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Selecting an arbitrator: Avoiding the pitfalls

 

Introduction

The choice of arbitrator is a key aspect of arbitration proceedings, and yet it is often only briefly addressed by the parties in the time-sensitive early stages of proceedings.

Parties can hold high hopes for 'their' arbitrator in the context of three-member tribunals: that their appointed arbitrator will take their side and become their advocate within the closed circle of the tribunal – and perhaps even persuade a split tribunal to rule in that party's favour.

But things can go wrong. An arbitrator can be challenged or a split tribunal can take a long time to make decisions and even then make compromised procedural and substantive decisions with which neither party is happy. In extreme circumstances, an award might even be less easily enforced if there are underlying procedural flaws attributable to the selected arbitrators.

While parties might not be able to control the future, there are basic safeguards which can help to protect against unwanted developments – or at the very least decrease the likelihood of such unwanted developments coming to light.

Institutional Rules – Inherent Protection

All of the leading institutional arbitral rules provide certain mechanisms which help to add structure to arbitrator-related issues.

The most pertinent example is challenges to arbitrators. Most arbitral rules will provide some mechanism for the challenge of arbitrators for failures such as acting outside of the terms of the arbitration agreement, making decisions on a biased or partial basis or failing to conduct the arbitration with reasonable efficiency. That mechanism will strive to ensure that challenges are properly and fairly determined. Institutional rules might also seek to prevent abuse of the use of challenges by parties, which can have its own negative effect on the arbitral proceedings (see, for example, the recently updated LCIA Rules of Arbitration 2014, at paragraph 2 of the Annex).

Other examples include the processes for appointing arbitrators on behalf of a party which has failed to appoint an arbitrator, and the replacement of arbitrators who become no longer fit to act during the course of proceedings.

Selecting effective arbitral rules at the earliest stages of a project or deal can help prevent major headaches once proceedings have commenced.

Selecting an Arbitrator

The arbitrators who compose a tribunal are not simply passive figures who at the end of the process render an award. They are people who interact with each other, the parties, witnesses and any expert witnesses. They set the procedure and timetable of proceedings, they issue decisions on crucial issues such as scope of disclosure, and they can participate in the examination and cross-examination of witnesses.

Therefore, in choosing the party-nominated arbitrator, it is important to take into account the candidate's legal and jurisdictional background (e.g. civil law or common law), relevant industry sector knowledge, and the language of the arbitration. The candidate's professional standing, reputation and integrity are also important (not least as this will have an impact on the amount of influence the party-nominated arbitrator is able to exercise over the other tribunal members), as well as his or her experience of international arbitration practice and procedure. Availability should not be overlooked, as it is important to have an arbitrator who is able to focus on the case at the appropriate times.

Of course a party will also want to select an arbitrator who may be favourable to the party's own position. This can be a nuanced process, as a party and their lawyer need to understand the intricacies of a party's case at a very early stage of the proceedings. Making an informed choice often relies upon a party's lawyer having had experience with and exposure to a broad array of different arbitrators from diverse legal traditions and backgrounds. The relevant person's CV and other public information (such as legal background and education, nationality, published writings and lectures) can also help to give a sense of the practitioner and paint a portrait. Word-of-mouth should not be overlooked.

It is also generally accepted that a potential arbitrator can be interviewed, provided that certain parameters are complied with in order to ensure the maintenance of independence on the part of the arbitrator and integrity of the arbitral process as a whole. For example, it would not be appropriate to ask the arbitrator's views on legal questions relevant to the case or, for example, whether the candidate is a strict constructionist or someone who is influenced by the equities of the case.

While parties will of course wish to do everything possible to select an arbitrator who will steer the proceedings in a favourable direction, it is absolutely crucial to ensure that a party-nominated arbitrator remains at all times entirely independent and impartial from the party nominating that person. Anything which indicates that an arbitrator is not neutral and independent will be an easy target for an opponent seeking to disrupt the proceedings, or even to lay in wait and disrupt enforcement proceedings. Further, an arbitrator who is seen to be biased or partial to a certain party might lose credibility with fellow arbitrators, with the result of a split tribunal ruling against that party.

Finally, selection of the president of the tribunal needs to be given very careful consideration. The parties might agree to certain attributes of the president in their arbitration agreement. In the case of a three-member tribunal, the party-appointed arbitrators might request or give their appointing party a list of potential candidates, to be shared with the other party and co-arbitrator with a view to seeking agreement. These opportunities to influence the process should not be missed.

Conclusion

Arbitrator selection is of critical importance in any arbitration and requires careful consideration of a range of different factors. Selection of appropriate arbitration rules can help to regulate the process. Parties can look to a range of sources of information when selecting an individual.

Ultimately, the key aims in selecting the party-nominated arbitrator is to choose someone who will both help to ensure that the overall procedure is one which matches the parties' and dispute's needs, and who will ensure that the arguments of his or her nominating party are properly considered and taken into account in any decision by the tribunal. As part of being able to fulfil this duty, the party-nominated arbitrator must be entirely independent, and seen to be independent, in order to ensure credibility in the eyes of the rest of the tribunal.