ICC Court releases a new guidance note on conflict disclosure

On 12 February 2016, ICC International Court of Arbitration adopted a new Guidance Note for the disclosure of conflicts by arbitrators. This Note has been incorporated in the pre-existing ICC Note to arbitrators and to parties, to answer the current need in arbitration procedures for greater transparency and diversity as to arbitrators, notably their independence and impartiality.

  1. The subjective standard, already enacted in the ICC Rules, is maintained.

According to this standard, an arbitrator must disclose any elements that may appear to be a breach of independence or impartiality in the eyes of the parties.

This subjective standard is traditionally opposed to the objective stand set by the IBA Guidelines on conflicts of interest, inspired from the UNCITRAL Model Law that relates to a “reasonable third person test”. According to this test, whether an objective conflict of interest exists must be assessed from the point of view of a reasonable third person having knowledge of the relevant facts and circumstances.

  1. The new guidance note is construed as a strong incentive for greater disclosure by a combination of two rules:
  • Disclosure does not necessarily mean the existence of a conflict;
  • Conversely, a failure to disclose is necessarily taken into account to assess whether there is a ground for challenge or not.
  1. The new guidance note endorses many rules of the IBA guidelines:
  • As previously enacted by the IBA guidelines and Article 11(3) of the ICC rules, the stage of the procedure is irrelevant for disclosure;
  • The precautionary principle is applied: in case of doubt, the arbitrator should disclose;
  • 9 hypotheses, inspired from the IBA guidelines and considered as the most frequent, are forecast, such as:
    • The arbitrator or prospective arbitrator or his or her law firm represents or advises, or has represented or advised, one of the parties or one of its affiliates;
    • The arbitrator or prospective arbitrator or his or her law firm acts or has acted against one of the parties or one of its affiliates;
    • The arbitrator or prospective arbitrator has in the past been appointed as arbitrator by one of the parties or one of its affiliates, or by counsel for one of the parties of its law firm;
  • Under the ICC Guidance Note, the duty to disclose cannot be set aside by an advance waiver – although it may be taken into account, whereas under the IBA Guidelines, the duty to disclose can be set aside by the parties, depending on the seriousness of the conflict.
  1. Consequences of the new guidance note:

The issuance of this Note shifts rules on conflict disclosure, from soft law through the IBA guidelines, to more compelling rules in the ICC framework. The role of the Court as described in the ICC note illustrates such change, since it has been specifically chosen as an implementing organ, to decide upon the potential breach of impartiality and independence of the arbitrators.

Nevertheless, it should be reminded that party autonomy is a cornerstone of the arbitration system.  With the elaboration of such stringent rules, party autonomy is weakened since the note does not enable them to waive potential identified conflicts.

It worth noting the ICC Guidance Note describes in detail the duty for arbitrators to be totally available for the conduct of the proceedings. Whereas such duty was only mentioned in the ICC rules, the Note compels the arbitrators to indicate the number of arbitrations in which there are acting, and their availability over the next two years.

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