The Non-Disclosure of Links Between Arbitrators and a Law Firm May Justify Their Challenge

What is the Challenge of an Arbitrator?

If during the course of arbitral proceedings, doubts arise regarding the impartiality or independence of an arbitrator, the parties have the right to challenge them in order to remove them from the tribunal.

The challenge must be grounded in the applicable national law and the arbitration rules governing the proceedings. Additionally, soft law instruments, such as the IBA Guidelines on Conflicts of Interest in International Arbitration (the “IBA Guidelines”), provide a framework for identifying circumstances warranting challenge using a traffic light system (green, orange, red) and establish disclosure obligations for arbitrators.

LCIA Decision 19 of 8 December 2020

In December 2024, the London Court of International Arbitration (LCIA) published 24 decisions on arbitrator challenges covering cases from 2017 to 2022.

Decision 19, dated 8 December 2020, concerned the challenge of the presiding arbitrator and one of the co-arbitrators due to their connection with a law firm that had been involved in drafting and advising on the disputed contracts.

After the arbitrators in question confirmed their availability and suitability to serve, the respondent party posed nearly twenty questions to each of them regarding their relationship with the law firm. Subsequently, a challenge was submitted to the LCIA, which was upheld.

Breach of the Duty of Disclosure Under the IBA Guidelines

The LCIA held that the failure to disclose their relationships contributed to the existence of reasonable doubts regarding their independence and impartiality, in accordance with General Standard 3(a) of the IBA Guidelines:

“If facts or circumstances exist that, in the opinion of the parties, may give rise to doubts regarding the arbitrator’s impartiality or independence, the arbitrator shall disclose such facts or circumstances to the parties, the arbitral institution or any appointing authority (where applicable and required by the relevant arbitration rules), and to the co-arbitrators, if any, before accepting the appointment or as soon as they become aware of them thereafter.”

Specifically, the LCIA concluded that the doubts regarding impartiality arose due to the non-disclosure of the following circumstances:

  • The presiding arbitrator had worked as a consultant for the law firm for eight years.
  • The law firm and the presiding arbitrator’s firm frequently co-organised events.
  • The presiding arbitrator had engaged lawyers from the law firm in certain cases, with temporary and permanent transfers between the two firms.
  • The presiding arbitrator’s LinkedIn profile referenced a close association with the law firm.
  • The arbitrator had participated in regional law firm associations, of which the law firm was a founding member.
  • The arbitrator was involved in professional associations and committees, which provided frequent interaction with the law firm’s lawyers.
  • The law firm referred a case to the presiding arbitrator 15 years ago.
  • The presiding arbitrator had shared office space with the law firm and maintained close personal relationships with its members.
  • The relationship between the law firm and the co-arbitrator dated back several years and was significant.
  • The law firm and the co-arbitrator’s firm regularly referred cases to each other.
  • The co-arbitrator’s firm’s secondment programme, which had been in place for approximately 12 years, had involved at least eight lawyers from the law firm, fostering an ongoing relationship between the firms.
  • The co-arbitrator headed the practice group in the region where the law firm operated, which could indicate involvement in maintaining the relationship with the firm.

The LCIA emphasised that its conclusions were not affected by the presiding arbitrator’s and co-arbitrator’s lack of awareness of the law firm’s involvement in certain past matters, as the crucial factor was the existence of their ties to the law firm.

Conclusions

The LCIA Decision 19 of 8 January 2020 serves as a clear example of the duty of arbitrators to disclose any circumstances that may give rise to reasonable doubts regarding their independence and impartiality before accepting an appointment.

In this regard, it is unsurprising that the IBA Guidelines – in their 2014 version, which was applicable at the time – stated in General Standard 3(d) that:

“Any doubt as to whether an arbitrator should disclose a fact or circumstance should be resolved in favour of disclosure.”

This decision reaffirms the importance of transparency in international arbitration and the necessity for arbitrators to disclose any connections that could compromise their impartiality and credibility in the arbitral process.

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