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An arbitration is only as good as the arbitrator. The arbitrator¡¯s impartiality and independence is crucial to arbitration; this is often a key point of contention for parties in the procedure. The UNCITRAL Model Law, the draft amendment to China¡¯s Arbitration Law and the rules of many arbitration institutions all pay special attention to circumstances that may give rise to justifiable doubts about the impartiality and independence of arbitrators, and arbitrators may be replaced or required to make a disclosure.

Some arbitration institutions provide more detailed circumstances requiring avoidance or disclosure, mostly by referring to the IBA Guidelines on Conflict of Interest in International Arbitration. The IBA guidelines employ four categories, divided according to seriousness:

• Non-waivable, where an arbitrator cannot be a member of any tribunal whatsoever;
• Waivable, where an arbitrator cannot be a member of a tribunal unless the parties expressly agree;
• Requiring disclosure, allowing the parties to raise objections; and
• No disclosure required.

In the third category, many disclosures are limited to a three-year period. This means that arbitrators are only required to disclose circumstances that took place within the past three years. An example is an arbitrator who served as counsel for one of the parties in a case within the preceding three years.

The issues

From the technical perspective of rulemaking, provisions involving numbers always invite questions. Why do circumstances of two years and 11 months ago need to be disclosed, but not those from three years and one month ago? How was the length of limitation period determined, and which points in time should be used for calculation?

In the author¡¯s opinion, the purpose of introducing a limitation period is to strike a balance between impartiality and independence of arbitration on one hand and procedural efficiency on the other. If the period is too long, parties may be encouraged to use challenges to delay arbitration proceedings or interfere with the opposing party¡¯s right to select arbitrators.

In practice, the IBA guidelines have not gone unchallenged. The purpose of the guidelines is to solve problems like lack of clarity of challenge rules, excessive disclosure, and parties¡¯ abuse of challenges to delay proceedings or interfere with an opposing party’s rights. However, whether the IBA guidelines have in fact solved such problems remains unclear.

An empirical study indicates that, after the promulgation of the guidelines in 2004, the ICC International Court of Arbitration saw an increase in the rate of challenges of arbitrators and a decrease in the rate of successful challenges. It is not known whether this is directly related to the guidelines or due to developments in the arbitration industry or the internet.

In addition, the author¡¯s own research did not manage to uncover how the length of three years was decided, or if there was any empirical research behind this. Some scholars also consider such a clear cut-off date to be somewhat arbitrary. In fact, in a challenge procedure of the SCC Arbitration Institute, one party claimed that three years was too long and too strict a standard considering the arbitrator¡¯s social connections.

An English caseAn English case

It is without dispute that the three-year limit should not be applied dogmatically. Instead, it should be determined on a case by case basis, by reference to the basic principle of challenge and disclosure; that is, whether a situation gives rise to justifiable doubt about an arbitrator¡¯s impartiality and independence.

The number of years since a circumstance occurred is only one factor of this determination. Others factors should also be taken into account for a comprehensive judgment, such as: the arbitrator¡¯s interest in the matter (for example, whether it constitutes a significant part of the arbitrator¡¯s income, and how close the arbitrator is to the party concerned); whether the arbitrator serves as the presiding arbitrator; the result of the decision (whether the proceeding would be greatly delayed, or leads to replacement or annulment of the award); agreement between the parties; and the opinion of a reasonable third person in the society.

Judgment would also depend on the understanding of the decision-maker on the value of arbitration and the practice of the industry. For example, in the case of Cofely v Bingham & Anor (2016) in the High Court of England and Wales, the court referred to the IBA guidelines and decided that an arbitrator should be dismissed after a comprehensive consideration of many factors.

In this case, there was a dispute between Cofely and Knowles law firm. The Chartered Institute of Arbitrators appointed Mr Bingham as arbitrator. Cofely inquired about Bingham¡¯s relationship with Knowles, including cases relating to Knowles that Bingham had ruled on, how many of these cases favoured Knowles, and how much money Bingham had received from cases relating to Knowles within the past three years.

Bingham never replied and kept questioning the purpose of Cofely during the hearing. Cofely then applied to remove Bingham according to article 24.1.a of the Arbitration Act.

The court held that, within the past three years, 18% of the appointments received by Bingham came from Knowles, and 25% of Bingham¡¯s income was from cases related to Knowles. Knowles had greatly narrowed the range of eligible arbitrators by raising various requirements.

Also, Bingham had been unaware of the inappropriateness of his non-response and behaviour. In conclusion, the court held that Bingham should be removed from the case. It is worth mentioning that, even so, the court found there was nothing untoward about the partial award already rendered by Bingham.

Final thoughts

In the above-mentioned case, the court did not pay much attention to the three-year limit. Rather, it took into account factors including the connection between the arbitrator¡¯s source of income and one party, the party¡¯s willingness to appoint the arbitrator, and the arbitrator¡¯s attitude during the procedure. This should serve as a note for practitioners.

• Arbitrators should not ignore a circumstance simply because it does not appear in the IBA guidelines. They should always disclose a circumstance when they are not sure whether they should do so, and should rationally deal with inquiries from parties.
• Parties to an arbitration should reasonably exercise their right to be informed of potential conflicts of interests of arbitrators.
• Decision-making authorities should not dogmatically apply the three-year rule and render a decision of replacement or annulment only because the arbitrator did not disclose a circumstance. Instead, they should comprehensively consider all the factors mentioned above, and distinguish whether a matter raised by parties indicates that an arbitrator¡¯s impartiality and independence is indeed affected, or whether one party is merely trying to delay the procedure.

In terms of China¡¯s arbitration industry, different arbitration institutions have varying numbers of cases, industry focus, geographical patterns of parties, occupations of arbitrators, and public perceptions in their areas. There are also enterprises and law firms involved in a huge amount of cases. Therefore, direct reference to the standard of IBA guidelines, or even a more stringent one, may lead to excessive disclosure and abuse of procedure.

The author is of the opinion that institutions could adjust such a limitation period according to their own circumstances, and focus on the consideration of multiple factors so that the rules better fit practice.