The leading international arbitration institutions, including the London Court of International Arbitration (“LCIA”) and the International Court of Arbitration (“ICC”), are revising their arbitration rules to improve efficiency, flexibility and transparency, and address challenges and concerns related to the COVID-19 pandemic.

In a previous post, we discussed LCIA’s updates to its arbitration and mediation rules, which came in effect on October 1, 2020.  The ICC has issued similar updates to its 2017 Arbitration Rules, which will take effect on January 1, 2021 (the “2021 ICC Rules”).  The updates, according to the ICC Court President, Alexis Mourre:

mark a further step towards greater efficiency, flexibility and transparency of the Rules, making ICC Arbitration even more attractive, both for large, complex arbitrations and for smaller cases.

Notable and substantive revisions to the 2021 ICC Rules include:

Electronic Submissions

            Article 3 of the 2021 ICC Rules now allows the parties to make their submissions by email, replacing the previous requirement to provide the submissions in a hard copy.  This amendment recognizes that most communications are now conducted electronically and addresses COVID-19 concerns when hard copy filing may be impossible and present health risks.

Virtual Hearings

            The ICC, like other international arbitration fora, quickly adopted to the COVID-19 reality of remote hearings.  Article 26(1) of the 2021 ICC Rules now provides that “[t]he arbitral tribunal may decide, after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication.” Continue Reading 2021 ICC Rules Update Aims At Greater Efficiency, Flexibility, And Transparency and Addresses COVID-19 Issues

Sarah Biser moderated a webinar roundtable discussion on  how to conduct business in the UAE and Israel – now that the Abrahams Accords have made possible trade and commerce between Israel and the UAE.  The roundtable discussion, held on October 28, 2020,  included Sarah Biser and Mark Hess of Fox Rothschild, Uzi Dayan, Member of the Knesset; Charles Laubach, Partner at Afridi & Angell Legal Consultants (Dubai, UAE); Omar Al Busaidy, Fulbright Scholar, MICE International (UAE); Yoram Elkaim, Head of Legal, Google – Europe, Middle East and  Africa; and Stephen Barak Rozen, Partner at Amit Pollak Matalon & Co.

If you would like a recording of the session, kindly email sbiser@foxrothschild.com.

 

Join Sarah Biser,  and other arbitration practitioners for a virtual discussion regarding the challenges of virtual hearings including preparation for virtual mediations and arbitrations – sponsored by the American Bar Association, Section of Litigation and Ankura.   The Webinar will be broadcast live on November 5, 2020 at 12 pm.  Please register at this link https://us02web.zoom.us/webinar/register/8216025154109/WN_hG0erzLwQJyUvgcvWcxN_w

 

 

Arbitration awards may be vacated or annulled based on arbitrator conflicts of interest and even just an appearance of impropriety. Read how different arbitrations deal with disqualification motions.

The Importance of Impartiality and Lack of Conflicts

Arbitrator’s impartiality and independence is the bedrock of international arbitration. Recent arbitration awards have been vacated or annulled due to arbitrator conflicts of interest or even mere appearances of impropriety. Parties may waive such conflicts, however, if the parties do not raise the conflicts in a timely and appropriate manner.

Recent proceedings demonstrate the importance of this issue.

On June 11, 2020, an annulment committee appointed in an ICSID case annulled a $128 million award against Spain in an Energy Charter Treaty case and ordered the claimants to pay all fees and costs in the case. The ruling was based on the arbitrator failing to disclose his 15-year relationship with claimant’s damage expert involving eight cases by the arbitrator’s law firm, including several where the expert was currently engaged. In addition, the arbitrator had presided over cases where the expert had previously testified. Because this information was not adequately disclosed, Spain did not have a chance to object at any time, including at the time the Tribunal was formed.

On December 16, 2015, France’s highest court annulled an arbitration award due to an arbitrator’s connection to the prevailing party. The Court of Cassation held that the partial award must be set aside because the arbitrator was a partner in a Canadian law firm that had a continuing relationship with the prevailing party.

Disqualification of Arbitrators-Know Your Audience

Finesse is required in the disqualification process, particularly when asserted later in the proceedings. Each arbitral forum has a different procedure and criteria for disqualification, and knowing the internal rules may make the difference between winning and losing the motion. One key difference is the degree to which information regarding disqualification will be shared with the Tribunal itself and whether the Tribunal has a voice in the decision.

Disqualification before the International Centre for Dispute Resolution (ICDR)

The ICDR follows the same disqualification procedure as its domestic affiliate, the American Arbitration Association. A party must send a challenge to the Administrator within 15 days of becoming aware of the circumstances supporting the challenge. Under Article 14 of ICDR Arbitration Rules, the Administrator notifies the opposing party of the challenge and grants a time to respond. The Tribunal is also notified of the challenge, but is no told which party filed the challenge. The Administrator may request information from the arbitrator who is being challenged. If the opposing party accepts the challenge, then the arbitrator must withdraw, or the arbitrator may withdraw unilaterally without admission that the challenge was correct. In the absence of agreement, the Administrator in his or her sole discretion will decide the challenge.

Disqualification Before the International Court of Commerce (ICC)

Under Article 14 of the ICC Rules, a party’s challenge must be filed in writing with the Secretariat within 30 days after the party becomes aware of a conflict, and the challenge must specify the facts and circumstances on which the challenge is based. The ICC itself “shall decide on the admissibility and, at the same time, if necessary, on the merits of a challenge after the Secretariat has afforded an opportunity for the arbitrator concerned, the other party or parties and any other members of the arbitral tribunal to comment in writing within a suitable period of time.” Unlike in the ICDR, the ICC Tribunal and the affected arbitrator, as well as all parties, shall be heard before a decision is issued.

Disqualification Before the ICSID Convention Arbitration

For treaty cases, challenges are filed with the ICSID Secretary-General or the Tribunal under Article 57 of the ICSID Convention. Once received, the challenge is forwarded to the Chairperson of the ICSID Administrative Counsel if the challenge is to a sole arbitrator or a majority of the Tribunal. A schedule is set for the challenged arbitrator to respond and for the other parties to comment. A decision on the challenge is usually made by the other members of the Tribunal (Article 58). Where a sole arbitrator or a majority of the Tribunal is challenged, the decision is made by the Chairperson of the Administrative Council.

Standards Governing Disqualification

In the ICDR, four factors are weighed in disqualification motions: whether the conflict is (a) direct, (b) continuing, (c) substantial, and (d) whether the challenge timely. Other arbitral fora apply similar rules and consider the disqualification criteria used by the seat of arbitration. That makes sense, because, if the award is challenged in court, the disqualification motion will be reviewed by the court as well.

Conclusion

Disqualification motions advance the integrity of the Tribunal, but must be brought timely and with good cause. Even if denied during the actual arbitration, the motion may be reconsidered at the annulment stage. Each arbitration forum has its own rules for disqualification motions, and these rules should be strictly followed.

Learn to Plan, Plan to Learn: FINRA Arbitration Training

A Complimentary Webinar Co-Sponsored by NSCP
Thursday, November 5, 2020  |  Noon PT  |  3 pm ET

Many in the financial industry favor arbitration for the certainty it affords as well as the defined obligations, cost savings and streamlined process it provides. But these benefits can be forfeited due to lack of preparation, potentially exposing you and your clients to issues that could have been avoided.

Fox partners Josh Horn and Oksana Wright will lead a discussion on the following topics:

·    Pre-Arbitration Considerations

o  Selecting an arbitrator

o  Selecting a venue

o  Virtual hearing challenges

o  Pre-hearing conference prep

o  Approaches to discovery depending on type of case

o  Motions prep

·    Arbitration Considerations

o  What is admissible evidence?

o  Use of expert witnesses

·    Post-Arbitration Considerations

o  Responding to post-hearing submission requests and appeals

Please register here.

In our recent post, we have discussed the split in the federal appeals courts over whether a private international arbitration constitutes a “foreign or international tribunal” within the meaning of 28 U.S.C. § 1782(a), which authorizes U.S. district courts to provide assistance to foreign or international tribunals by ordering discovery of persons in the district.

On September 22, 2020, in Servotronics, Inc. v. Rolls-Royce PLC et al., No 19-1847, the U.S. Court of Appeals for the Seventh Circuit joined the Second and Fifth Circuits in holding that 28 USC § 1782(a) does not apply to private international arbitration.  As we have previously discussed, the Sixth and Fourth Circuits both recently ruled that section 1782 may be invoked to seek discovery in aid of private foreign or international commercial arbitrations.  Continue Reading The Seventh Circuit Joins the Second and Fifth Circuits in Holding That 28 USC § 1782(a) Does Not Apply to Private International Arbitration

Due to uncertainties created by the pandemic, virtual hearings will continue to remain the default option in particular in domestic, international and cross border proceedings, in which in-person appearances are made difficult by travel constraints.

There are many practical considerations that practitioners and clients face with regard to virtual hearings.  This post summarizes some important issues that need to be considered in advance of a remote hearing:

  • Technical aspects: There are various technical aspects that need to be planned in advance, including the platform for the hearing; presentation of electronic evidence; translations; recording and transcribing.  Most of these technical aspects are better left to the professionals, rather than the attorneys, who should be focusing on the legal aspects of the hearing.  For example, if the budget allows, there should be a designated person assigned whose responsibility is to ensure that the technical aspects of the hearing are running smoothly.  Such individual should be responsible, among other things, for presentation of electronic evidence, muting and unmuting of participants, setting up the break out rooms, and ensuring participants’ access to the hearing.

Continue Reading Virtual Reality Of Arbitration Hearings

Join virtually Sarah Biser, Robert Rubin, Mark Hess, James Perry, Micha Tollman and Roberto Hernandez-Garcia for a discussion regarding the use of Dispute Review Boards in domestic and international projects.  The Webinar will be broadcast live on September 17, 2020 at 11:00 eastern.  Kindly register at the link below.

Join virtually Sarah Biser and other international law practitioners for a discussion regarding the successful delivery of domestic and international construction projects at the 2020 Construction Webinar Series organized by the American Arbitration Association.   The Webinar will be broadcast live on September 15, 2020 at 11 am ET.  Kindly register at ADR.org.

Co-authored by Robert Rohrberger

Objectives and Considerations

The majority of international arbitrations are decided by three-member arbitration panels. Each party selects its “party-appointed” arbitrator, and the president or chair of the three-member panel is selected by the two party-appointed arbitrators, by a neutral authority or by other agreement of the parties.[1] This blog discusses some of the more critical considerations that a party and its attorney should review in the selection of its arbitrator. The importance of an in-depth review and analysis of an arbitrator’s background, experience and ability to work with her co-arbitrators cannot be overstated. Indeed, the selection of an arbitrator may be one of the most critical decisions a party makes.

Predisposition vs. Appearance of Bias

The ideal party-appointed arbitrator is a person who, because of her legal or cultural background, nationality, history and professional and technical experience is likely to be predisposed toward the selecting party’s side. To that end, prior professional positions and relationships, arbitration experience, including prior decisions, and academic writings should be scrutinized. However, a commonality of views with the appointing party cannot override her conscience and professional judgment, undermine her effectiveness and/or violate the governing arbitration rules regarding bias, independence and partiality. She should have not only stature, experience and gravitas, but the credibility to persuade her co-arbitrators of the strength of her party’s position.

The major international arbitration institutions have rules relating to bias, impartiality and/or independence. For example, the arbitration rules of the United Nations Commission on International Trade (UNCITRAL),[2] the London Court of International Arbitration (LCIA)[3] the International Arbitration Rules of the American Arbitration Association (AAA)[4] and the International Chamber of Commerce (ICC)[5] embody one or more of these concepts. There are requirements regarding the disclosure of bias, and there are provisions regarding the potential overruling of an arbitration award if bias can be demonstrated.

Both parties expect to pursue justice in an unbiased fashion. Even if the party-appointed arbitrator may be generally predisposed to the party personally or to its position, the other arbitrators should believe that the appointee will vote against the appointing party if required by the facts and/or law. Although an arbitrator may qualify as non-biased pursuant to relevant rules, a party should avoid selecting an arbitrator who will be perceived by the other arbitrators as biased in favor of the appointing party. A party-appointed arbitrator is expected to vote for the party with the better or more compelling arguments, law and facts, even though the arbitrator may be sympathetic to the appointing party because of a common nationality, shared background, culture or shared legal perspectives ― such as a common or civil law training, view about contract interpretation and summary disposition, and inclination regarding limited or more expansive discovery.

Experience as an Arbitrator

In most cases, it is best to select an individual with multiple experiences in international arbitration, or at least to avoid an individual who has never served as an arbitrator. The lack of experience can undermine confidence in the appointee during deliberations and in crafting an award, and limit the appointee’s effectiveness. Of course, there must be a first time for every arbitrator and there may be times when an individual’s other qualities are compelling enough for the appointing party to give the individual an opportunity, even if he or she lacks experience in arbitrations.

Knowledge/Stature in Field

For similar reasons, it is important to select a person who is knowledgeable or an expert in the area that is the focus of the arbitration and ideally enjoys a level of stature and respect. Knowledge is needed for the arbitrator to fully understand the issues and to participate in a meaningful way in deliberations and the drafting of the award. A reputation in the relevant area adds weight to any arguments that the arbitrator may present to the other arbitrators. For example, in a complex construction matter, many parties are likely to prefer to appoint an arbitrator with expertise not only in construction generally, but in the technical issues critical to the resolution of the dispute.

People Skills

A knowledgeable and experienced person will have little impact on their fellow arbitrators if they lack interpersonal skills or have off-putting personality traits. An arbitrator who is the greatest figure in his field will not be persuasive if he constantly announces himself as such. It is best to select a person who is confident and forceful, as well as collegial and capable of participating in a respectful, meaningful and persuasive discussion.

Availability

Checking the availability of a prospective candidate is a must. Selecting a highly skilled arbitrator who is too busy can be problematic. So it’s best to evaluate this issue and try to get an honest assessment of the arbitrator’s schedule in advance.

Sources of Information

The best source of information to be used in selecting an arbitrator is the appointing party’s or its lawyers’ personal experience with the individual. However, in many cases, the decision will be made in the absence of that direct personal knowledge. In these situations, the decision is usually based on a recommendation from a network of friends and professional connections or an evaluation of the individual’s CV and information that can be garnered from the internet and other public sources of information.

Some private vendors are attempting to develop more detailed, data-driven analytics to aid in a more objective assessment of arbitrators and their professional qualities. For each prospective arbitrator, these vendors obtain a variety of information relating to critical aspects of an arbitration(s) from participants. This data includes:

  • How the arbitrator under discussion administered the proceedings
  • How often the tribunals (on which the arbitrator sat) engaged in an early resolution of issues
  • How satisfied or dissatisfied the parties were with the award.

The vendors then create reports on each arbitrator candidate that include graphs and charts, as well as information regarding how to interpret the data.

Conclusion

A party-appointed arbitrator is selected with the hope that she will be able to persuade the other two arbitrators about the merits and truths of her client’s position. Remember that the opposing party has the same view about its arbitrator. A party-appointed arbitrator with stature, the requisite skills and experience will understand the importance of independence and the appearance of objectivity, which cannot be overstated. The checklist of arbitrator characteristics set forth above is not a guarantee that one’s position will prevail, but the list will help guide a party in the appointment of an arbitrator who can maintain that balance.

[1]           Each arbitral institution has its own rules about the selection of the presiding arbitrator if the parties cannot agree. Those rules are beyond the purview of this blog.

[2]           UNCITRAL Arbitration Rules, Articles 11 and 12.

[3]           LCIA Arbitration Rules, Articles 5, 10 and 11.

[4]           AAA International Rules, Articles 7 and 8.

[5]           ICC Arbitration Rules, Articles 11, 13, and 14.