Should arbitrators live on Mars? Challenge of arbitrators in investment arbitration.
Under the existing arbitral regimes, the tool that parties have to address the lack of independence or impartiality of an arbitrator is essentially the challenge procedure. (2) That is why effective and transparent challenge mechanisms are fundamental for the integrity of international investment arbitration. (3)
Even the first case brought before the International Centre for Settlement of Investment Disputes (ICSID), Holiday Inns S.A. v. Morocco, (4) involved a circumstance affecting the independence of one of the arbitrators. (5) In another of the first ICSID cases, Amco Asia Corp v. Indonesia, (6) a challenge was actually presented, although it was rejected. (7) The literature on disqualification of arbitrators is however relatively scarce and, more importantly, reported decisions on challenges in investment arbitration are very few.
It has been rightly noted that "[t]he process of disqualification is often shrouded in secrecy, thus hindering the development of known, consistent standards." (8) As for arbitration in general, transparency is fundamental for challenge procedures. Publication of a higher number of reasoned decisions on challenges to arbitrators could be an important contribution to the functioning of investment arbitration, by signaling to prospective arbitrators and parties what kind of circumstances could affect the integrity of the Tribunal.
Part I of this Article briefly describes the provisions regarding challenges of arbitrators contained in the arbitration rules most widely used in the investment context. Part II discusses some of the most important challenge decisions in investment arbitration where reasons have been provided. It is suggested that a few of them have made important contributions to the theoretical development of the law on challenge of arbitrators, although the application of the principles to the facts is not always shared. This article concludes by stressing the need to further develop standards of independence and impartiality of arbitrators in order to make them more exacting, while suggesting that there might be some structural limitations in the existing arbitral systems to fulfill the growing aspirations of legitimacy of the international community.
I. RULES AND STANDARDS ON CHALLENGE OF ARBITRATORS
A. The ICSID Rules
Chapter V of the ICSID Convention contains the provisions on replacement and disqualification of conciliators and arbitrators. (9) In particular, Article 57 establishes the following:
A party may propose to a Commission or Tribunal the disqualification of any of its members on account of any fact indicating a manifest lack of the qualities required by paragraph (1) of Article 14. A party to arbitration proceedings may, in addition, propose the disqualification of an arbitrator on the ground that he was ineligible for appointment to the Tribunal under Section 2 of Chapter IV. (10)
In turn, Article 14(1) requires that arbitrators "be persons of high moral character and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment." (11) It should be noted, as to the last part of the sentence, that the Spanish version refers to persons "inspiring full confidence in their impartiality of judgment" ("inspirar plena confianza en su imparcialidad de juicio"), and the French version to persons "offering all guarantee of independence in the exercise of their functions" ("offrir toute garantie d'independance dans l'exercice de leurs fonctions").
It has been noted that while the English text refers to independence, the Spanish text refers to impartiality. (12) This is probably because at the time of the drafting of the ICSID Convention independence and impartiality were not always seen as wholly dissimilar concepts. (13) However, it has been rightly concluded that Article 14 requires both the application of the standard of independence--defined as relating to the "lack of relations with a party that might influence an arbitrator's decision"--and that of impartiality--defined as the "absence of a bias or predisposition toward one of the parties" or "in relation to the issues in dispute." (14)
Aside from the standards of independence and impartiality, it appears that the Spanish text of Article 14--inspire "full confidence in their impartiality of judgment"--and the French text--offer "all the guarantee of independence in the exercise of their functions"--set a higher standard than the English text. In accordance with Article 33(4) of the Vienna Convention on the Law of Treaties, any difference of meaning that the application of the ordinary methods of interpretation cannot resolve must be removed by having regard to the object and purpose of the Treaty. (15) It seems that the unchallenged arbitrators, if finding this difference of meaning, should apply the three criteria since, in light of its object and purpose, it does not appear that an arbitration conducted using the ICSID Convention in one of its official languages should be subject to less stringent standards than those in another ICSID case applying the ICSID Convention in any of the other two official languages.
B. The UNCITRAL Rules
Challenge of arbitrators in the context of the United Nations Commission on International Trade Law (UNCITRAL) is regulated in Articles 9 through 12 of the Arbitration Rules. (16) The first of these provisions deals with the important issue of disclosure. It provides for the duty of a "prospective arbitrator" to disclose "any circumstances likely to give rise to justifiable doubts as to his impartiality and independence." (17) The UNCITRAL Rules expressly provide for the continuation of such duty once the arbitrator is appointed. (18)
Under the UNCITRAL Rules, it is generally recognized that failure to disclose a circumstance that should have been disclosed may give rise to justifiable doubts as to independence and impartiality, although the latter consequence is sometimes qualified introducing additional criteria. (19) Disclosure of circumstances that may appear to affect independence or impartiality is so fundamental for the legitimacy of international arbitration, that failure to comply with the duty to disclose should weigh heavily in the consideration of a challenge against an arbitrator.
Article 10 provides that "[a]ny arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to the arbitrator's impartiality or independence." (20) It is generally contended that this provision establishes an objective test--to be applied in accordance with the view of a "reasonable, fair-minded and informed person" (21)--even though the article does not provide expressly for such a third-person approach. In any event, such "objective standard" has been coupled with the rejection of the requirement of actual bias, and the adoption of the standard of "apprehension of bias" or "appearance of bias" in the following words:
One might say that under the UNCITRAL Arbitration Rules doubts are justifiable or serious if they give rise to an apprehension of bias that is, to the objective observer, reasonable. Actual bias or partiality need not be established.... In sum the test to be applied is that the doubts existing on the part of the claimant here must be 'justifiable' on some objective basis. (22)
Other arbitration rules, such as the Rules of the London Court of International Arbitration (LCIA) and the International Arbitration Rules of the American Arbitration Association (AAA), also require arbitrators to be both independent and impartial. (23) In light of what has already been said in relation to ICSID rules, (24) it appears that, generally speaking, at present international arbitration allows for a challenge against an arbitrator both if he has any relationship that may affect his independence or if he is predisposed in favor of or against any of the parties or in relation to the matters to be considered in the arbitration.
C. The IBA Guidelines
On May 22, 2004 the Council of the International Bar Association (IBA) approved the IBA Guidelines on Conflicts of Interest in International Arbitration. (25) The IBA Guidelines were originally developed for international commercial arbitration, but the working group that drafted them later "realized that the Guidelines should equally apply to other types of arbitration, such as investment arbitrations (insofar as these may not be considered as commercial arbitrations)." (26)
The IBA Guidelines, which are not legal provisions and hence not binding per se, (27) require arbitrators to be impartial and independent "during the entire arbitration proceeding" until its termination. (28) Arbitrators should not act if "facts or circumstances exist, or have arisen since the appointment, that, from a reasonable third person's point of view having knowledge of the relevant facts, give rise to justifiable doubts as to the arbitrator's impartiality or independence." (29)
The test to determine whether the doubts are justifiable is "if a reasonable and informed third party would reach the conclusion that there was a likelihood that the arbitrator may be influenced by factors other than the merits of the case as presented by the parties in reaching his or her decision." (30) An "appearance test" is therefore explicitly adopted, to be applied objectively. (31)
The fundamental duty of disclosure of arbitrators is regulated in some detail in the IBA Guidelines. (32) Arbitrators shall disclose facts or circumstances which in the eyes of the parties may give rise to doubts as to the arbitrator's impartiality or independence, and "[a]ny doubt as to whether an arbitrator should disclose certain facts or circumstances should be resolved in favour of disclosure." (33)
In the interests of transparency, the adoption of a subjective test--i.e., in the eyes of the parties--for disclosure is commendable. However, the IBA working group's unqualified statement that "nondisclosure cannot make an arbitrator partial or lacking independence; only the facts or circumstances that he or she did not disclose can do so" (34) can be criticized.
The IBA Rules of Ethics for International Arbitrators establish that failure to disclose "creates an appearance of bias, and may of itself be a ground for disqualification even though the non-disclosed facts or circumstances would not of themselves justify disqualification." (35) This solution is clearly preferable, since it provides for a concrete consequence for the failure to disclose circumstances that should have been disclosed.
In any event, the IBA Guidelines provide for a duty of the arbitrator to "make reasonable inquiries to investigate any potential conflict of interest." (36) Importantly, "[f]ailure to disclose a potential conflict is not excused by lack of knowledge if the arbitrator makes no reasonable attempt to investigate." (37)
Finally, the IBA Guidelines contain lists that categorize different situations, which are meant to "provide specific guidance to arbitrators, parties, institutions and courts as to what situations do or do not constitute conflicts of interest or should be disclosed." (38) The Red List--which is in turn divided into waivable and nonwaivable--refers to situations that give rise to justifiable doubts as to the arbitrator's impartiality and independence, the Orange List refers to situations which in the eyes of the parties may give rise to such doubts, and the Green List refers to "situations where no appearance of, and no actual, conflict of interest exists from the relevant objective point of view." (39)
II. CHALLENGE DECISIONS IN INVESTMENT ARBITRATION
A. Vivendi v. Argentina
In Vivendi (40) , Argentina challenged Mr. Yves Fortier because his law firm "had been engaged by Vivendi's predecessor, Compagnie Generale des Eaux, to advise on certain matters relating to taxation under Quebec law." (41) The unchallenged members of the committee proceeded on the basis that, although the matter was still uncompleted, the great bulk of the work had been done before the proceedings commenced, Mr. Fortier had no personal involvement in the work or with the claimant companies, and the work had no relationship with the dispute. (42)
The decision appears to have made an important contribution in terms of the interpretation of the provisions of the ICSID Convention and the ICSID Arbitration Rules on challenge of arbitrators. First, it adopts an "appearance of bias test" in asserting, inter alia, that as arbitrators, members of ad hoc committees "must be, and appear to be, independent and impartial." (43) Second, it rejects the idea that the word "manifest" in Article 57 of the ICSID Convention requires that the arbitrator must be manifestly biased and that the inclusion of such word could "imply that there could be circumstances which, though they might appear to a reasonable observer to create an appearance of lack of independence or bias, do not do so manifestly." (44) Further, in discussing when a challenge should be accepted it concluded adopting a "reasonable doubt" approach as to impartiality with the following words:
If the facts would lead to the raising of some reasonable doubt as to the impartiality of the arbitrator or member, the appearance of security for the parties would disappear and a challenge by either party would have to be upheld. Once the other arbitrators or Committee members had become convinced of this conclusion, there would no longer be room for the view that the deficiency was not "manifest." (45)
The assessment of the facts, however, could be open to some question. For example, one may wonder if a party could have full confidence if the challenged arbitrator or member had no personal relationship with one of the parties but his firm did. (46) Or to what extent the fact that the work done by the arbitrator's firm is not related to the case in which he is acting satisfies the relevant requirements of impartiality and independence. Indeed, the view may be adopted that any existing business relationship between the arbitrator's law firm and one of the parties in principle affects the appearance of security for the parties. (47)
Still, one cannot help but agree with the importance given by the unchallenged members to the fact that "the relationship in question was immediately and fully disclosed and that further information about it was forthcoming on request, thus maintaining full transparency." (48) Nonetheless, fundamental as it is, full and timely disclosure is not enough to cure any and all circumstances that may affect the independence and impartiality of arbitrators. Parties cannot be expected to have full confidence in an arbitrator, no matter what circumstance affects him or her, just because the latter disclosed such circumstance timely and fully.
B. SGS v. Pakistan
In SGS v. Pakistan (49) Mr. Christopher Thomas was challenged by the claimant because his firm had been retained by Mexico in another case, and so the claimant:
believe[d] that Mr. Thomas' role (and/or that of his firm) as counsel representing what appears to be a very large client of his firm, if not the largest, before a tribunal presided by counsel for Pakistan in this case [i.e. Mr. Jan Paulsson] indicates that, in his role as arbitrator in this case, he may manifestly not be relied upon to exercise independent judgment. (50)
SGS's challenge was also based upon the fact that Mr. Paulsson had presided over the tribunal of Robert Azinian v. United Mexican States, (51) which had issued an award favorable to Mexico, represented in that case by Mr. Thomas, and that therefore the latter may feel indebted to Mr. Paulsson. (52)
In light of the provisions of Articles 57 and 14(1) of the ICSID Convention, the unchallenged arbitrators stated that "[t]he party challenging an arbitrator must establish facts, of a kind or character as reasonably to give rise to the inference that the person challenged clearly may not be relied upon to exercise independent judgment in the particular case where the challenge is made." (53) It is apparent that they equated the word "manifest" in Article 57 with the word "clear" for purposes of admissibility of a challenge. (54)
In rejecting the challenge, the unchallenged arbitrators noted that:
[i]t is commonplace knowledge that in the universe of international commercial arbitration, the community of active arbitrators and the community of active litigators are both small and that, not infrequently, the two communities may overlap, sequentially if not simultaneously. It is widely accepted that such an overlap is not, by itself, sufficient ground for disqualifying an arbitrator. (55)
Equating international commercial arbitration with investment arbitration as to challenge of arbitrators is problematic, (56) as well as expecting parties who are seeking justice from an investment tribunal not to be concerned by certain relationships just because that is the way things are in international commercial arbitration.
Further, when analyzing the facts, the unchallenged arbitrators stated that the claimant had to show, in order to prevail in the challenge, "that there is an understanding, express or implicit, between Mr. Thomas and Mr. Paulsson that each would vote in favor of the other's client." (57) However, it is not clear from the decision whether the claimant was actually arguing that such an understanding existed, and, in any event, showing the occurrence of that kind of fact will generally be impossible and is tantamount to requiring proof of actual bias.
Actual bias is manifestly not the standard for challenge of arbitrators under the ICSID rules, (58) even under the unchallenged arbitrators own reading of these rules. (59) Neither is actual bias the standard generally applied by domestic or international tribunals considering challenges against arbitrators. (60)
Under the applicable "appearance of bias" test, it is reasonable that crossed roles situations--such as an arbitrator acting in a case where one of the parties' lawyer also acts as arbitrator in another case where the former arbitrator is the lawyer of one of the parties--may cause concern to the parties. As to the challenge in SGS v. Pakistan it should be noted, however, that Mr. Thomas' disclosure was timely and complete, (61) and that in the related case, GAMI Inv. Inc. v. Gov't of the United Mexican States, (62) where Mr. Paulsson was appointed President of the Tribunal, the proposal for his appointment came from the party adversary to the party with which Mr. Thomas had a professional relationship. (63)
C. Siemens v. Argentina and Azurix v. Argentina
Another situation of crossed roles was present in the Siemens (64) and Azurix (65) cases. Argentina challenged the President of both tribunals, Dr. Andres Rigo Sureda, essentially because Dr. Guido Santiago Tawil, counsel for Siemens and Azurix in both cases, was appointed by Fulbright & Jaworski LLP, Dr. Rigo's firm, as arbitrator in the case of Duke Energy International v. Republic of Peru. (66)
A couple of months after the challenge, counsel for Azurix sent a letter to the ICSID Secretariat informing that the company had engaged Fulbright & Jaworski LLP in 2002 "on a limited engagement for a few months on a matter completely unrelated to [the Azurix] arbitration," and that the law firm had also represented an affiliate of Enron--Azurix having been a subsidiary of Enron--in litigation, "although Mr. Rigo was not involved in any way." (67) This letter led Mr. Rigo four days later to resign not from his position as President of the Tribunals in the Siemens and Azurix, but from his job at Fulbright & Jaworski LLP. (68)
In Siemens there was a split between the two unchallenged arbitrators, with Professor Bello Janeiro voting in favor of the challenge (69) and Judge Brower against it, (70) while in Azurix the two unchallenged arbitrators rejected the challenge. (71) Since in the first case the remaining arbitrators were equally divided on the challenge, it fell to the Chairman of the Administrative Council to decide upon the challenge, (72) who rejected it, regrettably without providing any reason. (73)
D. National Grid v. Argentina
Mr. Judd L. Kessler was challenged by the respondent in National Grid (74) due to an intervention by him during the merits hearing. (75) Mr. Kessler had been designated three months before this hearing, following the resignation of Mr. Whitney Debevoise, who had been appointed by the U.S. Senate as U.S. Executive Director to the World Bank. (76)
In the course of a cross-examination by counsel for Argentina, Mr. Kessler intervened, stating:
It is now clear that there are certain facts that the witness is familiar with, but I suppose that the basis of his testimony has to do with the hypothetical situation, and it is not hypothetical because everyone present here knows the facts in general, that there has been an important damage or a very important change in the expectations of the investment. (77)
Argentina's basic contention was that these statements showed that "Mr. Kessler prejudged the final result of the dispute without having based his statements exclusively on the evidence, arguments and applicable law in the case at hand, in particular, since the hearing was still in progress and both Parties still had evidence and arguments to deliver." (78)
The Division of the LCIA that decided on the challenge (79) admitted that, if taken "in isolation," "a reasonable third person might indeed gain the impression that Mr. Kessler had already taken a firm view on issues which are key to the final result of the arbitration." (80) It stated, however, that any appearance of bias was eliminated upon consideration of "Mr. Kessler's intervention as a whole and the context of [his] intervention," particularly the fact that he continued the intervention before any clarification from him was sought referring to a hypothetical major harm. (81)
Further, after Argentina sought clarifications from him, Mr. Kessler affirmed that he was referring to "an allegation of harm of a change in the contract that caused problems to the investor." (82) With this, the Division found that "Mr. Kessler made clear beyond any reasonable doubt that he was not prejudiced." (83)
Besides the question of how much weight to give a rectification in this context, there is the more general question of to what extent subsequent acts of an arbitrator may "cure" doubts as to his independence or impartiality. In this case, the first question is additionally complicated because the arbitrator may have been prompted to rectify prior statements not only by requests for clarification but even by the expression on the face of the person to whom the statement was directed. In light of these questions and the potential complication in their answers, justice may best be served by adopting a strict rule for handling questions of impartiality. Such a rule might state that the arbitrator cannot cure and must resign when circumstances give rise to justifiable doubts as to her impartiality and independence, unless perhaps the situation is expressly accepted by the parties. (84)
E. Suez v. Argentina
Argentina challenged the arbitrator's impartiality and independence twice in the cases brought against it by Suez and other water companies. (85) On October 12, 2007, Argentina filed its first proposal for disqualification of the arbitrator appointed by the claimant, Professor Gabrielle Kaufmann-Kohler. (86) The first proposal for disqualification related to Professor Kaufmann-Kohler's participation as an arbitrator appointed by the claimants in the (resubmitted) Vivendi case. (87) The arbitrators rejected the first challenge, asserting that it was untimely, (88) and because they could not find evidence of Professor Kaufmann-Kohler's lack of impartiality or independence in the award rendered in the Vivendi case. (89)
The second challenge was based upon Professor Kaufmann-Kohler's membership on the board of directors at the Swiss bank UBS A.G. (UBS). UBS is a shareholder in Suez and Vivendi, (90) and has interests in or has joint interests with Electricite de France (EDF). (91) All of these latter companies appointed Professor Kaufmann-Kohler as arbitrator in the arbitrations they brought against Argentina. Further, the challenge was motivated by the fact that Professor Kaufmann-Kohler "failed to disclose this fact to the parties and to ICSID as is required by the ICSID Rules." (92)
Additionally, Argentina advanced that UBS does research and makes recommendations with respect to investments in the water sector, (93) particularly recommending the purchase of shares of Vivendi and Suez. (94) This meant that the bank of which one of the arbitrators was a director was recommending investing in the claimants.
It should be noted that although UBS held 2.38% of the registered voting stock of Vivendi as of March 31, 2007, it was described on the latter company's webpage as a "main investor"--i.e., the investor with the highest registered share holding. (95) By the same token, even though UBS held 2.1% of the voting shares of Suez, it was described on the latter's webpage as a "main investor." (96)
Upon receipt of the challenge, Professor Kaufmann-Kohler stated that she had no knowledge of the relations between the claimants and UBS--particularly because she was a non-executive director with no involvement in the bank's individual investment decisions--and that UBS, as a "global financial institution," has business relationships with many corporations. (97) Furthermore, she revealed that when she was appointed as a UBS director she submitted on a confidential basis a list of all her arbitrations to the bank and "was subsequently informed by UBS that there were no conflicts of interest, except with respect to her position as a member of the America Cup Jury (since UBS sponsored a yacht in that competition), from which she resigned." (98)
In response to questions by the President of the Tribunal, who asked her why she had disclosed information on her arbitrations to UBS and also why she did not disclose her appointment to the parties in the arbitrations, Professor Kaufmann-Kohler stated that the submission of the list of arbitrations to UBS related to compliance with rules of the Swiss Stock Exchange, the New York Stock Exchange, and the Swiss Code of Best Practices on independence and disclosure requirements of directors. (99) She also stated that she had not informed the parties in the arbitrations about the appointment because, given the strict separation imposed by Swiss law between management and supervision of a bank, as a member of the supervisory body she was not involved in the management of the bank and "had no indication of any connections between the bank and a party in any of her arbitrations." (100) Therefore, she believed she had no need to disclose her appointment as a UBS board member to parties in the arbitrations. (101)
The unchallenged members of the Tribunal commenced their analysis by considering the challenge under the UNCITRAL Arbitration Rules since one of the cases--that brought by AWG Group Limited (AWG)--was subject to such rules. (102) Argentina was however not alleging any sort of a business relationship between UBS and AWG, (103) so the treatment of this case before considering the issues that formed the core of the challenge prevents one from putting the AWG case in the context of the whole challenge. (104) In fact, the only relationship between UBS and AWG that is referred to by the Tribunal is that UBS "conducts research and develops financial products related to the water sector" (105) (AWG being a company that operates in that sector). Such fact was not considered by the Tribunal to be a circumstance that gives rise to justifiable doubts as to the arbitrator's impartiality or independence as required by Article 10(1) of the UNCITRAL Arbitration Rules. (106)
It should be noted that the unchallenged arbitrators stated that the connection that may give rise to justifiable doubts "must be significant and direct, such as an economic relationship causing an arbitrator to be dependent in some way on a party." (107) This appears to be quite a high threshold for challenging an arbitrator. In fact, there might be significant economic relationships between an arbitrator and a party, which depending on the circumstances might well give rise to "justifiable doubts as to the arbitrator's impartiality and independence," without warranting the conclusion that the arbitrator "be dependent in some way on a party." (108)
As to the disclosure obligations under Article 9 of the UNCITRAL Arbitration Rules, the unchallenged arbitrators appear to adopt a restrictive view. (109) They stated that such article only requires the disclosure of "such facts that if disclosed might give rise to justifiable doubts as to impartiality and that an arbitrator has no obligation to disclose facts which do not meet this test." (110) Further, they affirmed that the duty of disclosure "extends only to those circumstances which more likely than not would support a challenge." (111)
However, the remaining arbitrators do not indicate in the eyes of who a particular circumstance "more likely than not would support a challenge." (112) Hence, if before disclosure the arbitrator must conclude not that the particular circumstance might support a challenge but that it will "more likely than not support a challenge," (113) and if such balancing is to be done not in the eyes of the parties--as established by the IBA guidelines (114)--but in the eyes of the arbitrator, (115) the duty of disclosure would not seem to be very demanding. More fundamentally, if an arbitrator is only to disclose such facts that would justify a challenge, as the unchallenged arbitrators in the second Suez decision suggest, (116) one may wonder whether the existence of an independent duty of disclosure is justified at all, or whether the arbitrator, if he realizes that facts of that sort exist, should just have the duty to resign.
In relation to the ICSID cases, the unchallenged arbitrators stated that "Article 57 places a heavy burden of proof on the Respondent to establish facts that make it obvious and highly probable, not just possible, that Professor Kaufmann-Kohler is a person who may not be relied upon to exercise independent and impartial judgment." (117) In this light, they asserted that a connection between a party and an arbitrator is not enough in and of itself for a challenge to succeed, since "[a]rbitrators are not disembodied spirits dwelling on Mars, who descend to earth to arbitrate a case and then immediately return to their Martian retreat to await inertly the call to arbitrate another." (118) The unchallenged arbitrators used this peculiar phrase--together with "the theory of six degrees of separation" to indicate that arbitrators have many connections with persons and institutions. (119)
Among the possible connections, the two arbitrators refer to several examples including that the arbitrator or his family members own shares in mutual funds which in turn hold UBS Securities. (120) This kind of example, however, seems to be different from a situation in which the arbitrator appointed by the claimants is a director of a shareholder in several of the claimants.
The unchallenged arbitrators noted that none of the five previous ICSID cases to have applied the relevant provisions had to deal with "an arbitrator who is a director of a firm that is a portfolio investor in a Party." (121) In fact, it is to be desired that in the future there are no further cases in which an arbitrator has certain connections with one of the parties such as being a director of a shareholder in the claimant.
Finding no guidance in the ICSID Convention and the Arbitration Rules for evaluating the connection that prompted the challenge, the unchallenged arbitrators identified four criteria for analyzing such connection: proximity, intensity, dependence and materiality. (122) As to the facts, and in rejecting the challenge, the arbitrators concluded that although UBS's shareholdings in Suez and Vivendi "may seem large in absolute terms, they are not significant in relative terms, bearing in mind that UBS manages hundred of billions of dollars in assets." (123)
The rejection of the challenge in the second Suez decision is also based on the fact that UBS "is a passive, portfolio investor" in Suez and Vivendi, and that Argentina "offered no quantitative evidence at all as to the potential effect of an award in favor of the Claimants on the price of their shares or the nature of their dividend distributions." (124) If the challenging party has demonstrated a relevant connection between the arbitrator and the other party and that fact was never disclosed by the arbitrator, it is doubtful as to whether the burden of proof should not shift to the arbitrator to show that such connection has no relevant impact on her independence and impartiality. (125)
The most disquieting part of the decision relates, however, to the failure of Professor Kaufmann-Kohler to disclose to the parties towards whom she was acting as arbitrator her appointment on the UBS Board. (126) The unchallenged arbitrators considered that, as to the submission of the list of her arbitrations to UBS, "it was important for UBS to confirm Professor Kaufmann-Kohler's independent status prior to her appointment as a director." (127) One may wonder whether it was not also important for the parties in the arbitrations where she is acting as arbitrator to also confirm her "independent status" in light of her appointment at UBS. (128)
The remaining arbitrators seem to share the view that nondisclosure, in and of itself, may give rise to justifiable doubts as to the arbitrator's independence and impartiality. (129) However, in their view:
whether nondisclosure raises such doubts depends on whether the failure to disclose was inadvertent or intentional, whether it was the result of an honest exercise of discretion, whether the facts that were not disclosed raised obvious questions about impartiality and independence, and whether the nondisclosure is an aberration on the part of the conscientious arbitrator or part of a pattern of circumstances raising doubts as to impartiality. (130)
Some of these criteria seem to set too high of a threshold, for instance when appearing to suggest that the non-disclosure should constitute an "aberration" on the part of the arbitration or part of a pattern of other circumstances raising doubts as to impartiality.
Further, the unchallenged arbitrators' view that a fact must be disclosed by the arbitrator "only if he or she believes that such fact would reasonably cause his or her reliability for independent judgment to be questioned by a reasonable person" (131) is also open to question. The previously-referenced stance adopted by the IBA Guidelines that such assessment must be done "in the eyes of the party" means that a circumstance must be disclosed by the arbitrator if it could create reasonable concerns in the eyes of the parties, even if the arbitrator herself does not believe that such circumstance affects her impartiality or independence. This seems to be more in line with the goal of achieving greater transparency in international investment arbitration and reinforcing the legitimacy of the mechanism of investment dispute resolution.
Finally, the unchallenged arbitrators concluded that it was reasonable for Professor Kaufmann-Kohler to rely on the examination done by UBS as to possible incompatibilities since UBS had under Swiss law "a strong incentive to ascertain her independence." (132) But, are the standards of impartiality and independence for bank directors under Swiss law the same as for arbitrators under ICSID rules? More generally, are there higher standards of independence and impartiality than those that should be required from an arbitrator sitting in an investment tribunal, which nowadays often have to pass judgment upon State measures relating to fundamental public policies and potentially affecting basic rights of millions of people? Is an arbitrator allowed to rely on a conflict check done by a private entity in order to justify her failure to disclose certain circumstances to the parties, particularly given that if she disclosed them to the private party in the first place it would seem to be because she did not consider them as completely irrelevant as to impartiality and independence? These three questions appear to require a negative answer.
F. EDF v. Argentina
The challenge against Professor Kaufmann-Kohler in the EDF case was effected through a submission that was identical to the one presented by Argentina in the second challenge against her in the Suez case. (133) Regarding EDF in particular, the challenge referred to common interests between EDF and UBS, UBS' holding of EDF securities, and this bank's recommendation to its customers to invest in EDF. (134)
As in Vivendi, the unchallenged members in EDF suggest that "reasonable doubts" as to independence of an arbitrator would suffice to sustain a challenge under the ICSID rules. (135) They further state that the word manifest in Article 57 of the ICSID Convention "relates not to the seriousness of the allegation, but to the ease with which it may be perceived." (136)
With respect to the facts, the remaining arbitrators saw no reason to suspect that Professor Kaufmann-Kohler would be biased in favor of the claimants, basically because "[h]er position as a non-executive director at UBS gives her no financial interest in any of the Claimant companies. Nor would she benefit in any way from an award in favor of Claimants." (137)
They did recognize nonetheless that Professor KaufmannKohler "feels a sense of emotional solidarity and psychological identification [with UBS] by virtue of her position." (138) However, this was not seen to be material, since the outcome of the award on UBS's fortunes and on Professor Kaufmann-Kohler's "psychological, social or economic well-being" would be de minis. (139)
This again raises the issue of how significant the circumstance that prompted the challenge is in relation to the case in question. But even accepting the importance of determining how material the questioned relationship is--which might indeed be completely reasonable in certain contexts--should we be making this distinctions at all? Do we need to accept arbitrators having ongoing de minis business relationships with the parties or should we, at least in the investment arbitration context, not allow such relationships even if de minis, thereby providing to the parties and to the international community in general the "appearance of security"?
The unchallenged arbitrators clearly embraced the need of a de minis standard, since otherwise "it would be unduly easy for a party wishing to derail an arbitration to do so by asserting some tenuous connection between the arbitrator and a fact that might arguably have an impact." (140) However, for example, an existing business relationship between an arbitrator or his law firm and one of the parties can be distinguished from other types of connections such as friendship. Even if the former type of relationship is de minis, it is questionable whether the arbitrator should still be seen as inspiring full confidence in his impartiality of judgment, especially in a system like the ICSID one which presumably seeks to satisfy the impartiality and independence requirements of different legal systems and different cultures. (141)
As to the lack of disclosure of Professor Kaufmann-Kohler's appointment on the UBS Board, the EDF decision affirms that "[w]hile some legal systems and arbitral rules might require such disclosure, no such duty indication can be found in the ICSID standards discussed above." (142) Similar to what has been already noted in relation to the second Suez decision, it is troubling to think that there are certain arbitral rules that might be deemed more demanding, in terms of arbitrators' duties of investigation and disclosure, than the ICSID rules.
There should be no doubt that, no matter how we define the nature of investment arbitration, "[t]he long standing norms that no one should be a judge in his own cause and that justice should be seen to be done apply equally to international arbitration." (143) Today, perhaps more than ever, it should be seen that decisions in investment arbitrations result from a legitimate and transparent process.
Areas for possible improvement are many, and include encouraging the publication of reasoned decisions on challenges, making the process of appointment of arbitrators by institutions more transparent, developing binding and detailed rules on conflicts of interest and the duty of disclosure (including tough rules for failures of the arbitrators to disclose relevant circumstances), etc. Regarding ICSID in particular, if a consensus is ever reached to amend the ICSID Convention, States should seriously consider the actual arrangements under which challenges generally will be decided by the other two unchallenged arbitrators, who are certainly not in the best position to decide upon a challenge against somebody that might have worked with them for years and that, depending on the result of the challenge, might have to continue working with them for a considerable amount of time.
It could be argued that at least some of the concerns expressed in many quarters as to circumstances affecting the independence or impartiality of arbitrators, are simply an unavoidable consequence of the ad hoc nature of international arbitration and of the way in which the international legal market functions. Indeed, it would appear that the establishment of a permanent appellate body with jurisdiction over investment matters, composed of persons of unquestionable reputation and competence and who would obtain their basic income from a salary paid by an international institution, could contribute to resolve some of the problems that are perceived as structural deficiencies of the current scheme. Be that as it may, all involved have a responsibility in the improvement of investment arbitration as it currently stands and its pursuit of international justice for investors and States.
(1.) See Jan Paulsson, Ethics, Elitism, Eligibility, 14 J. OF INT'L ARB. 13, 13 (1997).
(2.) In the ICSID context, the annulment procedure provides a further mechanism through which to challenge, subject to certain conditions, the lack of independence or impartiality of an arbitrator. See Convention on the Settlement of Investment Disputes Between States and Nationals of other States art. 52, Aug. 27, 1965, 17 U.S.T. 1270, 575 U.N.T.S. 159 [hereinafter ICSID Convention]. Indeed, at least three of the five grounds contained in Article 52(1)-paragraphs (a), (c) and (d)-can be used to raise issues concerning the integrity of a member of the Tribunal. See Philippe Pinsole, The Challenge of Awards Rendered by Biased Arbitrators--Do not Lose your Rights, 5(4) TRANSNAT'L DISP. MGMT. (2008).
(3.) Cf. W. Michael Tupman, Challenge and Disqualification of Arbitrators in International Commercial Arbitrations, 38 INT'L & COMP. L. Q. 26 (1989).
(4.) ICSID Case No. ARB/72/1, Order Taking Note of the Discontinuance Issued by the Tribunal, (Oct. 17, 1978).
(5.) See Tupman, supra note 3, at 44 (explaining arbitrator appointed by claimants had become an outside director of Occidental).
(6.) ICSID Case No. ARB/81/1, Decision on Jurisdiction, (May 10, 1988).
(7.) See Tupman, supra note 3, at 44 (describing challenge made against arbitrator appointed by claimants because arbitrator's law firm and claimants to counsel, prior to and during arbitration, had a joint office and profit sharing arrangement).
(8.) Id. at 26.
(9.) ICSID Convention, supra note 2, art. 56(3). Under ICSID Arbitration Rule 9, "[a] party proposing the disqualification of an arbitrator pursuant to Article 57 of the Convention shall promptly, and in any event before the proceeding is declared closed, file its proposal with the Secretary-General, stating the reasons therefore." ICSID Rules of Procedure for Arbitration Proceedings, Rule 9, (Apr. 2006) available at http://icsid.worldbank.org/ICSID/ICSID/RulesMain.jsp. The proposal is decided by the unchallenged members of the Tribunal, unless it refers to a sole arbitrator or to a majority of the arbitrators or if the arbitrators deciding the challenge are equally divided, in which case it is decided by the Chairman of ICSID's Administrative Council. Id.
(10.) ICSID Convention, supra note 2, art. 57.
(11.) Id. art. 14(1).
(12.) Suez, Sociedad General de Aguas de Barcelona S.A., & Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/03/19, Decision on a Second Proposal for the Disqualification of a Member of the Arbitral Tribunal, para. 27 (May 12, 2008).
(13.) See ICSID, Memorandum of the Meeting of the Committee of the Whole, Doc. SID/65-6 (Feb. 25, 1965), reprinted in 2 HISTORY OF THE ICSID CONVENTION 989, 993 (ICSID Publication, 2001) (including Broches statement expressing concern of German authorities that "the lack of independence or the partiality of an arbitrator would be a ground for disqualification.").
(14.) Suez, ICSID Case No. ARB/03/19, paras. 28-29 (May 12, 2008); ALAN REDFERN & MARTIN HUNTER, LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 200-201 (4th ed. 2004).
(15.) Vienna Convention on the Law of Treaties art. 33 [section] 4, May 23, 1969, 1155 U.N.T.S. 331 (stipulating method for interpreting treaty that appears in multiple languages).
(16.) United Nations Commission on International Trade Law (UNCITRAL), UNCITRAL Arbitration Rules, G.A. Res 31/98, arts. 9-12, U.N. Doc. A/RES/31/98 (Dec. 15, 1976) [hereinafter UNCITRAL Rules].
(17.) Id. art. 9; see also The Secretary-General, Report of the Secretary General: Preliminary Draft Set of Arbitration Rules for Optional Use in Ad Hoc Arbitration relating to International Trade, delivered to the U.N. Commission on International Trade Law, passim, U.N. Doc. A/CN.9/97 (Nov. 4, 1974) (commentary on draft Article 8(3)).
(18.) See UNCITRAL Rules, supra note 16, art. 9.
(19.) See DAVID CARON, LEE CAPLAN & MATTI PELLONPAA, THE UNCITRAL ARBITRATION RULES: A COMMENTARY 226 (Oxford Univ. Press 2006) (stating "failure to disclose may give rise to justifiable doubts but does not, per se, establish such justifiable doubts"); STEWART BAKER & MARK DAVIS, THE UNCITRAL ARBITRATION RULES IN PRACTICE: THE EXPERIENCE OF THE IRAN-UNITED STATES CLAIMS TRIBUNAL 50 (Kluwer Law & Taxation Publishers 1992); see also Doak Bishop & Lucy Reed, Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in International Commercial Arbitration, 14 ARB. INT'L 395, 408, 427 (1998) (stating "[i]n many situations, arbitrators have been disqualified because of failure to disclose relationships that might not have been disqualifying if initially disclosed"); Commonwealth Coatings Corp. v. Cont'l Casualty Co., 393 U.S. 145, 147-48 (1968).
(20.) UNCITRAL Rules, supra note 16, art. 10(1).
(21.) National Grid PLC v. the Republic of Argentina, LCIA Case No. UN 7949, Decision on the Challenge to Mr. Judd L. Kessler, para. 80 (Dec. 3, 2007); see CARON, supra note 19, at 210 (stating inclusion of word "justifiable" defines inclusion of "objective standard for impartiality and independence").
(22.) National Grid PLC, LCIA Case No. UN 7949, para. 86.
(23.) LCIA Arbitration Rules, art. 5.2, (Jan. 1998) available at http://www.lcia.org/ARB_folder/arb_english_main.htm ("All arbitrators conducting an arbitration under these Rules shall be and remain at all times impartial and independent of the parties; and none shall act in the arbitration as advocates for any party."); AAA International Arbitration Rules, art. 7 (March 2008), available at http://www.adr.org/sp.asp?id=33994 ("Arbitrators acting under these Rules shall be impartial and independent").
(24.) See also infra Part II.A. (discussing interpretation of ICSID rules in case law).
(25.) IBA GUIDELINES ON CONFLICTS OF INTEREST IN INT'L ARBITRATION, (May 2004), available at http://www.ibanet.org/Publications/publications_IBA_guides_and_free_materials. aspx [hereinafter IBA Guidelines].
(26.) Id. at 5. The extent to which investment arbitration is of a different nature than international commercial arbitration is open to question. Although it is true that both types of arbitration may have an impact on issues of public interest, discussion of public interest tends to be more pervasive in investment arbitration, which usually has a more direct link to public policies. Indeed, the assessment of the legality of fundamental public policies is often at the core of investment arbitration. Hence, it is doubtful whether rules on conflicts of interest developed for international commercial arbitration should be unconditionally transposed without more to investment arbitration, or whether some modifications should be introduced, for example as regards the extent to which parties can waive objections to certain kinds of conflicts of interest. See Christopher Harris, Arbitrator Challenges in International Investment Arbitration, 5(4) TRANSNAT'L DISP. MGMT. 1 (2008) (stating that "in international investment arbitration, the importance of the generally applicable twin qualifications demanded of all arbitrators--independence and impartiality--is even higher than in international commercial interest").
(27.) IBA Guidelines, supra-note 25, at 5.
(28.) Id. at 7.
(29.) Id. at 7-8.
(30.) Id. at 8.
(31.) Id.; see also Anne K. Hoffman, Duty of Disclosure and Challenge of Arbitrators: The Standard Applicable Under the New IBA Guidelines on Conflicts of Interest and the German Approach, 21 ARB. INT'L 427, 430-31 (2005) (discussing test for disqualifying arbitrator).
(32.) See IBA Guidelines, supra note 25, Explanation to General Standard 3, paras. (a)-(d) (explaining how to comply with disclosure requirements).
(33.) Id., General Standard (3)(a), (c).
(34.) Id. at Practical Application of the General Standards, para. 5.
(35.) IBA Rules of Ethics for International Arbitrators, Rule 4.1 available at http:// www.ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx (last visited March 28, 2009).
(36.) See IBA Guidelines, supra note 25, at 16.
(38.) Id. at 17.
(39.) Id. at 17-18.
(40.) Compania de Aguas del Aconquija S.A. & Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on the Challenge of the President of the Committee (Oct. 3, 2001).
(41.) Id. para. 15.
(42.) Id. para. 19.
(43.) Id. para. 11.
(44.) Id. para. 20.
(45.) Id. para. 25 (emphasis added).
(46.) Id. paras. 14-17; see IBA Guidelines, supra note 25, at 15 ("In the opinion of the Working Group, the arbitrator must in principle be considered as identical to his or her law firm, but nevertheless the activities of the arbitrator's firm should not automatically constitute a conflict of interest.").
(47.) Relationships between one of the arbitrators' firm and a firm representing one of the parties may have the same effect. See Hwatska Elektroprivreda, d.d., v. The Republic of Slovenia, ICSID Case No. ARB/05/24, Tribunal's Ruling Regarding the Participation of David Mildon QC in Further Stages of the Proceedings (May 6, 2008).
(48.) Compania de Aguas del Aconquija S.A. & Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/97/3, para. 25.
(49.) SGS Societe Generale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Decision on Claimant's Proposal to Disqualify Arbitrator (Dec. 19, 2002).
(50.) Id. at para. 399.
(51.) ICSID Case No. ARB(AF)/97/2, Award, para. 128 (Nov. 1, 1999).
(52.) SGS, ICSID Case No. ARB/01/13, para. 400 (Dec. 19, 2002).
(55.) Id. at 404.
(56.) See supra note 26 (comparing investment arbitration to international commercial arbitration).
(57.) SGS, ICSID Case No. ARB/01/13, para. 400 (Dec. 19, 2002).
(58.) See Vivendi, ICSID Case No. ARB/97/3, para. 25.
(59.) See SGS, ICSID Case No. ARB/01/13 (Dec. 19, 2002) (requiring for a disqualification proposal to be admissible "that a readily apparent and reasonable doubt as to that person's reliability for independent judgment has arisen from the facts established or not disputed." (emphasis added)).
(60.) See, e.g., R v. Sussex Justices, (1924) 1 K.B. 256, 259 (question of whether individual "so related to the case in its civil aspect as to be unfit to act"; Commonwealth Coatings Corp. v. Cont'l Cas. Co., 393 U.S. 145, 149-50 (1968) (a judge should "in pending or prospective litigation before him be particularly careful to avoid such action as may reasonably tend to awaken the suspicion that his social or business relations or friendships, constitute an element in influencing his judicial conduct."); R v. Bow St. Metro. Stipendiary Magistrate, (2000) 1 A.C. 119, 139 (H.L.) (appeal taken from Eng.) (Lord Nolan's opinion) ("judge may have to disqualify himself by reason of his association with a body that institutes or defends the suit"); id. at 141 (Lord Hope of Craighead's opinion) (absent waiver by both sides, judge must recuse himself if "anything which can even by remote imagination infer a bias or interest in the judge" exists); Webb & Hay v. The Queen (1994) 81 C.L.R. 41, 49-57 (Austl.) (Chief Justice Mason and Justice McHugh's opinion) (discussing standards used by various international jurisdictions); Piersack v. Belgium, 5 Eur. Ct. H.R. (ser. A) 169, 179 (1983) ("any judge in respect of whom there is a legitimate reason to fear a lack of impartiality must withdraw"); Palamara-Iribarne v. Chile, Inter-Am. Ct. H.R. (ser. C) No. 135, paras. 145-147 (Nov. 22, 2005) (impartial judge has "no direct interest in, a pre-established viewpoint on, or a preference for one of the parties, and that they are not involved in the controversy.... [and must withdraw if] there is some reason or doubt which is in detriment to the integrity of the court as an impartial body.").
(61.) See SGS, ICSID Case No. ARB/01/13 (Dec. 19, 2002) (discussing arbitrator's disclosures).
(62.) Final Award, UNICTRAL, (Nov. 15, 2004) 2004 Westlaw 3270068.
(63.) Id. para 4.
(64.) Siemens A.G. v. the Argentine Republic, ICSID Case No. ARB/02/8. Argentina also challenged Dr. Rigo, based on the same facts, in the UNCITRAL case of Nat'l Grid PLC v. Republic of Argentina.
(65.) Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12 .
(66.) Id. at 2.
(67.) Id. at 14.
(68.) Id. at 15.
(69.) Siemens, ICSID Case No. ARB/02/8, Decision of Professor Bello Janeiro on Proposal of Argentine Republic to Disqualify Dr. Andres Rigo Sureda, para. 4 (Feb. 11, 2005) (decision to disqualify Sureda made pursuant to Articles 14 and 57 of the ICSID Convention and Arbitration Rule 9).
(70.) Siemens, ICSID Case No. ARB/02/8, Decision on Jurisdiction, para. 4 (Aug. 3, 2004) (decision of Judge Brower on Proposal of the Argentine Republic to disqualify Dr. Andres Rigo Sureda pursuant to Articles 14 and 57 of the ICSID Convention and Arbitration Rule 9).
(71.) See Azurix, ICSID Case No. ARB/01/12, at 18 (Mar. 11, 2005).
(72.) See ICSID Convention, supra note 2, art. 58 (stating rule).
(73.) The challenge to Mr. Rigo Sureda is, as of the day of this writing, before two ICSID ad hoc Committees, due to annulment applications presented by Argentina. The present author is currently involved in such annulment proceedings and will therefore not comment upon the merits of the decisions on the challenge.
(74.) National Grid PLC v. the Republic of Argentina, LCIA Case No. UN 7949, Decision on the Challenge to Mr. Judd L. Kessler (Dec. 3, 2007)
(75.) Id. paras. 11-12.
(76.) Id. para. 29.
(77.) Id. para. 90. The statements were said in Spanish. The English translation transcribed was accepted by the parties as accurately reflecting what Mr. Kessler said. Id. paras. 90-91.
(78.) Id. para. 46.
(79.) The appointing authority that had been designated in accordance with the UNCITRAL Rules was the ICC Court, but the parties agreed that the LCIA would resolve the disqualification proposal. Id. para. 17.
(80.) Id. para. 92.
(81.) Id. paras. 93-96.
(82.) Id. para. 98.
(83.) Id. para. 99.
(84.) But see IBA Guidelines, supra note 25, at 20 (containing "Red List" of nonwaivable, incurable, conflicts of interest).
(85.) Suez, Sociedad General de Aguas de Barcelona S.A., & InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic, ICSID Case No. ARB/03/17, Decision on the Proposal for the Disqualification of a Member of the Arbitral Tribunal (Oct. 22, 2007); Suez, Sociedad General de Aguas de Barcelona S.A., & Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/03/19, Decision on a Second Proposal for the Disqualification of a Member of the Arbitral Tribunal (May 12, 2008).
(86.) See Suez, ICSID Case No. ARB/03/17, para. 12 (Oct. 22, 2007) (arguing objective existence of justified doubts with respect to arbitrator's impartiality).
(87.) See id. paras. 12-13 (citing Compania de Aguas del Aconquija S.A. & Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/97/3).
(88.) Id. paras. 21, 26.
(89.) Id. para. 34. The arbitrators also pointed out that "difference of opinion over an interpretation of a set of facts is not in and of itself evidence of lack of independence or impartiality." Id. para. 35.
(90.) See Suez, Sociedad General de Aguas de Barcelona S.A., & Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/03/19, Decision on a Second Proposal for the Disqualification of a Member of the Arbitral Tribunal, para. 12 (May 12, 2008) (noting Respondent suggests Professor KaufmannKohleis has conflict of interest).
(91.) EDF Int'l S.A., SAUR Int'l S.A. & Leon Participaciones Argentinas S.A. v. Argentine Republic, ICSID Case No. ARB/03/23, Challenge Decision Regarding Professor Gabrielle Kaufmann-Kohler, para. 12 (June 25, 2008).
(92.) See Suez, ICSID Case No. ARB/03/19, para. 9 (May 12, 2008) (explaining Respondent's second proposal to disqualify Professor Kaufmann-Kohler).
(93.) Id. para. 12.
(94.) See FERRIGESTION, LETTRE DE MARCHE DU 12 DE JUIN 2006 (2006), http://www.ferrigestion.fr/themes/ferri/LDM/LDM_12_06_06.pdf; UBS sieht 6 Favoriten im europaischen Mediensektor, Aug. 30, 2007, http:// sub01.finanztreff.de/99/kurse_einzelkurs_news,b,24,id,27335352,1,826,n,BS KYBORD5OP,Popup,1,r,20,s,Bsy,seite,kurse,section,0.html.
(95.) Suez, ICSID Case No. ARB/03/19, para. 12 (May 12, 2008).
(96.) Id.; see also SUEZ 2006 Reference Document, available at http://www.archivessuez.com/ document/?f=finance/en/SUE016_DRF06_VA_Section14_19.pdf.
(97.) Suez, ICSID Case No. ARB/03/19, para. 14 (May 12, 2008).
(99.) Id. para. 18.
(102.) Id. paras. 22-26.
(103.) Id. para. 23.
(104.) Id. para. 21. Before analyzing the AWG case, however, the Tribunal highlights the possibility of a connection between the different cases:
in the sense that if it were established that Professor Kaufmann-Kohler were predisposed to favor the Claimants in the ICSID cases such predisposition would also favor AWG Group Limited which is a partner with the other Claimants in the Buenos Aires water privatization that is at the heart of the dispute.
(105.) Id. para. 24.
(109.) See id. para. 26 (requiring disclosure of facts raising doubts of impartiality).
(111.) Id. para. 26 n.10 (citing DAVID D. CARON, LEE M. CAPLAN, & MATTI PELLONPAA, THE UNCITRAL ARBITRATION RULES: A COMMENTARY 202 (2005)).
(113.) Id.; see also IBA Guidelines, supra note 25, General Standard (3)(c) ("Any doubt as to whether an arbitrator should disclose certain facts should be resolved in favor of disclosure.").
(114.) See id. (setting forth IBA standard).
(115.) When considering the challenge under ICSID rules, the arbitrators seem to adopt the view that it is in the eyes of the arbitrator that the duty of disclosure has to be judged. Suez, ICSID Case No. ARB/03/19, para. 44 (May 12, 2008).
(116.) Id. para. 26.
(117.) Id. para. 29.
(118.) Id. para. 32.
(120.) Id. para. 33.
(121.) Id. para. 34.
(122.) Id. para. 35.
(123.) Id. para. 36.
(125.) Id. para. 39. For instance, as regards relevant facts such as Professor Kaufmann-Kohler's contention that she "was unaware until reading the Respondent's Second Proposal for her disqualification that UBS owned shares in Vivendi and Suez," given the failure to disclose the fact of her appointment, was it then for Argentina to prove that she was unaware of such shareholdings? Was it enough for Professor Kaufmann-Kohler to state that she had no knowledge of the shareholdings without providing any further piece of evidence?
(126.) Id. paras. 17-18.
(127.) Id. para. 38.
(128.) See IBA Guidelines, supra note 25, at Explanation to General Standard 3 [section] (b) ("It is the purpose of disclosure to allow the parties to judge whether or not they agree with the evaluation of the arbitrator and, if they so wish, to explore the situation further.").
(129.) Suez, ICSID Case No. ARB/03/19, para. 44 (May 12, 2008).
(131.) Id. para. 46.
(132.) Id. para. 47.
(133.) See EDF Int'l S.A., SAUR Int'l S.A. & Leon Participaciones Argentinas S.A. v. Argentine Republic, ICSID Case No. ARB/03/23, Challenge Decision Regarding Professor Gabrielle Kaufmann-Kohler, para. 9 (June 25, 2008).
(134.) Id. para. 12.
(135.) Id. para. 64.
(136.) Id. para. 68.
(137.) Id. para. 71.
(138.) Id. para. 72.
(139.) Id. para. 73.
(140.) Id. para. 121.
(141.) See Tupman, supra note 3, at 49 (stating "[t]he concept of a non-neutral arbitrator as it exists in some common law systems simply has no place where the parties are of different nationality and might lose faith in the arbitral process if a foreign, apparently lesser, standard were applied.")
(142.) Id. para. 99.
(143.) Naser Alam, Independence and Impartiality in International Arbitration - an assessment, 1 TRANSNAT'L DISP. MGMT. May 2004, at 1, http://www.transnational-dispute-management.com.
Gabriel Bottini, Coordinator of the Department of International Affairs of the Treasury Attorney General's Office of the Argentine Republic; Adjunct Professor of International Public Law, University of Buenos Aires. The views expressed herein are of the author alone and do not necessarily coincide with those of the Treasury Attorney General's Office of the Argentine Republic.
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