The Arbitration Foundation of South Africa’s international arbitration rules were released for public consultation on 1st July 2020. These new rules suggest that the choice of arbitration rules may increase. Parties to a dispute will have extended choices beyond those of the ICC, the LCIA, the Association of Arbitrators (South Africa) and the Model Law.
The rules of the arbitration, along with guidance on the matters of law, evidence and procedure, all have a bearing on the advice given. But a key consideration for parties will be who to select as the tribunal.
International arbitration results in added complications compared to those in a domestic arbitration.
The ability to participate in selecting the tribunal is ordinarily an advantage of the arbitration process. Parties are able to propose a sole arbitrator or nominate one of the two arbitrators. The appointee will then choose a chair or president for their three-member tribunal.
In essence, the choice of arbitrator will be, in all likelihood, the most important of decisions that a party makes after its decision to enter into arbitration. The parties must strive to agree upon an arbitrator who is the right person for the circumstances, rather than the default nomination by a third party.
Any appeal of an arbitral award is submitted within limited grounds. It is often the case from commentators that an arbitration will only be as good as the arbitrators.
The key factors for consideration
In my experience there are a number of key essentials for consideration in the selection process and these are in no particular order:
In all matters of dispute or competition, the fundamental requirement is to have a judge, arbiter or umpire who is impartial and independent of the parties. International arbitration is no different. However, when parties are from different countries, the nomination of a person that may not be known could raise concern.
Conflict checks take place to ensure that the arbitrator is impartial. The concept of impartiality is based on the arbitrator’s behaviour. The arbitrator should not show any prejudice to either party.
The arbitrators should not have an existing relationship with any of the parties. They should not have previously acted for or against, or as an arbitrator in one of their previous disputes.
When combined with impartiality the parties can consider whether a conflict exists and decide accordingly.
In recent years more has been made of unconscious bias. Often a party may perceive an unconscious bias exists when an arbitrator is from a different country, race or gender. Equally a party may have concern over an unconscious bias to a party’s country.
In a diverse world, arbitral institutions are generally adopting a diverse approach to their panel members, this ought not to be a concern.
A requirement for independence and impartiality is found in many arbitration rules.
The Rules for impartiality
Article 11 of the ICC Rules 2012 provides that every arbitrator must be and remain impartial and independent of the parties involved in the arbitration. They must disclose in writing to the Secretariat any facts or circumstances which might call into question this independence in the eyes of the parties.
Article 5.4 of the LCIA Rules 2014 provides that every candidate shall sign a written declaration. This declaration states whether there are any known circumstances that could give rise to justifiable doubts as to impartiality or independence. If so, the full detail of such circumstances should be specified in the declaration.
Rule 17 of the AFSA rules provide that any arbitrator appointed under the Rules shall be and remain impartial and independent of the parties. The rules go further in 17.2 to say that at all times during the proceedings an arbitrator shall immediately disclose to the parties and to the Secretariat any circumstances likely to give rise to justifiable doubt as to his or her independence or impartiality.
In addition to considering any disclosures made by a potential arbitrator, legal advisors should carry out further research on the arbitrator. This is possible through careful review of CVs, articles and other publications to ascertain an arbitrator’s opinions. You may wish to enquire with colleagues who have previously come across the arbitrator.
If a candidate has strong views on an issue that is central to the dispute, they need to be identified and appraised. A party will be unlikely to want to appoint an arbitrator who is strongly against its position on a particular issue.
Equally, while a degree of sympathy for a party’s case is desirable, an arbitrator who adopts a position helpful to the appointing party will be less useful. Such a position will be unlikely to gain the respect of other members of the tribunal and in turn will command little influence.
Relevant Skills, Qualifications and Experience
In recent years there has been a move for construction professionals to take second academic qualifications in law or aspects of law. As a result there has been a rise in the quality of dispute resolvers from the technical profession.
An arbitrator with a background in law may suggest an ability to manage the procedural requirements of an arbitration. However, this may cause concern as to their technical knowledge. The use of expert evidence has gone some way to alleviate this concern but again, quality of expertise may be a consideration when selecting an international arbitrator. An arbitrator with a technical background may be qualified in interpreting the competing views of experts and may not require the assistance of an Expert Assessor. This serves in increased time and cost in the proceedings.
The selection of a technical arbitrator may raise concerns on the procedural requirements. However, many technical dispute resolvers who enter the arbitration arena do so with experience and qualifications in legal processes. The ability to understand and crystallise issues based on experience is often helpful. When balanced with allowing parties to present their evidence easily, such an arbitrator can be very helpful.
The skills to be considered do not stop with a lack of or abundance of technical knowledge or a lexicon of legal citations. The required qualifications of an arbitrator are important. However, it is often the general integrity and personality of the arbitrator that appeals most to a party in a hearing.
A party can feel reassured by an arbitrator who is listening and understanding the points made, considering the evidence and its admissibility. These are qualities that cannot be understood from CVs. This is why references from parties with previous experience of the arbitrator can be helpful.
A good measure of an arbitrator is the commentary of a party who have had a decision go against them. If despite this, they took away a good deal of understanding, knowledge and respect for the process you can feel confident in the abilities of the arbitrator.
From my experiences of arbitration, I am more likely to recommend an arbitrator because of their manner than their outward displays of knowledge. This is not to say that manner and demeanour usurps the knowledge of the procedure and applicable law. Rather, it is the combination of both that will result in a reference being positively made of a particular arbitrator.
In international disputes, whilst English may be the language of the arbitration, it may not be the first language of the parties. An arbitrator who shows temperance and acknowledgement to a party’s language or culture is worthy of reference. In balance with this the arbitrator selection must consider an arbitrator who has a knowledge of a particular jurisdiction’s common law or codified law and with it the culture of practice.
Popular arbitrators and recommended arbitrators are usually busy with arbitrations.
The issue with busy arbitrators is that they can often be reserved for a number of years in advance. When a dispute requires resolution this does not aid the process. Similarly, parties may select an arbitrator for that very reason. Knowing that in the event of a postponement, it will be difficult to secure a replacement date in a busy arbitrator’s diary.
In selection this should form a key criterion for consideration. A delayed arbitration is justice denied. It will result in increased costs in reading in and consultations for the parties.
Rules for availability
I was able to find the LCIA of particular assistance in this aspect of selection. Article 5.4 provides that prospective arbitrators must declare not only that they are independent and impartial, but also that they are “ready, willing and able to devote sufficient time, diligence and industry to ensure the expeditious and efficient conduct of the arbitration”.
The ICC at Article 13 of the ICC Rules 2012 state, the ICC Court will consider a candidate’s availability when confirming or appointing an arbitrator.
Nationality and age
We have touched on the issue already in this narrative. However, the nationality of the arbitrator plays a part in international arbitrations where a sole arbitrator is required. Parties should select an arbitrator from a country other than that of the two parties engaged in the dispute.
An issue with this aspect of selection is that some arbitrators may operate and act under different passports without one of the parties knowing this.
For example, if a British arbitrator was required and a party selected an arbitrator from a commonwealth (or indeed, EU) country who had dual nationality but resided in the country of the party who selects them, then this could be considered inappropriate.
The AFSA rules provide at rule 18 that where the parties are of different nationalities, a sole arbitrator or chairman of the Tribunal shall not be of the same nationality as either party, unless the parties agree otherwise.
The age (and health) of arbitrators may be an issue in international arbitration selection. For example with the need for travel, the elder arbitrator may suffer with their health. In the event of death, then the process of replacement will begin and delay the dispute outcome.
Of course, they may be other determining criteria for consideration, but the key issues identified above offer some food for thought for those entering into the internal arbitration arena. The consultation mentioned in the introduction is available for comment until 31 August 2020.
Damian James is a Delay and Quantum Expert in the Construction industry and acts as an Arbitrator in Africa on an ad hoc and named basis with the LCIA. For more information or support with arbitration and expert evidence, please contact Damian at firstname.lastname@example.org