INTEGRITY IN INTERNATIONAL COURTS AND TRIBUNALS

INTEGRITY IN INTERNATIONAL COURTS AND

TRIBUNALS.

EZIRIGWE JANE1

Introduction

This paper seeks to examine the concept of

integrity, with its related terms like "unbiased",

"impartiality", "transparency" and "adherence to ethical

standards" in international courts and tribunals. It would

look at these terms as they affect the conduct of

international proceedings, conduct or misconduct of the

Arbitrators and Judges or the Counsels / Representatives of

the parties and the parties themselves. It would also briefly

comment on the critique of the international institutions in

the administration of justice and dispute settlement as it

concerns their transparency or lack of it.

Efforts would be made to discuss the integrity of

the Arbitrators and Judges as it relates to their requirements

for qualification, requirement of independence and

impartiality and the challenges that have arisen thereof. The1 Assistant Research Fellow, Nigerian Institute of Advanced Legal Studies

conduct or misconduct of Counsel/ Representatives of parties

would be examined to assess its effect on the integrity of the

process, especially with regards to the admission requirement

to represent parties in these institution, the ethical

standards for those who appear and the increasing conflict of

interest cases of Counsels who act as Arbitrators in similar

cases. The integrity of the parties to these proceedings

would be reviewed as per their role in the production of

evidence and the cases of forgery in this process, their

possible insistence in using a challenge procedure to delay

proceedings and the use of frivolous proceedings to negotiate

for settlements. The integrity in the whole international

judicial and arbitral institutions would then be assessed to

ascertain their transparency, openness and the confidence of

the public in their processes. Recommendations would be made

as to how to ensure that there is integrity in these

proceedings and that the public has more confidence in them.

This paper would look at cases mainly from

International Commercial Arbitrations2, investor - state

disputes and few cases from the House of Lords3. It would limit2 hereinafter called ICA3 England is a common seat of international Arbitration and so Case law of the English system is very relevant in any discussion on Arbitration.

itself to cases on challenges of the integrity/ impartiality

of the Arbitrator, Judge or Counsel and allegations on fraud,

bias and misconduct of all the actors involved in these

proceedings. The words attorney, lawyer and counsel are used

interchangeably and may sometimes include party

Representatives who are laymen. The word "integrity" would be

used in the context defined below.

Integrity is the adherence to moral and ethical

principles, soundness of moral character; honesty.4 It is a

firm adherence to a code of especially moral or artistic

values.5 It is a concept of consistency of actions, values,

methods, measures, principles, expectations and outcomes.

Integrity is closely linked with "being unbiased", "free from

all forms of prejudice and favouritism" and "impartiality".

These principles, when followed, promote values such as trust

and fairness in any system or process.

INTEGRITY OF ARBITRATORS/JUDGES

“There is little use in going to law with the devil while the court is held in hell."

4 www.dictionary.reference.com/browse,integrity5 www.merriam-webster.com/dictionary/integrity

Humphery O'Sullivan

Private international actors go to

arbitration to avoid adjudicatory risks, especially the risk

of bias. It follows that safeguarding procedural fairness is a

key concern in arbitral processes. The fear of bias lies at

the very heart of ICA so much so that the prevention of

partiality is its raison d'etre.6 The Magna Carta of ICA has

two main rules:

1. Due process and fair hearing; and

2. The independence and impartiality of arbitrators.7

The prohibition on bias justifies itself by

reference to the very same goal underlying the decision to

arbitrate which is promoting a level playing field8. There are

three competing tests for apparent bias in the leading seats

of the world today. The competing tests are:

6 Luttrell, S.R "Bias challenges in International Arbitration: The need fora "real danger" test" www.researchrepository.murdoch.edu.au...Accessed on 30th April,20147 Ibid8Park, W., "The Arbitrator Integrity: The Transient and the Permanent", SanDiego Law Review Vol.46:629,2009 p. 633

1. The “reasonable apprehension” test (the Sussex Justices test)

which requires that a fair minded and informed observer

would have a reasonable apprehension that the arbitrator is

biased. It is derived from the Judgment of Lord Hewart CJ in

Sussex Justices9.

2. The “real possibility” test (the Porter v. Magill test) which

requires that a fair minded and informed observer would say

that there was a real possibility that the arbitrator was

biased.10 It is based on the decision of the House of Lords

in Porter V. Magill.

3. The “real danger” test (the Gough test) which requires that the

Court must find there to be a “real danger” of bias before

apparent bias will be made out. It comes from the decision

of the House of Lords in Gough11.

When a decision maker is more inclined to

decide in favour of one party than the other, then that

decision maker will be said to have a party preference.

Party preference is the older form of bias. Party preference

9 Luttrell, S.R supra p. 8-910 Ibid11 Ibid

may take a number of different forms; Identify

characteristics and Party familiarity.

Identify characteristics include12:

1. Nationality or domicile (causing "Catalina Bias")13.

2. Race (causing "Noble China Bias").14

3. Political Persuasion / Association (causing "Pinochet

Bias")15.

Party familiarity includes16;

1. Professional familiarity: The party and the decision

maker have or have had professional dealings (e.g the

decision maker has judged the party before, or has acted

as counsel or advocate for the party in the past) -

(Rustal Trading familiarity)17

2. Commercial familiarity: The party and the decision maker

have either continuing or past commercial dealings, or

common commercial interests (e.g the arbitrator owns

12 Nos 2 and 3 below do not usually apply to corporate parties. See generally Luttrell, S.R supra p.1713 Re the owner of the Steamship "Catalina" and the owner of the steamship “Norma” (1938) 61 LIL Rep 36014 Noble China INC v. Cheong (1998) 43 OR (3d) 6915 CR v. Bow Street Metropolitan Stipendiary magistrate, ex parte Pinochet (No2) (1999) 2 WLR 27216 Luttrell, S.R supra p. 1917 Rustal Trading Ltd v. GIU & Duffus SA (2000) 1 Llyod's Reps 14

shares in the corporate party - bias by portfolio- (Saudi

Cable familiarity)18

3. Social familiarity- the party (or their witnesses) and

the decision maker know or are related to one another

(e.g by consanguinity, marriage, membership or the same

chambers or common membership of social or sporting clubs

- (Laker Airways familiarity).19

4. Representative familiarity- the officers, agents or

servants called as witnesses, or the advocates of the party

are professionally, socially or commercially familiar to the

decision maker or vice versa -(ASM Shipping familiarity)20-

The newest form of this is Hrvatska Counsel Conflict.

It has been argued that the international

arbitration community can be described as a mafia. It is

small, oligarchic and self regulating and geared around the

exchange of favours. It has also been argued that because

arbitrators get paid only when they are selected to serve,

arbitrators have an incentive to favour parties more likely to

18 AT & T Corporate and Lucent Technologies INC v. Saudi Cable Company (2000) All ER (comm) 62519 Laker Airways v. FLS Aerospace(1999) 2 Llyods Reps 4520 ASM Shipping Ltd of Indian v. TTMI Ltd of England(2005) App. L.R 10/19

select them in future21. The pool of arbitrators in regular

service in international disputes is made up of mostly

barristers, partners of larges international law firms and

senior law professors. These actors demonstrate a high degree

of role reversibility he (or she) who sits as arbitrator in

one matter is likely to stand as counsel in the next.

To promote confidence in the international

arbitral process, party input into the selection of

arbitrators has long been common practice. Even limited

interview of candidates by counsel has been allowed, at least

with safeguards to avoid discussion of the merits of the case.

Rightly or wrongly, litigants often perceive a benefit in

direct selection of a tribunal, rather than leaving the choice

entirely to an institution. This selection may involve

choosing a candidate who has had prior or present relationship

with the party or counsel22.

The most common ground for bias challenge is

professional relationship between arbitrator and a party or

their counsel. A balance however, ought to be made in the

relationship between an Arbitrator and a party or their21 Luttrell, supra22 Park, W. supra p. 644

Counsel. For instance, an arbitrator who says French people

exaggerate should not judge a case with a Respondent from

Paris. Also an arbitrator should not become romantically

entangled with a lawyer representing one side in the case.23

Equally settled is the proposition that an arbitrator will not

be disqualified merely because once, during a midmorning

coffee break at a professional lecture, he chatted with a

lawyer appearing before him in a case.24

There have been several cases in different

international institutions on allegations of bias, partiality

and conflict of interest of Arbitrators. These cases would be

examined below, under their respective institutions. However,

since London is a common seat of Arbitration, English law

applies and this has rubbed off on the case law in England and

vice versa, thus, a need to examine a few of such cases.

Catalina Case25

23 For a tale of room sharing by an arbitrator and a lawyer appearing before him in a case, see Richard B. Schmitt, Suite Sharing, WALL ST. J., Feb. 14, 1990, at A1. On two different nights, a video camera caught an arbitrator entering and leaving the hotel suite for one of the lawyers in his case. The attorney claimed that the arbitrator initially stayed with her because she had felt ill and he was concerned for her health. On the second night, said the attorney, the arbitrator was waiting for a lost briefcase that was not found until late evening, by which time he no longer had a room. The concerned attorney thus offered to share her room with him again. cited in Park, W. Supra p. 64124 Park, W. supra p. 64125 supra fn13

Here, the English Baronet, Sir William Norman Raeburn KC,

was appointed arbitrator to decide a dispute that arose out

of a collision between Portuguese and Norwegian owned ships

off the English channel island of Ushant. A witness for the

Portuguese applicant swore that he heard the arbitrator say

about the Portuguese party’s witnesses;

"The Italians are liars in these cases and will

say anything to suit their book. The same thing

applies to the Portuguese. But the other side here

are Norwegians, and in my experience, the

Norwegians generally are truthful people. In this

case, I accept the evidence of the master of the

(Norwegian vessel) Norma."26

On application, the award was set aside for actual bias

as justice could not be done because the arbitrator

clearly did not like or trust Portuguese people.

Saudi Cable Case27

Here, Mr. Fortier, the Chair of the tribunal was a

non-executive director and holder of 474 shares in a

26 Lutrell, S.R supra p. 5127 supra fn 18

Canadian outfit, Nortel which is a disappointment bidder and

also held 300 AT & T shares. The chairman did not mention

his directorship in Nortel as a result of a clerical error

in the curriculum vitae he provided at the time of his

nomination. When AT & T complained, Mr. Fortier offered to

resign his directorship but AT & T rejected same and applied

to the International Chamber of Commerce28(ICC) for his

removal on the ground that he lacked independence. Award by

the tribunal was upheld on an application to set it aside.

London Court of International Arbitration29

The LCIA is the world’s oldest

International arbitration institution established in 1893.

Until recently30, the LCIA had observed a flat prohibition

against publication of its decisions, and thus, its rulings

on challenges to arbitrators.

LCIA Rules provide:

"All arbitrators conducting arbitration under these

Rules shall be and remain at all times impartial

and independent of the parties; and none shall act28 hereinafter called ICC29 hereinafter called LCIA30 In 2006

in the arbitration as advocates for any party. No

arbitrator, whether before or after appointment,

shall advise any party on the merits or outcome of

the dispute." 31

In National Grid32, an arbitration under the UNCITRAL

Rules, Argentina filed a challenge to the American

arbitrator for interrupting a witness (in Spanish) and

caused Argentina to apprehend prejudgment. The arbitrator

said that he “completely identified with the Claimant’s

allegations. The parties agreed to submit the challenge to

the LCIA. LCIA convened a division of the court on the

matter with Mr. Fortier as president. Argentina quickly

objected to the president-whether or not the objection was

related to the Republic’s challenge to Mr. Fortier six years

prior in Vivendi v. Argentina is not clear in the judgment.

Mr. Fortier withdrew and an Irish arbitrator

replaced him. The challenge was dismissed as the tribunal

noted that the use of the word “allegation” by the American

Arbitrator when questioned by the Counsel to Argentina was

incompatible with the assertion of being prejudiced. It31 Article 5(2)32 National Grid Plc v. Argentine Republic LCIA, Case No UN7949

however noted that some confusion was caused by the comments

being made in Spanish (rather than English, American’s

mother tongue.)

In the writer's opinion, the action of the

English arbitrator, who chose to identify with the

Claimant's allegations in Spanish language is suspicious

enough to cause Argentina to apprehend prejudgment.

In another LCIA challenge Decision33 a

challenge arose out of an ex-parte Communication between the

Sole arbitrator and counsel to Claimant. The arbitrator and

Counsel met for 15 minutes behind closed doors and in the

course of the meeting, live issues in the arbitration were

discussed. Subsequently, in an exchange concerning the

meeting the arbitrator made comments casting aspersions on

the integrity of Counsel to Respondent and required that an

exchange between counsel regarding the meeting be deleted

from the transcript. The division concluded that the sole

arbitrator should be removed.

33 Challenge Decision 18(2005) cited in Partaside,N.G, "LCIA Decisions on Challenges to Arbitrators: A Proposal to Publish(2007) 23 ARB Intl at 13

International Chamber of Commerce

Article 7(1) of ICC rules states that "every

arbitrator must be and remain independent of the parties

involved in arbitration". Article 7(2) requires that

arbitrators sign a declaration of independence. Article

11(1) confers the right to challenge an arbitrator "whether

for lack of independence or otherwise". Article 15(2)

requires that "in all cases the arbitral Tribunal shall act

fairly and impartially and ensure that each party has a

reasonable opportunity to present its case".

Where a party alleges a breach of this mandatory

procedural rule, the ICC Court will evaluate the challenge.

However, all arbitral proceedings, before the ICC court are

confidential and so do the challenges.

Nevertheless, former Secretary General Yves Derains has

observed that "the (ICC) court has not normally accepted to

replace an arbitrator unless it appears likely, that he is

not, in fact independent". Some successful challenges

blindly reported in “Independence of Arbitrators”, the

special supplement to the ICC Bulletin of 1977 include.

ICC Challenge 1

Here, the Claimant challenged the Respondent’s co-arbitrator

who after being confirmed by the ICC Court, disclosed that he

had given legal advice to the Respondent in the past and had

been involved in the development of the project to which the

contract the subject of the dispute related.34

ICC Challenge 2

The Respondent challenged the sole arbitrator on the basis

that he was a member of a firm allied to the accounting Firm

that had acted as auditor for the Claimant35.

ICC Challenge 3

The Respondent challenged the Chairman on the basis that a

foreign office of his law firm was acting for a party in an

unrelated state court proceeding against the Respondent'

parent company36.

ICC Challenge 4

34 Whitecell, A.M "Independence in ICC Arbitration: ICC Court Practice Concerning the Appointment, Confirmation, Challenge and Replacement of Arbitrators." ICC Bulletin 2007 (Special Supplement), 99 cited in Luttrell supra p. 9935 Ibid p. 10036 Ibid

The Claimant challenged the Respondent state's arbitrator on

the basis that he failed to disclose the fact that he was a

member of the Respondent’s legal advisory branch37.

ICC Challenge 5

The Respondent challenged the arbitrator appointed on its

behalf on the basis that he failed to disclose that he had

served as chairman on a non-ICC tribunal convened in respect

of the same construction project as the ICC case. The

arbitrator responded that, because the non-ICC arbitration

had not progressed to the hearing stage, he did not consider

his independence to be impared. The Court disagreed and

removed the arbitrator38.

Permanent Court of Arbitration39.

The PCA was established by the Hague Convention for the

Pacific Settlement of International Disputes of 1899 and

1907

Telkom Malaysia40 37 Ibid38 Ibid p. 10139 hereinafter called PCA40 Telekom Malysia v. Republic of Ghana Case No HA/RK 2004 .667

Here, Ghana challenged the appointment of Professor

Gaillard on the basis that he was serving as counsel in a

similar but unrelated investor-state dispute in which he was

pressing for an expropriation claim on behalf of a foreign

consortium against the Kingdom of Morocco. The court

reasoned held that;

"Even if this arbitrator were able to sufficiently

distance himself in chambers from his role as attorney in

the reversal proceedings against the RFCC/Moroccan award,

account should in any event be taken of the appearance of

his not being able to observe said distance. Since he has

to play these two parts, it is in any case impossible for

him to avoid the appearance of not being able to keep

these two parts strictly separated. For this reason there

will be justified doubts about his impartiality, if Prof

Gaillard does not resign as attorney in the RFCC/Moroccan

case. Consequently the motion to challenge will in that

case be upheld. To avoid any uncertainty Prof Gaillard

should within ten days from this judgment have expressly

and unreservedly notified the parties to this arbitration

whether he will resign as attorney in the RFCC/Moroccan

case".

The Iran-United States Claims Tribunal41.

The IUSCT was established by the Algeris accords,

to resolve compensation claims arising out of the Iranian

hostage crisis of the 1979-1981. Its functions include the

conduct of arbitrations related to the post –resolution

nationalisation of US assets. The IUSCT uses a modified

version of UNCITRAL Rules. Article 111(2) of the Claims

Settlement Declaration between the United States and Iran

provided that the members of the IUSCT would be appointed in

accordance with the UNCTRAL arbitration rules and that those

rules would apply except to the extent that they were

modified by the parties or the tribunal42.

It is seated in the Hague. The IUSCT panel is composed of

nine members, three US- appointed, three Iran- appointed and

three “neutrals” from other states. For private Claims,

there is an allowance for sole arbitrators and panels of

three. State – State claims are heard by the full nine41 hereinafter called IUSCT42 Luttrell supra p. 109-10

member tribunal on banc. The IUSCT Rules prescribe the

method by which challenges to arbitrators may be made43. The

IUSCT uses the “justifiable doubts” standard set by UNCITRAL

Rule.44

Re Arbitrators Kashani and Shafeiei (1982)

Iran wrote to Judge Mangrad, the president

arbitrator of Chamber Three of the IUSCT in 1981, informing

him that they no longer believed in (his) neutrality and

suggested that he resigns. He refused to stand down. Iran

wrote again purporting to disqualify him on the grounds of

bias, as he had engaged in "unsound political propaganda" by

condemning the practice of capital punishment by Iran. The

tribunal referred the challenge to the Secretary General of

the PCA in accordance with UNCITRAL Rules 11 and 12. The

court rejected the Iranian challenge on evidentiary grounds.

The two Iranian arbitrators (Kashani and Shafeiel) began

to express lack of confidence in the president's abilities

and independence. The relationship between the members of

the tribunal deteriorated rapidly. The climax was that the

43 See Articles 11 and 1244 See UNCITRAL Rule 10(1)

two Iranian arbitrators physically attacked Mangard in the

entry hall to the tribunal. The United States challenged the

two Iranian arbitrators. Iran later replaced the two

arbitrators and so no decision was made in the matter.45

Re Judge Briner (1988).

In 1988, Judge Briner, Chairman of IUSCT Chamber Two

was challenged by Iran in Amoco Oil Company v. The Government

of the Islamic Republic of Iran46. The composition of the three

member tribunal was such that the third country arbitrator-

Judge Briener would determine the outcome of the case. Iran

argued that Judge Briner had failed to disclose that he was a

sole director of a Swiss subsidiary of Morgan Stanley &

company. Employees of Morgan Stanley were called as expert

witness in the Amoco arbitration. Iran’s position was that

this relationship gave rise to justifiable doubts as to Judge

Briner’s impartiality or independence, and that his failure to

disclose this gave rise to an additional ground of challenge.

At first, Judge Briner refused to withdraw but later did,

45 Luttrell S.R supra p.110-1346 Case No. 55/1988 IUSCT

citing the bona fide beliefs of the challenger and the best

interests of the tribunal as his reasons for standing down47.

Re Judge Broms (2001)

Judge Broms in his dissenting opinion on the tribunal’s

decision recited the terms of discussions between members on

the merits of the application. The US filed a challenge with

the appointing authority alleging that Judge Brom’s breach of

tribunal rules on secrecy of deliberations48 gave rise to a

reasonable apprehension of pro-Iranian bias. The US challenge

was dismissed49.

Court of Arbitration for Sports50

CAS was created in 1983 by the International Olympic

Committee (IOC). It has been used as a forum for the

settlement of high value sports media and entertainment

licensing disputes. It is the peak institution for the

specialist practice of sports law and dispute resolution51.

47 Luttrell S.R supra p.11348 Article 31 of IUSCT Rules49 Luttrell S.R. supra p. 11450 hereinafter called CAS51 See generally Grundel v. International Equestrian Federation(1 Civil Court ATF (15 March 1993))

Rule 33 of the CAS Rules says; "every arbitrator shall be and

remain independent of the parties and shall immediately

disclose any circumstances likely to affect his independence

with respect to any of the parties".

Article 34 of CAS Rules states that "an arbitrator may be

challenged if the circumstances give rise to legitimate doubts

over his independence". Article 12 of CAS Ad Hoc Rules

provides that "no arbitrator may act as counsel for a party or

other interested person before the ad hoc Division".

Celtic Plc v. UEFA52 (1998).

The challenge was brought on the basis of an arbitrator's

previous function as counsel in a matter in which a party to

the instant matter was involved. The ICAS board disqualified

the arbitrator referring to the governing code53.

Stockholm Chamber of Commerce54.

This emerged as the seat of preference for disputes

between the Soviet and Western parties towards the end of the

52 ICAS Decision of 2nd of October, 199853 Luttrell S. R supra 130-31 54 hereinafter called SCC

Cold War. A key event occurred in 1976-7 when the American

Arbitration Association and the Soviet Foreign Trade

Arbitration Commission entered into an optional Clause

Agreement outlining the consensus that disputes between US and

Soviet entities should be submitted to arbitration at the

Arbitration Institute of the Stockholm Chamber of Commerce.

Despite the fall of the USSR, the SCC still remains a

popular site for arbitration between Western Parties and

Russian, Eastern Europe and Chinese entities. This may be

largely due to the fact that the dispute resolution provisions

of investment treaties between the states often designate SCC

arbitration as an alternative to ICSID arbitration55.

Article 17 of the SCC Rules requires that an arbitrator

shall be impartial and independent. The records of the SCC

show that the most common cause for challenge is that the

arbitrators (or their firm) have had previous contact with one

of the parties involved. There has also been challenge on

common arbitrator - party nationality, apparent outcome

preference based on pecuniary interest and prior relations

with counsel.

55 Luttrell S. R supra p.137

SCC Arbitration 60 /2001

This challenge arose out of an agreement for the sale and

purchase of land in Sweden. The Claimant was Swedish and the

Respondent was Dutch. The Claimant appointed a partner in a

Swedish law firm as its arbitrator and proceedings began. In

an innocent omission, the Claimant’s arbitrator failed to

disclose that his partner was counsel for the Claimant’s

parent company in proceedings before a Swedish state court.

Despite the fact that the two corporate entities were legally

separate, the SCC Board found that there were justifiable

doubts as to the arbitrator’s impartiality and independence56.

Rapla Invest57 (2006)

This challenge arose out of a claim for monies due

under an agreement between TNK Trade Ltd (TNK) and Swonco

Swedish Oil AB ( Trading as Rapla Invest) for the sale and

supply of oil. After the final award was handed down, Rapla

discovered that TNK’s appointed arbitrator had two years

earlier been an arbitrator in a SCC arbitration in which a

Ukrainian subsidiary of TNK was a remote party and had also

56 Ibid p.13957 See Decision of the Svea Court of Appeal, Stockholm Sweden on 7th Feburary,2006 in Case No. T 5044 -04

appeared as counsel for this same subsidiary in insolvency

proceedings in the Luhan’s K Court of Financial cases. The

arbitrator did not disclose any of these prior association

with TNK when he accepted nomination. The challenge was

however dismissed58.

International Centre for Settlement of Investment Disputes59

ICSID is part of the wider international judicial

system. It is the only truly delocalized arbitral institution

in the world. ICSID is its own locus arbitri. The lex arbitri

of ICSID is derived from non-national sources and includes the

Washington Convention, the ICSID Arbitration Rules and ICSID

jurisprudence. In ICSID proceedings, bias challenges can be

made before, during or after the award is made but not at

enforcement stage. The only post-award opportunity to plead

bias is by motion for annulment under Article 52 (1) (d)60.

Article 14 states the qualities that a person must

possess in order to be nominated as a panel member or

appointed as an arbitrator in an ICSID proceeding. The person

must have;

58 Luttrell S.R, supra p.140-4159 hereinafter called ICSID60 Luttrell S.R, supra p.239-40

(i). high moral character

(ii). technical expertise and

(iii). capacity to exercise independent judgment.

Where an arbitrator does not possess all

three of these qualities, then he can be directly challenged

in accordance with Article 57. Article 38 regulates default

appointments by the Chairman. It creates a “Common Nationality

Prohibition” which provides that, in order to be eligible, the

appointees “shall not be nationals of the Contracting State

party to the dispute or of the Contracting State whose

national is a party to the dispute. It must be noted that this

applies only in situations of default appointment by the

Chairman and not where the chairman is designated as

appointing authority under the arbitration agreement.

Article 57 governs the process of challenging

arbitrators. It allows for the challenge of any tribunal

member on account of any fact indicating manifest lack of the

qualities required under Article 14 (1). This sets a very high

bar for challenging an arbitrator as vantage is not clarified.

Article 58 provides that decisions on challenges are taken by

the unchallenged members of the tribunal or the annulment

committee itself. Where the challenge is made to a sole

arbitrator or the tribunal or committee is split on the

challenge, the chairman of ICSID shall decide finally.

However, Generation Ukraine61 suggests that, in the rare event

that the Chairman itself is conflicted out, the matter will be

referred to the Secretary General of the PCA for final

determination62.

ICSID Rule 6 requires that arbitrators judge fairly. Rule

6 (2) requires the arbitrators to sign a declaration of

independence and provide a written statement of past and

present professional, business and other relationships (if

any) with the parties or any other circumstances that might

cause (his/ her) reliability for independent judgment to be

questioned by a party and importantly assume a continuing

obligation to promptly notify the Secretary General of the

Centre of any such circumstance. In Vivendi v. Argentina (Re

Challenge to President Forties)63 the tribunal held that the

61 Generation Ukraine v. Ukraine ICSID Case ARB/00/9 (Award 16 September 2003) 62 Luttrell S.R supra p63 ICSID Case ARB/97/3 3 October 2001Decision on the challenge to the president of the committee on Compania de Aquas del Aconquija SA & Vivendi Universal v. Argentine Republic

Rule 6 (2) disclosure obligation applies to members of ad hoc

annulment committees as it does members of merit panels. In

Suez v. Argentina64, the jurisprudential extension of Rule 6

(2) requires that arbitrators have an ongoing (but limited)

duty to investigate possible conflicts of interest.

Under Rule 9(1) the party proposing disqualification

must bring their challenge promptly. In Suez v. Argentina, it

was held that 53 days was not prompt. Prof. Schrever suggests

that “promptly” means as soon as the party concerned learns of

the ground of possible disqualification. If the proposal to

disqualify is not promptly made, the right to propose

disqualification will be deemed to have been waived under Rule

27. The ICSID test in challenge proceedings is unique. The

inter-operation of Article 14(1) and 57 produces a rule that

an ICSID arbitrator may only be challenged for bias where they

manifestly lack the capacity to exercise independent judgment.

No other arbitral institution uses this test. The key word is

manifest. In Vivendi v. Argentina, manifest was interpreted to

exclude reliance on speculative assumptions or argument but

not to bar challenges brought solely on the basis of

64 ARB/03/17

appearance. In Suez v. Argentina it was interpreted to mean

“obvious or evident”.65

Challenge decisions under ICSID often cite judgments of

previous ICSID panels and the decisions of the courts of

leading arbitral seats as persuasive authorities to reach

their conclusions. They also often refer to and apply the IBA

Guidelines on Conflicts of Interest in International

Arbitration when they decide challenge proposals66.

In Holiday Iras/ Occidental Petroleum v. Morocco67 the

Claimant’s arbitrator stood down after disclosing that he had

become an outside director of Occidental Petroleum. In Amoco

Asia Corp & Ors v. Indonesia; Re Arbitrator Rubins68, Indonesia

challenged the Claimant’s appointee Mr. Rubin on the fact that

he had given tax advice to the individual who controlled the

three corporate Claimants seven years earlier. His firm also

had an office and profit sharing arrangement with the lawyers

for the Claimant, but neither Amoco nor its controlling

shareholder were clients of either firm. The challenge was

65 Luttrell S.R supra66 Ibid67 ICSID case ARB /72/1, reported in ICSID Eleventh Annual Report 1976/1977 at p. 34 cited in Luttrell supra p. 24868 ICSID Case ARB/81/1 Decision on Proposal to disqualify Arbitrators (24 June 1982) unreported, cited in Luttrell supra

dismissed as there was found to be no manifest risk of

partiality because the services rendered by Mr. Rubin to the

Claimant’s principal shareholder were not in the nature of

regular legal advice.

In stressing the significance of Article 57 expression

“manifest”, the tribunal held that under the Washington

Convention, the challenger must prove not only the facts which

indicate a lack of independence, but also that the lack is

“highly probable” not just “possible” The tribunal arrived at

conflicting conclusions on the Claimants argument that a

separate standard of independence was appropriate for party

appointed arbitrators, on the one hand stating that “no

distinction can and should be made” and on the other holding

that a party arbitrator cannot be disqualified for

relationship because the party appointing system presumes some

acquaintance between the party and its appointed arbitrator.

This decision has been the subject of strong criticism by

commentators who have argued that the tribunal “imposed a

standard that would tolerate virtually all prior business of

professional relationship. Such a standard has no precedent in

municipal law of any country and it is quiet astonishing that

it should have been applied in ICSID, with its unique and

delicate balance of the right of host states and foreign

private investors69.

Zhinvali Development v. Georgia70 (2001)

Here, a proposal to disqualify an arbitrator

was made by Georgia on the basis of occasional purely social

contact between the arbitrator and an executive officer of the

Zhinavali. The proposal was dismissed with the tribunal

stressing the absence of any professional or commercial

relationship between the arbitrator and the executive. It held

that Georgia's contention that a merely occasional personal

contact could manifestly affect the judgment of an arbitrator,

in the absence of any further facts was purely speculative.

This decision was cited with approval by the ICSID tribunal in

the challenge to president Fortier in Vivendi v. Argentina.

Vivendi v. Argentina r71.

In Vivendi Universal & Anor V. Argentina, Re President

Fortie (2001), Argentina challenged Mr. Fortier on the ground

69 Luttrell supra p.249-5070 ICSID CaseARB/00/1 (Decision on Respondent's proposal to disqualify Arbitrator, 19 January 2001, unreported cited in Vivendi v. Argentina at para 23) cited in Luttrell supra p.25171 supra fn 63

that one of the partners at Mr Fortier's firm had given an

advice on Quebec tax law to Vivendi's corporate predecessor.

Mr fortier was not personally involved and the tax matter was

unrelated to the claim against Argentina. The committee

dismissed the challenge and held that an arbitrator's

professional relationship with a party is not an automatic

basis for disqualification and that all circumstances need to

be considered in order to determine whether the relationship

is significant enough to justify entertaining the reasonable

doubts as to the capacity of the arbitrator or member to

render a decision freely and independently.

SGS v. Pakistan; Re Arbitrator Thomas72 (2002).

Here, SGS challenged Pakistan’s party arbitrator, Mr.

Thomas, on the basis of his connections with counsel for

Pakistan (Mr. Paulsson). It alleged that three years earlier,

Arbitrator Thomas had been counsel for the successful

arbitration in an ICSID arbitration (Azinian v. Mexixo73) in

which Mr. Paulsson was an arbitrator and that the partial

72 SGS Societe Generale de Survelliance SA v. Islamic Republic of Pakistan, ICSID Case ARB/01/03(Decision on Claimant's proposal to Disqualify an Arbitrator, 19 December,2002) (2005) 8 ICSID Rep 398 @ 402 cited in Luttrell supra p.25473 Robert Azinani & Ors v. United Mexican States ICSID Case ARB(AF)/97/2

manner in which the tribunal in Azinian decided in favour of

Mr. Thomas’s client created a reasonable appearance that

arbitrator Thomas would “return the favour” in the instant

matter. SGS said that the subsequent appointment of Mr.

Paulsson as President of a tribunal in an action in which Mr.

Thomas was advising a party supported the appearance of bias .

The deciding arbitrators dismissed the challenge and held that

it was bereft of any basis in the fact of this proceeding74.

Canfor Corporation v. The United State of America75 (2003).

Here, the US proposed to disqualify an arbitrator

who had a year before his appointment described the US

Government measures on softwood lumber as “harassment”. The

legitimacy and affect of the US Government softwood lumber

policy was live in the dispute. The arbitrator stood down on

the advice of the Secretary General of ICSID.

Generation Ukraine v. Ukrainae; Re Arbitrator Voss (2003).

The challenge in here raised the problem of

Grundel Bias at ICSID. The challenged arbitrator - Dr. Voss,

was appointed by the Ukraine in the ICSID proceedings74 Luttrell supra p.25475 Canfor Corporation v. The United States of America; Decision on Preliminary Question (2006) 18 W Trade & Arb Mat 4 at p.136

commenced by Generation Ukraine. The Claimant challenged him

on the basis that he had, during his time as Deputy General

Counsel of the MIGA been involved in studies and investment

policy reviews of Ukraine for the OECD. The Claimant's concern

was that Dr. Voss must have developed personal connection with

the Ukrainian political officials76 and that these personal

connections would deprive him of the capacity for independent

judgment. The deciding arbitrators were divided on the

claimant’s disqualification proposal and in accordance with

Article 58, the challenge went to the Chairman of the ICSID

Administrative Council for final determination77. It was at

this point that the matter took the course of Grudel Bias

because Dr. Voss was being challenged on the basis of his

relationship with a World bank Agency (MIGA) and the person

being asked to judge his independence was the President of the

World Bank. There seemed to be a potential breach of nemo

judex in sua causa. In an original and unparallel78, the

president referred the challenge to the Secretary General of

the PCA in the Hague. The Secretary General of PCA considered76 Fouret, J. "The World Bank and ICSID: Family of Incestous Ties" (2007) Intl Org Law Rev 121-144 at 138 cited in Luttrell supra p.25577 Ibid78 Fouret, J. Post M. (eds) " Chronique de reglement pacificque des differends internationaux" (2003) 16.2 R QDI @ 283 cited in Luttrell supra p.255

the matter and made a recommendation that the proposal to

disqualify Dr. Voss be dismissed79. This recommendation was

accepted by the Chairman of ICSID and the challenge was

rejected.

Commentators have praised the approach

taken by ICSID in Generation Ukraine and the writer applauds

the reference that an independent and impartial tribunal

should decide the challenge but does not support the decision

to dismiss it. In the writer’s opinion, while it may be true

that the connection with the political officials of Ukraine

may not be enough to establish bias, the fact that he had been

involved with the investment policy reviews of Ukraine, and a

possible connection with the interest of the country is

expected, with the alleged connection to political officials

establish is enough to apprehend prejudgment.

Grand River Enterprise & Ors v. The United State of America; Re Arbitrator Anaya80

(2007)

This claim was brought under NAFTA Chapter

11. The US challenged the appointment of Prof. Anaya who was

79 Generation Ukraine supra at para. 4.1880 cited in Luttrell supra p. 256

appointed by the Claimant on the basis that he was an advocate

for certain Native American groups in proceedings against the

US before Inter-American Commission on Human Rights and the UN

Commission on the Elimination of Racial Discrimination (CERD).

The US claimed that justifiable doubts arose to Prof. Anaya’s

ability to impartially judge the NAFTA Claim, because his

participation in the Human Rights matter suggested he had

predetermined the issue of US compliance with international

obligations. The challenge went to be the Secretary General of

ICSID who whole to Prof. Anaya informing him that his role as

advocate before CERD was incompatible with his function as

arbitrator in the NAFTA matter.

Prof. Anaya agreed to discontinue to act as an

advocate in the CERD proceeding but said that he would

continue to assist law students in relation to Human Rights

advocacy work. The US challenge was dismissed as it was found

that Prof. Anaya’s advisory work was not inconsistent with his

role as arbitrator under UNCITRAL Rule 11(1)81.

Suez & Ors Argentina; Re Arbitrator Kaufmann-Kohler (No.1) (2007).

81 Luttrell supra p.256

Here, the tribunal ruled that Argentina was out of

time in challenging the appointment of Professor Kaufmann; 52

days after it became aware of Prof Kaufmann’s involvement in

the Vivendi award. Argentina relied on the inference that

Prof. Kaufmann was biased against Argentina simply because she

was a member of a tribunal that made a unanimous award against

Argentina six years earlier82.

Suez & Ors v. Argentina’ Re Arbitrator Kaufmann-Kohler (No. 2) (2008).

Shortly after the dismissal of its first proposal,

Argentina challenged Prof. Kaufmann-Kohler again. The 2nd

challenge was filed after Argentina discovered that in 2006

Prof. Kaufmann had been elected to the supervisory board of

Swiss bank UBS. UBS held a 2.1% stake in Suez and 2.38% stake

in Vivendi. Argentina alleged that Prof. Kaufman failed to

disclose these facts in accordance with ICSID Rule 6 (2) and

UNICTRAL Rule 9. The deciding arbitrators dismissed the 2nd

challenge. The tribunal found that Prof. Kaufmann was not

involve in the day-to-day management of UBS and was unaware

that UBS owned shares in Suez or Vivendi until reading

Argentina’s 2nd disqualification proposal.83

82 Ibid83 Ibid p.258-60

Impartiality and independence are also

mandatory acquirements under Article 4 of the UNCITRAL Model

Law on International Commercial Arbitration84. In Telkom Malaysia

v. Republic of Ghana85, the tribunal held that maintaining the

integrity and reputation of international arbitration was a driving

concern behind the IBA Guidelines. Under the IBA Guidelines, every

arbitrator shall be impartial and independent of the parties at the

time of accepting an appointment to serve and shall remain so during

the entire arbitration proceeding until the final award has been

rendered or the proceeding has otherwise finally terminated.86 On

Conflicts of Interest , the IBA Guidelines provides that;

a. "An arbitrator shall decline to accept an appointment

or, if the arbitration has already been commenced, refuse

to continue to act as an arbitrator if he or she has any

doubts as to his or her ability to be impartial or

independent.

b. The same principle applies if facts or circumstances

exist, or have arisen since the appointment, that, from a

reasonable third person‘s point of view having knowledge

of the relevant facts, give rise to justifiable doubts as84 1985 as amended 200685 Decision of the District Court of the Hague, 18 October, 2004 Challenge No.13/2004; Petition No HA/RK/2004.66786 Park, W. supra p. 701

to the arbitrator‘s impartiality or independence, unless

the parties have accepted the arbitrator in accordance

with the requirements set out in General Standard 4.

c. Doubts are justifiable if a reasonable and informed

third party would reach the conclusion that there was a

likelihood that the arbitrator may be influenced by

factors other than the merits of the case as presented by

the parties in reaching his or her decision.

d. Justifiable doubts necessarily exist as to the

arbitrator‘s impartiality or independence if there is an

identity between a party and the arbitrator, if the

arbitrator is a legal representative of a legal entity

that is a party in the arbitration, or if the arbitrator

has a significant financial or personal interest in the

matter at stake"87.

The IBA Guidelines identify

circumstances that may expose arbitrators to bias challenges.

They include three -colour-code “Application List”- Red,

Orange and Green. The Red list deals with situations where a

conflict of interest exists. In recognition of the doctrine of

party Autonomy (and its limits), the Red list is put into two;87 Ibid p. 701-702

the non-waivable Red list identifies conflicts of interest

where the arbitrator must not act; while the situations in the

“waivable Red List” must be disclosed, and the arbitrator may

only act where the parties are fully aware and give their

express consent. The Orange list describes situations where a

conflict could exist in the eyes of the parties. The Green

list entails matters where no conflict of interest will exist

and disclosure is not necessary.

Notwithstanding that arbitrators are sometimes

rightly challenged, it is evident that crying bias is one of

the best ways to derail arbitral proceedings. The reason is

that the proceedings are usually suspended while the challenge

is heard. The arbitrator may even stand down. These delays may

be beneficial to the client as it may give it time to make

money for the award, allow for creative book keeping or even

give the client a chance to shed assets. They may revive

settlement negotiations with positive results at same times.

Williams Park, vice-president of the London Court of

International Arbitration identified “spurious attacks on

arbitrators” independence as one of the four problematic

elements of arbitral procedure.88 There are ways challenges

can be setup. One of the dirtiest trick is to telephone an

arbitrators and record the conversation in the hope that the

ex parte communication will yield some impropriety which will

be admissible as evidence in a challenge to the arbitrator’s

impartiality or independence.89

Most municipal laws apply the same standard of

impartiality and independence to Judges and arbitrators.

Article 4 of Code of Judicial Ethics90 provides on

impartiality thus; "Judges shall be impartial and ensure the

appearance of impartiality in the discharge of their judicial

functions" and "Judges shall avoid any conflict of interest,

or being placed in a situation which might reasonably be

perceived as giving rise to a conflict of interest"91. Article

5 of the same code provides that "Judges shall conduct

themselves with probity and integrity in accordance with their

office, thereby enhancing public confidence in the

judiciary"92.

88 Ibid89 Ibid90 ICC-BD/02-01-0591 Ibid92 Ibid

The Burgh House Principles on the

Independence of The International Judiciary93 considers the

following principles of international law to be of general

application:

- to ensure the independence of the judiciary, judges must

enjoy independence from the parties to cases before them,

their own states of nationality or residence, the host

countries in which they serve, and the international

organisations under the auspices of which the court or

tribunal is established;

- judges must be free from undue influence from any source;

- judges shall decide cases impartially, on the basis of the

facts of the case and the applicable law;

- judges shall avoid any conflict of interest, as well as

being placed in a situation which might reasonably be

perceived as giving rise to any conflict of interests;

- judges shall refrain from impropriety in their judicial and

related activities.

There have been some doubts on the

integrity of some Judges of international courts. In one case,93 www. ucl.ac.uk/laws/.../burgh_final_21204pdf Accessed on 30th April,2014.

a judge who had previously published a book about Sierra Leone

in which he called two people who were to appear before his

court “criminals” was asked to recuse himself. The judge did

not want to recuse himself from the case. Other members of the

bench, however, decided unanimously that the judge should

recuse himself. That situation also raised the question of

whether the judge should have been appointed to the court in

the first place, given the opinions proffered in the book and

how they would affect the public perception of his

impartiality94.

There have also been concerns that the practice,

in some courts of including a judge of the same nationality as

one of the parties to a case, or an ad hoc judge nominated by

one of the parties to the litigation, may imply a threat to

judicial independence95. But it has also been argued that it

94 "Integrity and Independence: the shaping of the Judicial Persona", an excerpt from the report of the 2007 Brandeis Institute for International Judges. Full text is available at www.brandeis.edu/ethics/internationaljustice95 In some courts, a national judge is appointed by his or her country to sit on the bench of a court where each member state is entitled to a judge.This judge does not “represent” the home country but may be called upon to provide an insider’s perspective and knowledge on the country’s legal practices, history, and language. The European Court of Human Rights has a judge from each of the 47 members of the Council of Europe, and the European Court of Justice has a judge from each of the 27 members of the European Union. An ad hoc judge is appointed by a state party appearing before the International Court of Justice or the International Tribunal forthe Law of the Sea to sit with its regular bench only for the case in question and only when the state does not already have a judge from its

was helpful for an international court to have on the bench

judges from the same country as the parties96.

There have also been allegations on the

integrity of Judges in the national courts. For instance, the

Center for Public Integrity found that Judge James Hill of

the United States had ruled on four appeals in which he owned

stock in companies that came before him, violating clear rules

governing the federal courts. In all four instances, the court

ruling favored his financial interest.  However, in a

statement released by the court, Hill said he was not aware of

those stock holdings at the time due to the complexity of his

family’s trusts97.

Judge Bedjaoui sums up the need to balance

our expectations on the bias and impartiality requirement

for these decision makers and the natural course of things

thus;

"Like all men, an arbitrator has a conscience

which gives him a certain outlook on the world. He

country serving at the court. An ad hoc judge need not be a citizen of the state that appoints him or her .cited in fn above , note 1. 96 Ibid97 O'Brien, R., "Law Breaking Judges that took cases that could make them even richer", The Daily Beast of 28th Aril,2014. Accessed on 29th april,2014

cannot detach himself from all the emotional ties

which, consciously or unconsciously may influence his

thoughts. Whenever men are judged, including judgment

by arbitration...a wager is laid on impartiality. An

arbitrator is not a disembodied floating being,

without origins, or ethnic, cultural, religious,

social and other attachments. I think it would be

destructive to exaggerate these considerations and

naïve and suspicious to ignore their existence

completely".98

INTEGRITY OF COUNSELS/ REPRESENTATIVES OF PARTIES.

Conduct of Counsels

There is no international bar regulating

the practice of forensic advocacy before international courts

and tribunals. It has been argued that there may be a need for

procedural reform in order to introduce common and strict

ethical standards of conduct for counsels appearing before

international tribunals. However, the impracticability of a

Code of Ethics is noted, as it is argued that providing a

98 Bedjaoui, M., "The Arbitrator: One Man-Three Roles"(1988) 5:IJ Intl Arb 7cited in El-Kosheri. Youssef,"The Independence of International Arbitrators: An Arbitrators's Perspective". ICC Bulletin 2007(Special Supplement) p. 47

uniform code of ethics for counsels will have little impact on

the segment of international arbitrations in which there is no

counsel or the party representatives are laypersons. Industry

arbitrations, such as commodities arbitrations conduct their

proceedings without counsel. Furthermore, governments are not

always represented by attorneys. For example, at the Iran-U.S.

Claims Tribunal, representatives for Iranian government

agencies were not always attorneys. And there was no

indication that those who purported to be lawyers were

licensed to practice law. In international arbitrations, there

is simply no assurance that someone who is acting as a

representative, even as a legal representative, is actually an

attorney licensed by a regulatory body99.

Though some basic rules of ethics are

accepted almost everywhere, examples include courtesy and

respect for the tribunal members and opposing counsel, honesty

and integrity, and the avoidance of unnecessary conflicts, but

commonly, ethical precepts vary greatly from state to state. A

uniform code may diverge from the standard of professional

ethics in the country where the international arbitration is

99 Mosk, R."Attorney Ethics in International Arbitration", Berkeley J. Int'lPublicist, Vol. 5, p. 33-34

located, and the standard of professional ethics in the

jurisdiction in which lawyers are licensed100.

Notwithstanding the absence and impracticability

of a Code of Ethics for Counsels in International arbitration,

an arbitral tribunal can regulate the conduct of Counsels

during proceedings by setting forth at the outset what it

expects from Counsels. The subject of those expectations can

include conduct during the arbitration, treatment of

witnesses, spoliation, good faith in presentations, disclosure

of information, communications with witnesses, communications

with arbitrators, applicability of privileges and more. Where

an attorney violates one of these expectations, the Tribunal

can impose sanctions, such as disregarding evidence, drawing

adverse inferences, and, in extreme cases, disqualifying

counsel and even imposing a terminating sanction, if

appropriate101.

Some tribunals however, impose no

sanctions even in obvious cases of misconduct by Counsels. For

instance, at the Iran-United States Claims Tribunal, during a

hotly contested case between the governments, Counsel for the

100 Ibid101 Ibid p. 34

American company requested various files in other Tribunal

cases in which Iran had apparently taken a position

inconsistent with its position in the case under

consideration. After this matter was raised, the Iranian

representatives went into the Registry at night and removed an

entire category of its claims, including those in which it had

taken the inconsistent positions. The President of the

Tribunal took no action.102It has been reported that in another

proceeding, Iran’s representative learned, after impermissibly

gaining information about the content of arbitrator

deliberations, that an adverse ruling on issues of

expropriation was likely.103Presumably, Iran’s representative

had knowledge of the confidential deliberations, while the

American claimant did not. Iran’s representative then sought

to settle the case at a figure below that which had been

decided by the panel. Notwithstanding knowledge or suspicions

of these improprieties, no sanction resulted.

102 See ANDREAS LOWENFIELD, et. al., REVOLUTIONARY DAYS 159-160 (1996) cited in Mosk, R. supra p. 35103 See Concurring Opinion of George H. Aldrich in ITT Industries, Inc. and The Islamic Republic of Iran, et al., Award on Agreed Terms No. 47-156-2 (26 May 1983), reprinted in 2 Iran-U.S. C.T.R. 349. cited in Mosk, R. supra p 35

However, in the  Foresti  case104, Counsel for the

respondent had disclosed con dential information belonging tofi

his client to the Claimant and offered to assist in convincing

his client to accept a settlement favourable to the Claimant

in exchange for a bribe. Counsel for the Claimants was not

informed by his clients of ongoing negotiations with Mr Nthai

until a relatively late stage, whereupon they advised

disclosure to the other side and to the arbitral tribunal. The

tribunal held that the Respondent's costs (and, indeed, the

Claimant's costs) would have been smaller if the Claimants had

indicated earlier their willingness to settle on a "with

prejudice" basis, and if Mr Nthai's corrupt solicitations had

been promptly disclosed. Accordingly, the tribunal held that

it is right that the Claimants should bear responsibility for

a portion of the Respondent's costs. Mr Nthai was later

disbarred by his national bar105.

Admission Requirements And Conflict Of Interest

104 Piero Foresti and Others v. South Africa (ICSID Case No. ARB(AF)/07/01), Award (4 August2010) For a summary narrative of the incident, see the Award,paras. 30–40.105 . For documents relating to the disbarment proceedings, see http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page71654?oid=171725&sn=Detail

This section would be discussed in

particular reference to ICSID proceedings. The Convention is

silent concerning the representation of parties in arbitral

proceedings. Although parties may appoint professional or

lay representatives as they wish, in practice, parties have

nearly always been represented by lawyers106.

There is however, controversy

concerning the propriety of individuals serving as arbitrator

in one arbitration whilst simultaneously serving as

representative in another arbitration. There are reasons for

imposing an admission requirement that excludes currently

serving arbitrators as well as former arbitrators for a

certain period of time from serving as representatives. An

appearance of inequality of arms results from the ability

of parties to retain arbitrators as representatives because

those arbitrators inevitably acquire from their position as

arbitrator certain insider knowledge concerning the

mentalities and proclivities of fellow arbitrators107. Thus,

there is a significant tactical advantage to the current

106 Sarvarian, A.,"Problems of Ethical Standards for Representatives before ICSID Tribunals.", The Law and Practice of International Courts and Tribunals 10(2011) 67-134107 Ibidp.85

arbitrator appearing before a colleague in another arbitration

in that he will appear to have a much deeper awareness of that

individual's personality than his opposing representatives. To

level the playing eld, parties may feel that they must allfi

engage representatives who are also arbitrators. Such practice

will inevitably lead to allegations of nepotism or other forms

of corruption in the arbitral process108.

A more compelling reason to exclude

arbitrators from serving as representatives of parties is the

potential for issue of conflict whereby an arbitrator hearing

argument on a legal issue in one arbitration may appear as a

representative and argue on that same legal issue in another

arbitration. The possibility exists that such an arbitrator-

cum-representative may be alleged to have manipulated his

decision as arbitrator and/or his pleadings as

representative109. Or the arbitrator might be tempted, even

subconsciously, to add a sentence to an award that could later

be cited in another case. Such an arrière pensée might lead to

disparaging or approving some legal authority or argument

regularly presented in similar disputes and thus intended to

108 Ibid 109 Ibid

persuade in a different matter where the arbitrator or

arbitrator‘s firm acts as counsel110.

Power To Exclude Counsel From Proceedings

In the absence of prescribed admission requirements

or deontological rules, it may be suggested that ICSID

tribunals have an inherent power to protect the integrity of

their own proceeding by sanctioning representatives for

misconduct and in some now accepted rare cases, exclude a

party’s counsel from further participating in one arbitral

proceedings111. In the Hrvatska case, the Respondent's

representation (the English rm of Allen & Overy) informed thefi

tribunal and the Claimant of the appointment of Mr David

Mildon QC of Essex Court Chambers as their representative for

the oral hearings. It is important to note that this

appointment was made after the constitution of the tribunal

and the completion of the written stage of proceedings. The

Claimant, upon learning that the President of the tribunal (Mr

David Williams QC) was also a member of Essex Court Chambers,

requested disclosure of the nature of the professional links110 Park,W. supra p.648111 Ibid

between the two men. The Respondent's representatives denied

any duty of disclosure and resisted disclosure until the oral

hearing itself, whereupon it emerged that they had approached

Mr Mildon about instructing him some two months prior to their

noti cation of his participation just before the oral hearingfi

itself.

The Claimant applied for Mr Mildon's

exclusion on the ground that, if it had known of his

participation before the constitution of the tribunal,

it would not have agreed to the President's appointment. Being

unfamiliar with the English Bar, it was uncomfortable with the

idea that two members of the same chambers, though sharing no

hierarchical relationship, being self-employed could both

appear in the same arbitration as arbitrator and

representative. The Tribunal contended that,

"The Tribunal's obligation as guardian of the

legitimacy of the arbitral process is to make every

effort to ensure that the Award is soundly based and

not affected by procedural imperfection. If the

Tribunal grants the order sought it may later be

contended by the Respondent that there was a serious

departure from a fundamental rule of procedure, i.e.

the right to representation (ICSID Arbitration Rule

19) and the right to be given a full opportunity to

present a case. On the other hand, if the order were

refused the Claimant may later assert unfairness

inthat the President was not in a position to be

relied upon to "judge fairly" asrequired by ICSID

Arbitration Rule 6 or that there existed an

impermissible appearance of partiality"112.

The tribunal was confronted with

the choice that, prompt disclosure having been precluded as a

remedy by the Respondents' representatives conduct, the only

two ways to remove a risk of appearance of bias were the

resignation of the President or the exclusion of Counsel from

the proceedings. It concluded that

"... although the Respondent in this

case was free to select its legal

team as it saw fit prior to the

constitution of the Tribunal, it was not entitled

subsequently (sic) amend the

composition of its legal team in such a fashion 112 Hrvatska v. Slovenia paragraph 15

as to imperil the Tribunal's status

or legitimacy.113

It continued,

"In light of the fundamental rule enshrined in

Article 56(1) of the Convention and given its inherent

procedural powers confirmed by Article 44, the Arbitral

Tribunal hereby decides that the participation of Mr.

Mildon QC in this case would be inappropriate and

improper. We appreciate that the Respondent was under a

misapprehension in this regard and will, by making

appropriate procedural adjustments, ensure that the

Respondent's ability to present its case will not be

adversely affected by this ruling."114

It has however been argued that a closer

examination of the decision may have broader implications for

ICSID and ICA as it is fundamental that parties have the right

to counsel of their choice. But the accepted fundamentality of

the right to counsel does not, it seems, render it an absolute

procedural rule, where the choice of counsel imperils the

integrity of the process, the right will be trumped115. The

113 Hrvatska v. Slovenia paragraph 26114 Hrvatska v. Slovenia paragraph 34115 Sarvarian,A. supra p.95

writer applauds this decision and its novel application. This

is because it was not practicable (as the tribunal could not

simply endorse it) to demand the President's resignation, a

course of action that neither party desired, when his

appointment long preceded that of the representative in

question. To demand that would have been both unfair and

disruptive. The issue of disclosure or withdrawal due to

appearance of bias arising from professional or personal links

can be fairly solved with a temporal approach whereby the onus

should lie upon the person appointed later, whether arbitrator

or representative. A rst come, rst served approach dealsfi fi

equally with both bench and bar and protects the position of

the most innocent person concerned116.

Hrvatska would be compared with the case

of Rompetrol Group N.V v. Romania117 where the Respondent

sought an order from the Tribunal requiring the Claimant “to

remove Mr. [Barton] Legum from the case and to forbid him from

participating in it in any way.” The Respondent cited as the

ground for its application that Mr. Legum was until 31

December 2008 employed by a law firm of which one of the116 Ibid117 ICSID Case No. ARB/06/3 Decision of the Tribunal on the Participation ofa Counsel. 14 January 2010

Members of the Tribunal is a member118. On 31 July 2009 the

Respondent wrote to the Tribunal, stating that Mr. Legum and

the Member of the Tribunal appointed by the Claimant had until

recently been members of the same law firm, and demanded that

the Claimant make ‘full disclosure of all relations, past and

present’ between both Mr. Legum ‘and any other member of the

firm of Claimant’s counsel’ with the member of the Tribunal in

question. The Respondent invoked ‘the integrity of the

Tribunal and the arbitral process, as well as its total

independence.119

The Tribunal held that,

"It is common ground between the Parties that the

rules governing the present arbitration proceedings,

i.e. the ICSID Convention and Arbitration Rules,

contain no provision allowing in terms for a challenge

to the appointment by a Party of counsel to represent

it in an ICSID arbitration. Some other source for such

a challenge must therefore be found, which the

Respondent seeks to do by implication from the general

tenor of the Arbitration Rules, and by invoking an118 Rompetrol v. Romania paragraph 1119 Rompetrol v. Romania paragraph 5

inherent general power on the part of any tribunal to

police the integrity of its proceedings. The only

authority the Respondent cites in support of the

existence of a power to exclude counsel and its

exercise in specific circumstances is the recent

decision of another ICSID Tribunal (in the case of

Hrvatska Elektropriveda d.d. v. Republic of Slovenia2), read in

conjunction with the IBA Guidelines of 2004 on

Conflicts of Interest in International Arbitration

(themselves considered in that decision). It may be

worth remarking that the IBA Guidelines direct

themselves to the position of an arbitrator, and say

nothing about a power on the part of a tribunal to

intervene over the nomination of counsel"120.

It continued and distinguished between the case of Hrvatska

and the present case;

"The Hrvatska decision is not of course a binding

precedent. The Tribunal observes simply that, if it

indeed be correct to attribute to an ICSID Tribunal the

powers implied by the Hrvatska Tribunal, they would remain

powers to be exercised only in extraordinary120 Rompetrol v. Romania paragraph 14

circumstances, these being circumstances which genuinely

touch on the integrity of the arbitral process as

assessed by the Tribunal itself; the mere subjective

claim by one Party to an arbitration that a professional

association between counsel and an arbitrator might be

misunderstood can clearly not suffice, unless the claim

is found by the Tribunal itself to be well grounded on

some objective and dispassionate assessment of the

circumstances of the individual case....."

" A power on the part of a judicial tribunal of

any kind to exercise a control over the representation

of the parties in proceedings before it is by definition

a weighty instrument, the more so if the proposition is

that the control ought to be exercised by excluding or

overriding a party’s own choice. One would normally

expect to see such a power specifically provided for in

the legal texts governing the tribunal and its

operation. Absent express provision, the only

justification for the tribunal to award itself the power

by extrapolation would be an overriding and undeniable

need to safeguard the essential integrity of the entire

arbitral process. It plainly follows that a control of

that kind would fall to be exercised rarely, and then

only in compelling circumstances"121.

The Tribunal concludes that,

"The decision of the Hrvatska Tribunal cites the

doctrine and practice supporting the inherent authority

of an international court or tribunal to exercise such

powers as are necessary to preserve the integrity and

effectiveness of its proceedings. Whether such general

authority does or should extend to the exclusion of

counsel is however a more open question. The domestic

court decisions on the matter are directed to a

different issue, namely the possibility that counsel

for one party might have gained (or might have been

able to gain) access to privileged information of the

other party. As the Tribunal has already pointed out

(paragraph 17 above), the only justification for such

extension in the arbitral context would be a clear need

to safeguard the essential integrity of the arbitral

process, on the basis that that integrity would be

121 Rompetrol v. Romania paragraph 15-16

compromised were the exclusion not ordered. For that,

there is however very little support, if any, in the

established practice in international litigation

involving States. It is by no means uncommon, for

example, that a State appearing before the

International Court of Justice as Applicant or as

Respondent might quite properly be represented before

the Court by an Agent, or by Counsel, who until

recently had been working in close and continuing

association with a person who had in the meanwhile been

elected to serve as Judge on the Court; similar

situations can readily be envisaged before the European

Court of Human Rights or the European Court of Justice,

in litigation pitting a private party against the

State.But, as the Tribunal understands matters, there

is no trace of this being regarded by those standing

judicial organs as a circumstance impugning either the

proper composition of the Court itself or the right of

the State’s chosen representatives to audience before

it. Similarly, but in the converse direction, the

Tribunal is reluctant to lend encouragement to any

practice over and above the accepted rules of

professional conduct and ethics that might end up

casting a blight over the investor’s freedom to find

the most appropriate person to represent it in

promoting its claims within the ICSID system."122

INTEGRITY OF PARTIES

The are several types of misconduct

both by the States and by private parties. While the States

are usually accused of engaging in such acts, private parties

also engage in them. These include forgery and concealment of

documents, illegal surveillance of com-munications (mail,

phone, e-mail, and computer hacking), intimidation of the

participants in arbitration (arbitrators, party

representatives, counsel, experts and witnesses), lies, and false

testimony . Some governments, particularly in authoritarian

systems with weak rule of law, nd it difi fficult to refrain from

using the many means at their disposal to frustrate the

arbitration or steer it in their favor.123

122 Rompetrol v. Romania paragraph 22123 Sarvarian , A. supra pg. 87

In the adducing of evidence, there are

not only the dangers of forgery and witness tampering by

parties, willful attempts to manipulate and distort the

veracity of evidence also occur. An example of documents whose

authenticity was challenged before the International Court of

Justice arose in the case of Qatar v. Bahrain124 where Qatar

adduced eighty-one "historical documents" to its written

pleadings in support of its case that it had title to the

disputed Hawar Islands. Expert analysis commissioned by

Bahrain indicated that documents adduced by Qatar and stated

to be from its own archives were forged. Qatar declined to

elaborate upon the provenance of the documents claiming that

they had obtained them through "academic and private channels"

and that they had submitted them to the Court in good faith.

Qatar's subsequent analysis also resulted in certain questions

as to the document's authenticity, following which it withdrew

them so as to enable the Court to address the merits of the

case without further procedural complications . . . with the

proviso that it does not accept Bahrain's distortions of the

historical facts or its exaggerations of the effect of the

124 Maritime Delimitation and Territorial Questions between Qatar and Bahrain(Qatar v. Bahrain)(Merits), I.C.J. Rep(2001) 40 cited in Sarvarian, A. supra

challenged documents upon Qatar's case. Although in its

judgment the Court only commented upon the incident in the

section setting out the history of the proceedings, Judge

Fortier (seemingly adopting the words of Sir Elihu

Lauterpacht, counsel for Bahrain, in his oral arguments) in a

separate opinion characterised Qatar's case as “polluted” and

“infected” by the documents125.

In similar vein, the tribunal in the Gabay 

arbitration126 before the Iran-US Claims tribunal rebuked the

conduct of the Claimant and its Counsel. It held that,

"On the basis of the testimony of the

Respondent's expert witness and of the Claimant's

statements at the Hearing as well as other evidence,

the tribunal is convinced that the copy of the letter

of 1 June 1983 submitted by the Claimant has been

altered. Therefore, the tribunal does not consider this

document in determining the date on which the claim

arose... The tribunal disapproves of such behaviour on

the part of the Claimant and of his attorney. Although

it does not have the power to impose sanctions or

125 Sarvarian, A. supra126 Norman Gabay v. Islamic Republic of Iran (Case No. 771), Award (10 July 1991), 27 Iran-USC (1992) 40-48 cited in Sarvarian, A. supra p.111

disciplinary measures for presentation of false

evidence, the tribunal cannot pass over such abusive

conduct in silence. The Claimant should have

investigated the authenticity of his document before

its presentation to the tribunal and, at any rate,

should have compared it to the original copy presented

by the Respondent, and withdrawn his document and

accusations of forgery against the Government of Iran

soon after the latter's comments and evidence were

led." fi

Parties have also been accused of

using challenge proposals to delay or derail proceedings127 or

bring frivolous cases to pressure for negotiations. In the

past, arbitrations conducted under ICSID were criticized

that the system did not provide for any mechanism to monitor

claims that are manifestly without legal merit. However in

2006, ICSID introduced Rule 41(5) in its Arbitration Rule in

order to counter the submission of claims which are patently

unmeritonous. The new rule authorised an ICSID arbitral

127 See above on Integrity of Arbitrators/ Judges fn

tribunal to rule at a preliminary stage that the claim is

manifestly without legal merit and thus dismiss the claim128.

Although the objective of Rule 41(5)

is not explicitly aimed at targeting claims that constitute on

“abuse of process” it is likely that the rule will prevent or

at least offer an adequate procedure to assess the submission

of such claims, since it provides arbitral tribunals operating

under the ICSID convention with a procedure to access the

claims, inter alia on these grounds in an early stage in the

proceedings and dismiss same, thus avoiding embarking on

costly and lengthy arbitral procedures. ICSID tribunals had

prior to Rule 41(5) applied the notions of good faith and

abuse of process to access claims during the ordinary stages

of proceedings129.

For instance in Inceysa v. El Salvador130, the

tribunal upheld the principle that investment not performed in

“good faith” could not benefit from the international

protection provided for in BITS. In Phoenix Action Ltd v.

128 Eric De Brabandere , "ICSID Rule on Early Dismissal of Unmeritious Investment Treaty Claims: Preserving the integrity of ICSID Arbitration, Manchester Journal of International Economic Law Vol. 9, Issue 1:23-44 2012.129 Ibid130 ICSID case No. ARB/03/26 Award 2 August 2006

Czech Republic131, a transfer of shares from a husband to his

wife of another nationality essentially done in order to gain

access to ICSID Arbitration was held not to have been made in

good faith. The tribunal declined jurisdiction and ordered the

Claimant to pay both the ICSID costs and the Respondent’s

legal fees and expenses while stating the need to prevent

abuses of ICSID system. 29

INTEGRITY IN THE INTERNATIONAL INSTITUTION.

Several international institutions have

had allegations cast on their integrity, transparency and

openess. Currently, no evidence supports the proposition that

the arbitral system as it now exists provides incentives to

produce inaccurate decisions that favor either Claimants or

Respondents, or even that such incentives actually exist.

However, there have been arguments that suggest that as

merchants of adjudicative services, arbitrators have a

financial stake in furthering [arbitration‘s] appeal to

131 ICSID case No. ARB/06/5 Award, 15 April, 2009

claimants, which results in an apprehension of bias in favour

of allowing claims and awarding damages against governments132.

This has been countered with the argument that,

"assuming rational arbitrators seek to enhance income, biased

decision making would be an odd way to do so, given that

awards would be subject to review by either national courts

(for lack of due process or violation of public policy) or

before an ad hoc committee convened in connection with an

ICSID proceeding.133.

There is however, an obvious identification of ICSID as

an institutional extension of the World Bank and a vehicle for

“multinational corporate hegemony”. Some of the allegations of

ICSID bias are made on the basis that the institutional links

between the centre and the World Bank make the two entities

“one and the same” or that the record of some decisions

against Southern host states betrays a deeper “philosophical

link between ICSID purpose and World Bank policy. The World

Bank pays the running costs of ICSID. The Administrative

Council of ICSID is composed largely of the representatives of

World Bank member states. The World Bank and the

132 GUS VAN HARTEN, INVESTMENT TREATY ARBITRATION AND PUBLIC LAW 152–53 (2007) cited in Park, W. supra p. 651133 Park,W. supra p.658

Administrative Council convene concurrently and the President

of the World bank is ex officio the Chairman of the

Administrative Council. What is controversial is that the

connection between the two has not been severed, unlike how

the International Olympic Committee reacted to the challenge

in Grundel’s case by divesting itself of its responsibility

for the CAS and transferring control of the court to a new

economically independent Council.

Recently, these reservations have made Bolivia,

Venezuela, Ecuador and Nicaragua declare their intentions to

withdraw from the Washington Convention. In a statement made

after Bolivia’s withdrawal, the Special Ambassador for trade

and integration was credited to have cited the ICSID claim of

Aguas de Illimani (a subsidiary of Suez). The international

Finance Corporation (a member of the World Bank group) was a

shareholder in the Claimant company. He alluded to nemo judex

when he said;

"it is clear that the same institution should not be both

arbitrator and a party to the dispute."

It has been also been argued that states are

concerned that many arbitrators who decide in ICSID Tribunals

also act as Counsel in other BIT cases involving the very same

issues – and that “there are virtually no rules on conflicts

of interest” in ICSID proceedings. Many arbitrators who are

sitting in key positions on multibillion-dollar cases would

never pass a conflicts test applied to a US Supreme Court

judge134.

Other arbitral processes are also accused of not being

very transparent in their processes. Awards in ad hoc

Investor-State Arbitration under the UNCITRAL Rules are hardly

ever published. The Stockholm Chamber of Commerce usually

publishes awards without identifying the parties or the

arbitrators. The ICC proceedings are inherently confidential.

All these raise doubts as to transparency in these

international institutions in the eyes of the public. There is

a need to address most of these issues to ensure that the

confidence of the public is gained.

RECOMMENDATIONS134 Kahale, T. Does ICSID need an Overhaul? A System in Crisis? LatinLawyer Vol. 12 Issue 1

While no effort would totally eliminate

allegations of bias and misconduct by the actors in

international courts and tribunals, concrete efforts should be

made to greatly reduce them. Most of these would be in the

areas of amendment to either the Rules of the institutions or

the Convention establishing the institutions. The absence of

an international ethical code of conduct is an important lacuna

that needs to be addressed. In examining select issues that engage

basic ethical principles with reference to ICSID jurisprudence, one

may conclude that there is an unacceptable frequency of serious

misconduct amongst ICSID representatives. The reason is obvious: the

stakes at issue, nancial and political, bring great pressure to bearfi

upon representatives to engage in all manner of misconduct in order

to achieve victory at all costs. One may also speculate, based upon

the number of incidents that reach the public domain whether in

official documents or by anecdotal reporting, on the number

of abuses that may well occur undetected. The reason for the

urgent introduction of rules of ethical conduct is to deter

agrant misconduct by representatives, namely, abuses thatfl

cannot be justi ed or excused under any system of justicefi 135.

135 Ibid p.96

Also, amending the rules of international

institutions to impose an admission requirement for

representatives to be members of national bars and

consequently bound by professional ethics and discipline will

help. This has been argued to have the effect of restricting

freedom of choice of parties which is, for instance, the

hallmark in ICSID procedure. But then there are several

reasons to impose this admission requirement. Firstly, parties

should not appoint lay persons who will not be bound by any

ethical standards of conduct whatsoever136. Counsels are

usually disciplined by their national bars. For instance , in

Re Forseti case137, where counsel for South Africa (Mr Seth

Nthai SC) was disbarred for breaching con dentiality byfi

disclosing the internal deliberations of his legal team and

offering to persuade his team to accept a settlement

advantageous to the Claimants in exchange for a bribe138.

Secondly, minimal standards of professional

competence and expertise should be expected of most Counsels

in order to ensure that parties are able to present their

cases on an approximately equal footing. Situations where some

136 Sarvarian A. supra p.73137 supra fn 104138 Sarvarian A. supra p.84

parties , especially State parties, appoint lay men on their

teams who may not possess the necessary skills in advocacy to

advance their cases does not place the parties on equal

footing. Cross-examination of witnesses, for example, is a

skill that requires years of continuous practice to develop

and cannot be improvised. Thus, parties should not present the

evidence of witnesses of fact and expert witnesses to a

tribunal by nominating such persons as representatives rather

than as witnesses139.

More so, persons should not be able to serve

contemporaneously as arbitrator and representative in

arbitrations because this creates an apparent risk of

inequality of arms. The problem of issue con icts can befl

neatly and permanently solved by requiring persons to choose

either to act as arbitrators or as representatives. Counsel

should disclose any personal links with the opposing party

or with the tribunal such as may give rise to an appearance of

con ict and in certain cases should probably be obliged tofl

refuse or withdraw from a case.

139 Ibid