I. Definition
Arbitrators may be subject to specific duties imposed by the terms of their appointment in ad hoc arbitration, by the procedural rules of a designated institution in institutional arbitration, or by relevant rules at the seat of arbitration.
A common requirement across most arbitration rules and national laws is that arbitrators must act impartially and independently. They also have a duty to disclose relevant circumstances to maintain the appearance of impartiality and independence. This duty of disclosure is crucial for ensuring these qualities are perceived as present.
A lack of independence or impartiality can be grounds for challenging an arbitrator or the tribunal’s award. The importance of these qualities is further highlighted because arbitrators may also serve as counsel in other cases, and counsels may serve as arbitrators.
However, the standards of impartiality and independence can vary across different arbitration institutions and jurisdictions. For example, English courts often apply the “real danger of bias” test, while U.S. law requires that an arbitrator avoid “evident partiality.”
II. The Difference Between Independence and Impartiality
Independence refers to the objective and external relationship between the arbitrator, the parties, counsel, and co-arbitrators. An arbitrator must not only be independent but also be perceived as independent by third parties.
Impartiality, on the other hand, is generally a subjective state of mind that is more abstract and difficult to measure. It can be inferred from an arbitrator’s external conduct and implies the absence of external control, bias, or predisposition towards a party. Some arbitration rules did not originally include impartiality as grounds for challenging an arbitrator but have since been amended to include it. ICSID tribunals have explicitly recognized that independence and impartiality are the key qualifications for arbitrators, and a manifest lack of these qualities is a valid ground for challenging an arbitrator.
III. The “Justifiable Doubts” Approach to Independence and Impartiality
The UNCITRAL Arbitration Rules use the standard of “justifiable doubts” regarding an arbitrator’s independence and impartiality. These doubts are considered justifiable if they would raise concerns of bias in the mind of an objective, reasonable observer.
Similarly, the SCC Arbitration Rules also refer to the justifiable doubts standard. While the reasoning behind SCC Board of Directors’ disqualification decisions is not disclosed, it appears that the SCC Arbitration Institute draws inspiration from the IBA Guidelines on Conflicts of Interest in International Arbitration when deciding challenges under SCC Rules.
The ICSID Convention, however, requires that arbitrators be relied upon to “exercise independent judgment,” and allows a party to propose the disqualification of any tribunal member based on “any fact indicating a manifest lack” of the necessary qualities. This standard seems to be more stringent than the justifiable doubts standard due to its emphasis on “any fact indicating” and the interpretation of the term “manifest.”
In the case of Suez, Sociedad General de Aguas de Barcelona, S.A. and Interagua Servicios Integrales de Agua, S.A. v. Argentine Republic, the tribunal noted that the ICSID Convention imposes a heavy burden of proof to establish that it is obvious and highly probable—not just possible—that the challenged arbitrator cannot be relied upon to exercise independent and impartial judgment. Some tribunals have followed this approach, while others have not.
Despite the differences between independence and impartiality, they are often assessed together as they both serve the same purpose. The IBA Guidelines, in particular, state that every arbitrator must be impartial and independent from the time of accepting an appointment until the final award is rendered or the proceedings are otherwise concluded. While not legally binding, the IBA Guidelines are widely recognized as good practice to avoid conflicts of interest in arbitration and represent broader efforts to harmonize standards of independence and impartiality in international arbitration, thereby strengthening confidence in arbitration as a dispute resolution method and increasing predictability.