The Party-Appointed Arbitrator's Undisclosed Pension
An ICC tribunal sits in Paris with three arbitrators: A (claimant-appointed), B (respondent-appointed) and C (chair). The dispute concerns a $40m infrastructure project. After the second evidentiary hearing, respondent's counsel learns that B's former law firm advised respondent's subsidiary on an unrelated financing two years before B's appointment. B's independence declaration stated that neither B nor B's firm had any relationship with the parties. B had left the firm 18 months before appointment but still receives a pension from it. The respondent files a challenge with the ICC Court 12 days after learning this. By then the tribunal has issued procedural order No. 7 and heard six of nine fact witnesses. The respondent does not want to lose its own appointee but says it has no choice. A and C believe the challenge is tactical. The ICC Court has not decided.
1. Apply the justifiable-doubts standard and the IBA Guidelines to B's situation. Is the challenge timely, and should it succeed?
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The test is whether a reasonable third person, knowing the relevant facts, would have justifiable doubts about B's independence or impartiality. Party-appointed arbitrators are not held to a lower standard. B's declaration was inaccurate: B's former firm advised the respondent's subsidiary while B was a partner, and B still receives a pension from the firm. The timing matters. The advice was two years before appointment; B left 18 months before appointment, so the advice occurred about six months before B left. That is a prior professional relationship within the usual three-year lookback. The pension is an ongoing financial link, although its significance depends on its size and whether it is fixed or discretionary.
Under the IBA Guidelines, a former partner of a firm that acted for a party or its subsidiary in an unrelated matter is often on the Orange List, requiring disclosure but not automatically disqualifying. The inaccurate declaration and the ongoing pension could push the matter towards the Red List if the link is significant or if B was personally involved. The challenge is timely: the ICC Rules require a challenge within 30 days of appointment or of learning the facts, and 12 days is within that period. The respondent did not waive by continuing after knowledge because it acted promptly. The challenge should probably succeed, or at least B should be replaced, because the combination of a prior firm relationship, a continuing pension and a false declaration creates justifiable doubts. The fact that B was party-appointed does not save the appointment.
2. If the ICC Court rejects the challenge, what are the respondent's remaining options and how should the tribunal protect the award?
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A rejected challenge does not end the matter. The respondent can preserve the objection and later rely on it in setting-aside proceedings at the seat, or resist enforcement under the New York Convention. The threshold is high: the respondent must show justifiable doubts or actual bias, not merely that the challenge was disagreeable. The tribunal should record the challenge, the ICC Court's decision and the parties' continued objections. B should make a full written disclosure of the firm relationship, the pension and any other contacts. If B stays, the tribunal should avoid any appearance of bias: no private communications with B's firm, no ex parte contact with the respondent, and full transparency in procedural orders.
The tribunal should also consider whether B should voluntarily resign to protect the award. That is sometimes the least costly route, but it can reward tactical challenges. If B remains, the tribunal should give the parties a fresh opportunity to object and should ensure that B participates in all deliberations. The chair should document dissent and the reasoning on contested procedural points. The respondent should not boycott the hearings; it should participate under protest and reserve rights. If the award later survives, the respondent's challenge record will be tested at the seat.
3. If B is replaced, what happens to the evidence already heard, and what should the reconstituted tribunal do?
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Replacement does not automatically wipe out the earlier proceedings. The reconstituted tribunal has discretion to decide whether and to what extent to repeat hearings, but it must respect the parties' right to be heard and the principle of equal treatment. A new arbitrator cannot simply adopt findings of fact from a tribunal he or she did not sit on without giving the parties an opportunity to address the evidence. The safest approach is to hold a case-management conference, provide the new arbitrator with the full record, and ask the parties which witnesses need to be recalled.
The tribunal should consider the importance of the six witnesses already heard, the length of their testimony, and whether credibility is in issue. If credibility is central, the new arbitrator should hear the key witnesses again, at least in summary form. If the evidence is documentary and uncontested, the tribunal may adopt the transcript with consent. The tribunal should issue a procedural order setting out the approach, the timetable and any costs consequences. The award should record that the reconstituted tribunal gave the parties a full opportunity to be heard. This reduces the risk of a later challenge based on irregularity.