefly surveys those obligations.

2.121  International arbitrators have a duty to conduct the arbitral proceedings in accordance with the parties’ arbitration agreement (and any subsequent procedural agreements between the parties). This obligation is made express in some ethical rules and national laws.¹⁸⁹

2.122  For example, Article 18 of the UNCITRAL Model Law provides that ‘the parties shall be treated with equality and each party shall be given a full opportunity of presenting his case’. In rare instances, arbitrators may disregard the parties’ agreement, either because enforcing it would require a violation of international public policy or otherwise render a resulting award unenforceable in the relevant national courts. The implications of these obligations for the arbitrators’ role is analysed in detail in Chapter 9.

2.123  Arbitrators also have an obligation to complete their mandate (including by not resigning unjustifiably prior to rendering a final award), by deciding all of the issues presented to them.¹⁹⁰ Conversely, arbitrators are obligated to respect the limits of their own jurisdiction and the parties’ agreement.¹⁹¹ Some ethical codes spell out this obligation specifically, though it may be subject to countervailing obligations to observe applicable mandatory law.

2.124  Arbitrators also have general obligations of competence and diligence, which are specified in some ethical rules.¹⁹² An arbitrator should not accept an appointment unless actually possessing the requisite skills, such as language, and unless able to accommodate the arbitration in his or her schedule. This obligation of diligence also extends to issuance of the final award.

2.125  Another obligation that is rarely discussed, but potentially very important to the parties, is an arbitrator’s obligation to maintain confidentiality. Among the leading arbitration institutions, only a few actually impose a duty on arbitrators to maintain confidentiality.

2.126  Article 46 of the Stockholm Chamber of Commerce Arbitration Rules imposes such an obligation. Similarly, Article 34 of the AAA/International Centre for Dispute Resolution (ICDR)’s International Arbitration Rules requires arbitrators to maintain the confidentiality of ‘confidential information disclosed during the proceedings by the parties or by witnesses …’ and ‘all matters relating to the arbitration or the award’. Article 9 of the IBA Rules of Ethics also requires that arbitrators maintain ‘in perpetuity’ deliberations of the tribunal and the contents of the award, and Canon VI of the AAA/ABA Code of Ethics obliges arbitrators (p. 97) to ‘keep confidential all matters relating to the arbitration proceedings and decision.’ Some national laws also impose obligations to maintain as confidential information they obtain in the performance of their professional duties.

2.127  In cases when none of these rules directly apply, parties invariably have a sense that arbitrators will not, unless required by law, publicly reveal information about the proceeding or its outcome. Confidentiality may be one area where formal ethical regulation remains underdeveloped, but parties have pronounced and precise expectations. As a result, the personal integrity and ethical discretion of individual arbitrators remains an important source of protection for confidential information.

2.128  There is little consensus with respect to an arbitrator’s obligation to propose settlement or to refrain from pressing settlement, and parties from different systems may have significantly different assumptions. On the one hand, in some legal systems, judges are legally required to aid the parties in attempting to reach settlement,¹⁹³ and international arbitrators are arguably in a unique position to be able to encourage settlement.¹⁹⁴ On the other hand, the process of encouraging settlement, particularly to the extent it may involve ex parte communications with parties, may compromise an arbitrator’s obligations of impartiality, which is why some legal traditions and arbitration rules prohibit this intersection of roles.¹⁹⁵ Article 8 of the IBA Rules of Ethics permits arbitrators, with the consent of the parties, to assist in settlement efforts, but it also requires that they warn parties about the risks of ex parte settlement communications. To the extent it can be considered an obligation, any duty to promote settlement is best understood as an obligation for arbitrators to propose that, in appropriate circumstances,¹⁹⁶ the parties consider settlement.¹⁹⁷

2.129  National laws may also impose certain obligations on arbitrators when they suspect corruption or are confronted with criminal wrongdoing by the parties.¹⁹⁸ In addition, arbitrators’ other obligations may be excused if performing them would require a violation of national criminal law.¹⁹⁹

2.130  The sources and content of arbitrators’ ethical obligations is a complex topic. It is also uniquely interwoven into the procedures and market conditions under which arbitrators are selected and appointed. The highly strategic nature of the selection process, combined with imperfections in the market for arbitrator services present added complications for effectively regulating the professional conduct of arbitrators. Notwithstanding these challenges, the substance and forms of arbitrator regulation are, with some exceptions described in later chapters, generally more effective than might be supposed in the absence of traditional forms of professional regulation.

2.131  In recent years, the range of sources that combine together to determine the ethical obligations of arbitrators has expanded dramatically. Complicating the sheer plethora of sources, these various sources apply at different stages of the arbitral proceedings and are applied by different entities for different purposes. The result is that even a presumptively static obligation, such as impartiality, may appear to shift or alter depending on the stage and context of its application. Chapter 6 examines how these various sources fit together and how the allocation of regulatory authority among them reveals that international arbitrators provide a model for self-regulation that can be emulated to regulate other participants in international arbitration, as discussed in the following chapters.