Independence and impartiality of arbitrators with a special focus on lack of impartiality of the President.

ICSID Arbitral Tribunal

ICSID Arbitral Tribunal

ICSID Case No. ARB/12/12

4 March 2019

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Not directly mentioning EU law but relevant to it in light of Opinion 1/17 and of the ECJ‘s case law on the independence and impartiality of judicial organs.

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In this high-profile case, the respondent State submitted a request to disqualify the entire tribunal. The most interesting point of the request for the purposes of this training is the attempt to disqualify the presiding arbitrator. The problem here lied with the fact that a partner in the arbitrator‘s law firm had acted as counsel of the Claimant in another dispute brought against the same respondent State, even though it was a claim of a different nature (commercial as opposed to investment arbitration) and relating to a different subject matter (it was a tax dispute).

The case is related to the impartiality (or internal aspect of independence), being essentially a case of a possible conflict of interest on the part of the arbitrators (thus affecting his equidistance from the disputing parties).

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The President had not disclosed this circumstance that his associates were involved in litigation against the same Respondent State in unrelated disputes. The Respondent argued that this demonstrated the existence of a conflict of interest. In particular, the Respondent challenged the legitimacy of the tribunal‘s decision to pose questions to the parties to clarify some legal issues, which, according to the Respondent, was a disguised attempt to assist the Claimant in the formulation of its claims. The lack of disclosure on the part of the President was considered to be evidence of bad faith. 

On the procedural steps, the following points need to be mentioned:

On 31 May 2012, the Secretary-General of ICSID registered the Claimants‘ request for the institution of arbitration proceedings. The Tribunal in this arbitration comprises of The Honourable Charles Brower, Professor Vaughan Lowe QC, and Professor Albert Jan van den Berg, as the presiding arbitrator. 

On 27 September 2013, the Claimants submitted their Memorial on the Merits. 

On 22 August 2014, the Respondent submitted their Counter-Memorial on the Merits, a Memorial on Jurisdiction and a request to address objections to jurisdiction as a preliminary question. 

On 7 September 2014, the Tribunal issued Procedural Order No. 8 in respect of the Respondent‘s request, joining the objections to jurisdiction to the merits of the dispute.

On 10-21 October 2016, the Tribunal held a hearing in respect of the Parties‘ arguments on jurisdiction, liability and damages.

On 31 August 2018, the Tribunal issued a decision on one of the Respondent‘s objections to jurisdiction.

On 12 November 2018, the Respondent wrote to the ICSID Secretary-General, requesting the disqualification of the Tribunal.

On 20 November 2018, in accordance with the schedule established by ICSID, the Claimants wrote to the ICSID Secretary-General, opposing the Respondent‘s Proposal. 

On 26 November 2018, the ICSID Secretariat wrote to the Parties, conveying the comments of each member of the Tribunal on the Respondent‘s Proposal. 

On 11 December 2018, the Parties wrote simultaneously to the ICSID Secretary-General. In these communications, the Respondent maintained its Proposal, and the Claimants endorsed the comments provided by the members of the Tribunal. 

On 24 January 2019, the ICISD Secretariat, on behalf of the ICSID Secretary-General, wrote to Hugo Hans Siblesz, Secretary General of the Permanent Court of Arbitration, enquiring whether he would be willing to make a recommendation on the Respondent‘s Proposal to the Chairman of the ICSID Administrative Council.

On 28 January 2019, Hugo Hans Siblesz responded that he would be willing to provide a recommendation on the Respondent‘s Proposal. 

On 28 January, 30 January and 1 February 2019, the International Bureau of the PCA and the ICSID Secretariat exchanged correspondence regarding the timing and modalities for the provision of this Recommendation.

On 4 March 2019, the recommendation was issued and included the rejection of the proposal for disqualification.

The main conclusion reached by the PCA Secretary General is as follows: “I am not convinced that inferences regarding the Tribunal‘s collective decision to pose the questions of 26 October 2018 to the Parties can reasonably be drawn from the very different circumstances of the presiding arbitrator‘s disclosures”. This seems to suggest that part of the problem was the way in which the challenge was formulated by the Respondent.

As mentioned herein, the case relates to the independence and impartiality standards applicable in the EU to judicial organs as resulting from the Charter and the ECJ‘s case law.

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The Tribunal makes reference to the existing abundant tribunal case law on the matter, including some cases featuring in this template.

The Tribunal mostly makes reference to other arbitral tribunals of the same nature and kind.

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The Tribunal engaged in a systemic interpretation of the norms applicable with a view to preserving an overall coherence of the system.

The question is very specific and no direct impact can be identified.

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https://www.italaw.com/sites/default/files/case-documents/italaw10404.pdf

Luca Pantaleo, Lectoraat Multilevel Regulation, The Hague University of Applied Sciences.