International Bar Association updates its Guidelines on Conflicts of Interest in international arbitration

By Flore Poloni

International arbitration Partner Flore Poloni discusses recent updates to the International Bar Association’s Guidelines on Conflicts of Interest, which add clarity and encourage additional disclosures from arbitrators and counsel.

Flore’s article was published in Law360, 10 April 2024, and can be found here.

The IBA Guidelines on Conflicts of interest in International Arbitration (the “Guidelines”) have become a pillar of international arbitration since their release in 2004. One often forgets that they are only a soft law instrument since they are regularly referred to by national court decisions.[1] They are deemed to have “achieved widespread acceptance as setting out current international practice for disclosure among arbitrators”.[2]

One reason for their success is doubtlessly that they have set a useful standard and practical approach to conflicts of interests in a context where a common international standard is indispensable although national norms and perceptions may vary. It should also be stressed that they deal with one of the trickiest issues of arbitration, one that can make or break proceedings and that can also break relationships within law firms (as we see with the rise of arbitration boutiques): what is acceptable in terms of relationships with the parties, their counsel or co-arbitrators and what must be disclosed to accept an arbitrator appointment before the arbitration proceedings start.

The Guidelines have been modified in 2014 and now again in 2024. Again in the updated version, they set a General Standard and then provide for more detailed practical application according to a so-called “traffic light system” – red, orange and green – including subtleties in the form of a waivable red list.

The key revisions included in the 2024 update (“the Updated Guidelines”) are as follows:

Update to the General Standard

  • Duty to disclose or duty to investigate?

Although it remains clear that there exists a duty to disclose circumstances that may give rise to doubts in the eyes of the parties as to an arbitrator’s impartiality or independence, it is now specified that a failure to disclose certain facts or circumstances does not necessarily entail the existence of a conflict of interest on the part of the arbitrator (3.(g) “An arbitrator’s failure to disclose certain facts and circumstances that may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or independence, does not necessarily mean that a conflict of interest exists, or that a disqualification should ensue)”.

The duty to disclose does not only concern the arbitrators however but also the parties themselves. Indeed, parties are required to disclose any relationship with an entity or person “it believes an arbitrator should take into consideration when making disclosures”, as well as the identity of all counsels advising on the dispute, not only those appearing in the proceedings as used to be the case.

Additionally, obstacles to the duty to disclose that may stem from professional secrecy rules are now clearly dealt with and the arbitrators are recommended not to accept the appointment or resigning (“3(e) When considering If the arbitrator finds that the arbitrator should make a disclosure, but that professional secrecy rules or other rules of practice or professional conduct prevent such disclosure, the arbitrator should not accept the appointment, or should resign”).

As far as the duty to investigate is concerned, this lies with the parties as is specified at 4(a) that, “A party shall be deemed to have learned of any facts or circumstances [that could constitute a potential conflict of interest for an arbitrator] that a reasonable enquiry would have yielded if conducted at the outset or during the proceedings”.

  • Frameworks of relationships

Law firm or employer?

To mirror the fact that arbitrators may not only work for law firms but also be employed by a company or any other kind of organisation, General Standard (6) now includes the possibility for an arbitrator to bear the identity of an “employer”, and not only of a law firm. Indeed, the term employer has been added throughout General Standard 6, indicating notably that “a) The arbitrator is in principle considered to bear the identity of the arbitrator’s law firm or employer”.

Some additional details on what constitutes a law firm have been added in the explanation of the General Standard, “As a general proposition, a law firm for these purposes is any firm in which the arbitrator is a partner or with which the arbitrator is formally associated, including in the capacity of an employee of any designation, as counsel, or of counsel.  Structures through which different law firms cooperate and/or share profits may provide a basis for deeming an arbitrator to bear the identity of such other firms. Similarly, although barristers’ chambers should not be equated with law firms for the purposes of conflicts, disclosure may be warranted in view of the relationships between and among barristers, parties, and/or counsel.”

Barrister chambers used to be protected from the disclosures that must be made by members of law firms due to their specific structure. This is put into question as what matters more is the reality of the relationships rather than the form under which they operate, which is what the Committee has clearly attempted to grasp since the draft adds the possibility of disclosure from barristers “in view of the relationships between and among barristers, parties, and/or counsel”. Certainly, something that our barrister colleagues will wish to further comment on.

Controlling influence

The Committee chose to broaden the relationships that may raise questions to “any legal entity or natural person over which a party has a controlling influence may be considered to bear the identity of such party.” In that regard, the Updated Guidelines considers third-party funders, insurers, subsidiaries, affiliates, or State entities as bearing the identity of a party when they may have a direct economic interest in the prosecution or defence of the case. This is justified as such third parties might have significant influence on the arbitration proceedings.

Relationships between arbitrators

General Standard 3 now includes clarifications on dynamics within the arbitral tribunal as well as arbitrators are now required to take into account relationships with co-arbitrators in their disclosures.

Updates to the traffic light system

  • Red and waivable red

There are no significant changes in the Updated Guidelines to the non-waivable red and waivable red list besides the addition of the word employer as already mentioned above.

  • Green list

Similarly, the only slight modification to the green list is a clarification as concerns contacts between the arbitrator and one of the experts, that no disclosure is required if “the arbitrator, when acting as arbitrator in another matter, heard testimony from an expert appearing in the current proceedings” (4.5.1).

  • Orange list

The orange list is the one knowing the true expansion with numerous additions:

Circumstances may arise in which an arbitrator has previously acted as expert. Such circumstances were therefore added to the orange list at 3.1.6, “The arbitrator currently serves, or has acted within the past three years, as an expert for one of the parties, or an affiliate of one of the parties in an unrelated matter.” A similar circumstance where the arbitrator has been appointed as an expert by a party’s counsel has been added at 2.9, “The arbitrator has, within the past three years, been appointed as an expert on more than three occasions by the same counsel, or the same law firm.” To cover the case where the arbitrator would be the counsel appointing an expert in separate proceedings, the list even includes at 3.3.6 “The arbitrator is instructing an expert appearing in the arbitration proceedings for another matter where the arbitrator acts as counsel.”

In the event the arbitrator has, within the past three years, been appointed to assist in mock- trials or hearing preparations on more than three occasions by the same counsel or the same law firm might require a disclosure. (3.2.10)

As provided in the General Standards, the dynamics within the arbitral tribunal might also require disclosures, i.e. relationships between co-arbitrators. Notably, if an arbitrator and counsel for one of the parties currently serve together as arbitrators in another arbitration (3.2.12) or if an arbitrator and their fellow arbitrator(s) currently serve together as arbitrators in another arbitration (3.2.13).

Situations emanating from social media might also require a disclosure in the case where the arbitrator has publicly advocated a position on the case (3.4.2).

When the arbitrator holds a position in the institution administering the case, disclosures might be necessary when he/she holds an executive or other decision-making position with the administering institution or appointing authority with respect to the dispute and in that position has participated in decisions with respect to the arbitration (3.4.3).

The Updated Guidelines encourage arbitrators and counsel to disclose additional situations that could potentially be seen in the eyes of the parties as prone to conflicts of interests. Such guidance is useful as although in case of doubt, one would argue that a disclosure should always be favoured, the appreciation of the situations giving rise to doubts remains highly subjective and varying across legal cultures, the Updated Guidelines are therefore essential in harmonizing the standards in an international and cross-cultural context.

[1] ENGLAND – W Limited v M SDN BHD [2016] EWHC 422 (Comm); US No. 1041, AO Tatneft v.Ukraine, c/o Mr. Pavlo Petrenko, Minister of Justice, United States Court of Appeals, District of Columbia Circuit, No. 20-7091, 28 December 2021; SINGAPORE No. 10, BYL et al. v. BYN, Singapore International Commercial Court of the Republic of Singapore, Originating Summons No. 9 of 2019, 3 March 2020, SWITZERLAND Federal Supreme Court of Switzerland, 1st Civil Law Chamber, 4A_292/2019, 16 October 2019’

[2] SINGAPORE No. 10, BYL et al. v. BYN, Singapore International Commercial Court of the Republic of Singapore, Originating Summons No. 9 of 2019, 3 March 2020

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