Originally from the ICDR Handbook on International Arbitration Practice - Second Edition

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I.    Introduction

With the globalization of the economy in full swing, the number of transnational disputes before international arbitral tribunals continues its upward trend.  The reasons for the primacy of international arbitration as a means of resolving disputes are, by now, familiar to practitioners.  International arbitration avoids the risk of litigating in foreign jurisdictions with unfamiliar foreign legal systems and which may present difficulties when it comes to enforcing foreign judgments. International arbitration typically affords more confidentiality to the parties. International arbitration also satisfies the desire to have a neutral forum and impartial decision makers selected by the parties themselves.  In sum, as the 2015 Survey Improvements and Innovations in International Arbitration conducted by School of International Arbitration at Queen Mary University of London  reported, 90% of respondents indicate that international arbitration is their preferred dispute resolution mechanism.

Despite the expansion of international arbitration, the pool of experienced international arbitrators has remained small and many of these arbitrators work at large law firms, which tend to represent the largest multinational clients. This situation can create actual and imputed conflicts of interest that could undermine the impartiality of many international arbitrators. This situation can put the arbitration and the ensuing award at risk. Nominating an arbitrator who has such a conflict creates an opportunity for the adversary to challenge the arbitrator’s appointment for failure to make a required disclosure. Then, at the end of the arbitration, a losing adversary could decide to challenge enforcement of the award on the same ground, thus jeopardizing the integrity of the award.   

International arbitral institutions as well as the International Bar Association (IBA) have developed standards aimed at helping arbitrators determine what they must disclose to the parties (and other participants) when asked to serve as an arbitrator. The standards for disclosure, however, are not identical. This creates uncertainty about the standards arbitrators should apply when deciding what should be disclosed, and about the standards parties should apply when deciding whether to challenge the appointment of an arbitrator or when seeking to vacate an adverse award based on an arbitrator’s failure to disclose.