International institutions all over the world promote the perfect fairness of the arbitrator idea. The requirement of impartiality and independence are widely emphasised in the rules and codes of most arbitral institutions and formulating agencies like UNCITRAL, ICC, ICSID and LCIA, AAA and IBA.

Arbitrators may have specific duties imposed on them by (i) terms of appointment in case of ad hoc arbitration, (ii) by the procedural rules of the designated institution in case of institutional arbitration, or (iii) eventually, by relevant rules concerning arbitration applicable at the seat of arbitration. A common requirement in most arbitration rules and national laws is that an arbitrator shall act impartially and independently and has a duty to disclose relevant circumstances to maintain the required perception of independence and impartiality. The lack of independence or impartiality may constitute a ground for a challenge of an arbitrator or the award of the tribunal. The importance and relevance of these qualities is amplified due to the fact that arbitrators may serve as counsel in different cases and counsels may serve as arbitrators. However, standards of impartiality and independence may differ from one arbitration institution to another and from one seat of arbitration to another.

Independence and Impartiality

At first sight, the concepts “independent” and “impartial” seem almost similar. Despite this fact, they do have some differences that are necessary to explain. The concept of independence is related to the personal connection or relationship between the arbitrator and the parties or their counsel- personal, social and financial. Independence refers to objective and external manifestation of the relationship between the parties, counsels and co-arbitrators. An arbitrator shall not only be independent but he shall also be perceived as independent by third parties. Impartiality of an arbitrator refers generally to the state of mind, subjective and abstract concept which is difficult to measure and can be deducted from his/her external conduct. It entails an “absence of external control” as well as any “bias and predisposition towards a party.” Some arbitration rules did not explicitly list impartiality as a ground for challenging an arbitrator but were amended to include impartiality.

A clearer example of the concept of independence can be found in the ICC rules of arbitration requiring each arbitrator to declare whether there pre-exists any kind of relationship, past or present, direct or indirect, with any of the parties or counsellors assisting them.

Unlike independence, the concept “partiality” is more abstract being a state of mind that only can be proved through facts. Impartiality is the absence of any bias in the mind of the arbitrator towards a party or the matter in dispute. Is the absence of any favouritism and the obligation and commitment to serve all the parties as opposed to a single.

Neutrality

In addition to independence and impartiality there is another concept, namely that of “neutrality”. Once again, it is not an easy task to distinguish impartiality and neutrality at a first sight.  As with impartiality, this requirement is not bound with the concept of the independence of the arbitrator. The concept of neutrality is linked to the nationality of the arbitrator and, in such case, parties from different nationalities will require the presiding arbitrator to have a different nationality. For instance, the ICC rules provide that ‘The sole arbitrator or the chairman of an arbitral tribunal shall be of a nationality other than those of the parties.

Impartiality and Independence in International Arbitral Institutions

The arbitration rules of the International Chamber of Commerce (ICC) provide in its Article 11.1 that “Every arbitrator must be and remain independent of the parties involved in an arbitration”. Article 11.2 contains a precaution measure in this respect when it states that before its appointment or confirmation a person proposed as an arbitrator must he sign a declaration of his independence and turn over to the Secretariat a written report on any fact or circumstance that from the perspective of the parties may jeopardise his independence. The Secretariat must turn over such written report to the parties and set a deadline for the parties to express their opinion on the matter.

The independence and impartiality of arbitrators are also mentioned in the International Bar Association (IBA) draft guidelines on impartiality, independence and disclosure. These general standards are abstract, and overall, they establish than an arbitrator must remain impartial and independent throughout the arbitral proceedings and are required to resign voluntarily when he or she has doubts regarding his or her impartiality or independence. Article 1 establishes that ‘Arbitrators shall proceed diligently and efficiently to provide the parties with a fair and effective resolution of their disputes, and shall be and shall remain free from bias’.

Generally, in the arbitral institutions above mentioned the lack of impartiality and independence is sufficient for the parties to challenge the arbitrator in question, in this regard the UNCITRAL model law on international commercial arbitration establishes the following under Article 12.2 that  an arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he doesnot possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

The American Arbitration Association’s (AAA) Arbitration Rules establishes in similar terms that the arbitrators acting under these rules shall be impartial and independent. Prior to accepting appointment, a prospective arbitrator shall disclose to the administrator any circumstance likely to give rise to justifiable doubts as to the arbitrator’s impartiality or independence. If, at any stage during the arbitration, new circumstances arise that may give rise to such doubts, an arbitrator shall promptly disclose such circumstances to the parties and to the administrator. Upon receipt of such information from an arbitrator or a party, the administrator shall communicate it to the other parties and to the tribunal.

Conclusion

The International business community is choosing more and more international commercial arbitration as a system to resolve their disputes due to its suitability, in comparison with litigation before national courts, to resolve disputes in a neutral, confidential, rapid, flexible and less expensive manner.  The trust of the parties in international arbitration is also based in part, and only in part, on their expectations that the arbitrators composing the tribunal are entirely independent and impartial.