The issue of appointment of the same arbitrator in multiple arbitrations
The issue of multiple appointments of the same arbitrator by the same party has always been a topical issue in international arbitration.
One of the core principles of international arbitration is that each arbitrator must be independent and impartial. At the same time, repeated appointment of an arbitrator by the same party might result in establishment of a certain connection between them, which is not in line with the above principle. One can argue that in such a situation an arbitrator becomes more concerned to provide a good service to the appointing party rather than to act as an independent and impartial adjudicator of a dispute.
Before going into further analysis, we should first define the possible scenarios when repeated appointment might lead to the appearance of bias.
Scenarios leading to arbitrator’s possible bias
The discussed connection between an arbitrator and a party may, in particular, manifest itself in one of the following forms:
(i) An arbitrator’s appointment by the same party in several unrelated arbitration cases over a certain period of time. In this scenario, the cases would concern distinct facts, subject matter and evidence.
(ii) An arbitrator’s appointment by the same party in several cases that concern the same or similar issues, but different facts and evidence. An example would be multiple appointments of an arbitrator by a state in investment treaty arbitrations in the event when several investors file claims arising out of the same misconduct of the state and under the same BIT.
(iii) An arbitrator’s appointment by the same party in several cases that concern the same facts, subject matter and evidence. This occurs, for example, if an arbitrator serves in two or more related cases arising out of the same commercial transaction based on one or several contracts between the same or related parties, and at least part of the evidence submitted in each case is identical.
Each of these scenarios is obviously different in terms of an arbitrator’s ability to maintain his or her independence and impartiality. On the one hand, neither national legislation nor various international legal instruments provide detailed guidance for these scenarios, except for general references to the impartiality and independence of arbitrators. On the other hand, the existing arbitration practice, soft law and legal doctrine address them and, hence, they are subject to analysis.
Finding the proper legal and factual standards
To begin with, Clause 3.1.5 of the IBA Guidelines on Conflict of Interest in International Arbitration (Orange list) requires an arbitrator to disclose the situation if such arbitrator “currently serves, or has served within the past three years, as arbitrator in another arbitration on a related issue involving one of the parties, or an affiliate of one of the parties”. This provision is of a rather general nature. There is no explanation as to the degree the two or more arbitration cases should interrelate. The arbitration practice often contains a more elaborate analysis and substantiation. Let us consider the following examples.
In the ICSID case Tidewater Inc. v. Bolivarian Republic of Venezuela, the claimant challenged Professor Brigitte Stern, an arbitrator appointed by Venezuela, on the grounds that she was appointed as arbitrator by Venezuela in another three ICSID cases. There was no evidence, however, that those cases were somehow interrelated. The other two members of the tribunal rejected the challenge. In particular, the decision states that “the starting point is that multiple appointments as arbitrator by the same party in unrelated cases are neutral, since in each case the arbitrator exercises the same independent arbitral function”.1
The decision further continues that “there would be a rationale for the potential conflict of interest which may arise from multiple arbitral appointments by the same party if either (a) the prospect of continued and regular appointment, with the attendant financial benefits, might create a relationship of dependence or otherwise influence the arbitrator’s judgment; or (b) there is a material risk that the arbitrator may be influenced by factors outside the record in the case as a result of his or her knowledge derived from other cases”.2
The above rationale is undoubtfully correct and illustrative. It would be unreasonable to suppose that a reputable arbitrator should be barred from participating in a case merely because he or she was appointed by the same party but in an unrelated case. At the same time, it becomes clear that the arbitrator’s impartiality in the above case could have been called into question if the appointments were made in related arbitrations.
The above case can be viewed as addressing the first scenario above. In relation to the second scenario, the ICSID case Raiffeisen Bank International AG and Raiffeisenbank Austria d.d. v. Republic of Croatia can be mentioned as an example. In this case, the respondent proposed to disqualify Dr. Stanimir Alexandrov, an arbitrator appointed by the claimant. Among other arguments, the challenge was substantiated by the fact that Dr. Alexandrov was sitting in another arbitration commenced under the Austria-Croatia BIT. In particular, the respondent argued that the issue of the compatibility of the Austria-Croatia BIT with the law of the European Union would be central to both cases.3
The challenge was fully rejected in the same fashion as in the Tidewater case. The Chairman of the ICSID Administrative Council stated that “the mere exposure of an arbitrator to the same legal issue in multiple arbitrations is insufficient to disqualify that arbitrator”, and that there must be a significant overlap of facts that are specific to the merits and the parties involved for the challenge to succeed.4
There are also other cases in the public domain that follow the same approach. All of them establish the same unambiguous standard. It can be framed as follows: no challenge should be upheld, unless an arbitrator’s impartiality is clearly tainted by the facts and evidence submitted by the parties in a related case. Such a standard is, indeed, reasonable. Acceding to the lower standards would definitely compromise the foreseeability and quality of international arbitration. Therefore, coming back to the three scenarios described above, only the third one, in which the facts and evidence of separate cases overlap, may give rise to justified grounds for challenging the appointed arbitrator.
A good example of the third scenario can be found in the recent decision of the ICC Court rendered in March 2021 on the disqualification of arbitrator Klaus Sachs in the case Anaklia Development Consortium LLC v. the Government of Georgia. In this instance, the red line was, indeed, crossed. The claimant filed the claim with the ICC under an investment agreement with Georgia, whereas one of the claimant’s largest shareholders filed essentially the same claim against Georgia but under the Netherlands-Georgia BIT. Both claims concerned the alleged respondent’s misconduct in relation to the same projects, and, hence, involved the same facts and evidence. Nevertheless, the respondent appointed Mr. Sachs as an arbitrator in both cases.
The ICC Court upheld the challenge of Mr. Sachs by its decision of 5 March 2021.5 The decision, in particular, states that “[it] suffices for a risk of prejudgment to exist that similar issues of fact or law exist in different proceedings that are pending at the same time involving the same arbitrators. Although the Court has no reasons to doubt that Mr. Sachs would fulfil his duties with fairness and integrity, the risk of unconscious biases resulting from the involvement in two overlapping proceedings cannot be discarded”.6
This very recent piece of arbitration practice from one of the most reputable arbitral institutions once again confirms the standard we have defined above. The parties, arbitrators, as well as arbitral institutions, should not deviate from it in order to ensure the integrity and quality of international arbitration.
1 Tidewater Inc. v Bolivarian Republic of Venezuela, ICSID Case No ARB/10/5, Decision on Claimants’ Proposal to Disqualify Professor Brigitte Stern, Arbitrator, 23 December 2010, para. 60.
2 Ibid, para. 62.
3 Raiffeisen Bank International AG and Raiffeisenbank Austria d.d. v. Republic of Croatia, ICSID Case No. ARB/17/34, Decision on the Proposal to Disqualify Stanimir Alexandrov, 17 May 2018, para 25.
4 Ibid, para. 91.
5 Anaklia Development Consortium LLC v. the Government of Georgia, Decision of ICC Court on Challenge of Arbitrator Klaus Sachs, 5 March 2021.
6 Ibid, para 26.