In February 2024, the International Bar Association (IBA) published the 2024 edition of its Guidelines on Conflicts of Interest in International Arbitration.
The guidelines
The purpose of the guidelines is to provide an internationally standardised and clear framework for identifying, disclosing and evaluating potential conflicts of interest.
The guidelines are nonbinding and do not override either national law or any applicable arbitration rules. However, arbitral parties worldwide often incorporate them into arbitration agreements and procedural orders.
The guidelines are set out in two sections:
- The general standards regarding impartiality, independence and disclosure.
- The practical application of the general standards, which uses a traffic light system of red, orange and green lists to indicate how specific situations should be assessed.
Update to the guidelines
Both the general standards and practical application sections have been amended in the 2024 version of the guidelines. The most salient updates are set out below.
General principle
The 2024 guidelines clarify that the arbitrator’s obligation of impartiality and independence ceases once the tribunal has rendered its final award and the period permitted under the relevant rules for any correction and interpretation of this award has elapsed.
Conflicts of interest
A conflict of interest may arise where an arbitrator has a pre-existing relationship with a party to an arbitration, or their chosen expert. Depending on the severity of conflict that is identified, the arbitrator may need to reject an appointment. The updated guidelines continue to use the objective test of what a ‘reasonable third person’ would conclude, based on the facts and circumstances.
However, the guidelines now seek to distinguish the appropriate action to be taken in situations which objectively have a conflict of interest. Where a relationship has been included on the ‘non-waivable’ red list, the arbitrator should inherently decline to act. Conversely, the guidelines indicate that a disclosure by the arbitrator would be sufficient in respect of situations on the ‘waivable’ red list. This means that the arbitrator may continue to act if the parties to the arbitration expressly state their willingness for them to do so.
Further, there have been several additions to the orange list, which set out circumstances that raise some doubts as to whether the arbitrator is appropriately impartial or independent. These now include instances where:
- Two arbitrators have the same employer.
- An arbitrator has been appointed by a party twice or more in the last three years for mock trials or hearing preparation.
- An arbitrator has acted as an expert for a party or its counsel on another matter in the last three years.
- Two arbitrators, or an arbitrator and counsel, are currently acting on another arbitration together.
- An arbitrator is instructing an expert used by a party in another arbitration.
- An arbitrator has published an opinion on the matter on social media or a professional networking platform.
- An arbitrator holds an executive or other decision-making position in an administering institution, which means they would be actively participating in decisions on the present arbitration.
By contrast, there have been minimal updates to the green list, which sets out situations which are unlikely to raise ‘justifiable doubts’. These have been updated to include instances where the arbitrator has previously heard testimony from an expert being used in the present arbitration.
Waiver by the parties
The 2024 guidelines have introduced a presumption that parties to an arbitration know about facts and circumstances which they would have discovered had they carried out reasonable enquiries.
Relationships
The 2024 guidelines modernise the factors to consider when looking at the relationship between an arbitrator and a party to the arbitration. They recognise that arbitrators may not solely work within law firms, but instead may be employees of companies, particularly as in-house practices continue to grow.
The 2024 guidelines also acknowledge that there may be controlling influences which have a bearing on an arbitrator’s ‘identity’. These include third-party funders, insurers, parent companies and state entities.
Duty of the parties and the arbitrator
The guidelines set out the party’s obligation to inform the arbitrator ‘at the earliest opportunity’ of any direct relationship it has identified between itself and the arbitrator or indirect relationship, such as between the arbitrator and its legal representation, its affiliates, or other persons and entities under its control.
Conclusion
Overall, the amendments introduced by the guidelines provide further detail and clarity than the previous version, which should make them easier to understand and adopt. They also modernise the guidelines – by recognising the evolving landscape of the legal profession and the various organisational structures arbitrators may be practising within. Finally, the increased emphasis on the need for disclosure is in line with amendments sought by the UK’s current Arbitration Bill.
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