Are there any restrictions in the appointment of arbitrators?
International Arbitration (2nd Edition)
The Code of Judicial Organization (CJO) provides for some restrictions in the appointment of arbitrators. Specifically, Article 226 of such statue establishes as a general rule, that the parties or the judge who are involved in the dispute, may not be appointed as arbitrators. Also, Article 225 of the CJO states that arbitrators must be of legal age, legally capable of disposing of their assets, and that they must know how to read and write. This provision also states that only lawyers may be appointed as de jure arbitrators.
On the contrary, the International Commercial Arbitration Law No 19.971 does not impose specific restrictions for the appointment of arbitrators. Nevertheless, it does state that the nationality of an arbitrator shall not be an obstacle for her or his appointment, unless otherwise agreed by the parties (Article 11(1)) and it also recognizes indirectly in its arbitrators challenge provisions, that they must be impartial and independent from the parties (Article 12).
In Portugal, arbitrators should necessarily be individual persons with full legal capacity, independent and impartial (art. 9 (1) and (3) LAV). The law does not determine that only arbitrators with a legal background may be appointed.
Also, whoever is invited to exercise functions as an arbitrator has a duty to disclose all the circumstances that may cause justified doubts regarding its impartiality and independence (art. 13 (1) LAV).
Parties may freely choose the arbitrators, provided that the arbitrators chosen are impartial, independent and that the parties have reached an agreement regarding the appointed arbitrators.
If the parties have signed an arbitration clause without having agreed on a procedure to appoint the arbitrators or where they encounter difficulties in choosing their arbitrators, the NCPC sets out rules to appoint three arbitrators. In such a situation, each party shall appoint one arbitrator and the two appointed arbitrators will then choose a third arbitrator (Article 1227 of the NCPC).
However, there might have contractual limitations, imposed by the parties. Indeed, parties are free to agree on such requirements and may furthermore agree to exclude certain categories of persons.
Arbitrators must also comply with the ethical duties of the professional association to which they belong (if any). Luxembourg law does not include any provisions in this respect specifically applicable to arbitration.
In general, there are no restrictions on the appointment of arbitrators, apart from the requirements of independence and impartiality. As an exception to the foregoing, in domestic arbitration only the conciliation authority may be appointed as arbitral tribunal in matters relating to the lease and usufructuary lease of residential premises (art. 361 para 4 CPC).
Although the IBA Guidelines on Conflict of Interest in International Arbitration have no statutory value, the Swiss Federal Tribunal indicated that the IBA Guidelines on Conflict of Interest in International Arbitration may serve as valuable instrument when verifying the independence and impartiality of arbitrators. Furthermore, the Swiss Federal Tribunal has ruled that the co-arbitrators and the chairperson are subject to the same degree of independence.
No. In line with the UNCITRAL Model Law, the German law does not restrict the parties’ free choice of arbitrators (aside from the fact that arbitrators must be impartial and independent throughout the proceeding, section 1036 (2) ZPO).
The Arbitration Act does not impose any restrictions as to the appointment of arbitrators. The only requirement is for arbitrators to be independent and impartial. Meanwhile, according to the ICAC Arbitration Rules (both the New Arbitration Rules and the ones currently in effect) only the arbitrators listed in the Recommendatory List of the ICAC Arbitrators may be appointed either by the parties or by the President of the Ukrainian Chamber of Commerce and Industry (the "UCC").
In Panama, an arbitrator that has violated the Code of Ethics of an arbitration institution or that has been declared guilty of prevarication, falsehood or fraud cannot be appointed or continue acting as an arbitrator.
Moreover, for domestic arbitrations, arbitrators that are not deciding the dispute as “amiable compositeurs” or “ex aequo et bono” shall be practicing attorneys-at-law.
There are restrictions in the appointment of an arbitrator, pursuant to Article 206(1) of the UAE CPC:
"An arbitrator may not be a minor, a legal incompetent, a person deprived of his civil rights for reason of a criminal sentence, or a bankrupt, unless his status is restored’"
The UAE CPC Article 206(2) provides for an odd number of arbitrators should more than one arbitrator be required.
In addition to the criteria for potential arbitrators which may be set out in the arbitration agreement / clause, the DIAC Rules (Article 9) and DIFC-LCIA Arbitration Rules (Article 5) make further reference to the ongoing requirement that the arbitrators remain independent and impartial for the duration of the arbitral proceedings.
Under the Arbitration Act, anyone who enjoys full legal capacity in regard to his actions and his property are capable of being an arbitrator, i.e. you must be at least 18 years old and you cannot have a trustee or be bankrupt. In addition, the arbitrator must be independent of the parties. No other restrictions apply, e.g. sitting judges of the Swedish courts may be appointed as an arbitrator.
Under the SCC Rules, when the parties are of different nationalities, the SCC must appoint an arbitrator who is of a different nationality than the parties, unless the parties have agreed otherwise. No such restrictions are found under the Arbitration Act.
Swedish courts have recognized the IBA Guidelines on Conflict of Interest in International Arbitration and it is fair to say that these guidelines serve as a general restriction in the appointment of arbitrators.
Spanish legislation has certain restrictions as to who may serve as arbitrator. No legal entity may serve as an arbitrator, only individuals.
There is no limit to the number of arbitrators, provided they are odd in number. If there is no agreement as to the number of arbitrators, only one arbitrator will be appointed.
Under article 15.1 of the SAA, unless the parties agree otherwise, the sole arbitrator must be a jurist; however, this is not required if the arbitrator must decide the dispute ex aequo et bono. In a tribunal formed by three or more arbitrators, at least one of them must be a jurist.
Under Serbian law, there are few restrictions in the appointment of arbitrators. Arbitrators have to have to be legally competent natural persons, they have to be independent and impartial with regard to the parties and the subject matter of the dispute, and they need to fulfil the characteristics prescribed by parties themselves in the arbitration agreement. Finally, a person who has been convicted to a prison sentence cannot be appointed as arbitrator as long as the legal consequences of the conviction are in force.
For domestic arbitration, no person appointed to serve as an arbitrator shall be related by blood or marriage within the sixth degree to either party to the controversy. No person shall serve as an arbitrator in any proceeding if he has or has had financial, fiduciary or other interest in the controversy or cause to be decided or in the result of the proceeding, or has any personal bias, which might prejudice the right of any party to a fair and impartial award.
For international commercial arbitration, following the 1985 UNCITRAL Model Law, no person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties. The parties are free to agree on a procedure of appointing the arbitrator or arbitrators.
The Arbitration and Conciliation Act, 1996 specially section 12, 13, 14 and 15 provides for the grounds to challenge the jurisdiction of the Arbitration Tribunal including but not limited to the termination of mandate of an Arbitrator on the ground of bias or if he become de-facto or de-jure unable to perform his duty. The Hon’ble Supreme Court in various judgments has held that normally an officer of a private company or closely related with the private company or party, ought not to be an Arbitrator. In Indian Oil Corporation Ltd. vs. Raja Transport [Arising out of SLP (c) no. 26906 of 2008], the Hon’ble Supreme Court held that merely a government officer has been appointed as an arbitrator with relation to a contract involving Government, may not be a case of bias, unless actual bias has shown. However, if that person has dealt with the contract/project as the dealing authority or controlling authority or his superior’s decision is under challenge before him, he ought not to be appointed as an arbitrator.
With the recent amendment of 2015, as per section 12(1) of the Arbitration and Conciliation Act, 1996 when a person is approached in connection with his possible appointment as an arbitrator, he shall disclose in writing any circumstances:
(a) such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and
(b) which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months.
The grounds stated in the Fifth Schedule shall guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator.
If such grounds exist, then such person cannot be appointed as an Arbitrator.
As per section 12(5) of the Arbitration and Conciliation Act, 1996 notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator.
The following persons are barred to be appointed as an Arbitrator as per the Seventh Schedule of the Arbitration and Conciliation Act, 1996:
(i) The arbitrator is an employee, consultant, advisor or has any other past or present business relationship with a party.
(ii) The arbitrator currently represents or advises one of the parties or an affiliate of one of the parties.
(iii) The arbitrator currently represents the lawyer or law firm acting as counsel for one of the parties.
(iv) The arbitrator is a lawyer in the same law firm which is representing one of the parties.
(v) The arbitrator is a manager, director or part of the management, or has a similar controlling influence, in an affiliate of one of the parties if the affiliate is directly involved in the matters in dispute in the arbitration.
(vi) The arbitrator's law firm had a previous but terminated involvement in the case without the arbitrator being involved himself or herself.
(vii) The arbitrator's law firm currently has a significant commercial relationship with one of the parties or an affiliate of one of the parties.
(viii) The arbitrator regularly advises the appointing party or an affiliate of the appointing party even though neither the arbitrator nor his or her firm derives a significant financial income therefrom.
(ix) The arbitrator has a close family relationship with one of the parties and in the case of companies with the persons in the management and controlling the company.
(x) A close family member of the arbitrator has a significant financial interest in one of the parties or an affiliate of one of the parties.
(xi) The arbitrator is a legal representative of an entity that is a party in the arbitration.
(xii) The arbitrator is a manager, director or part of the management, or has a similar controlling influence in one of the parties.
(xiii) The arbitrator has a significant financial interest in one of the parties or the outcome of the case.
(xiv) The arbitrator regularly advises the appointing party or an affiliate of the appointing party, and the arbitrator or his or her firm derives a significant financial income therefrom.
(xv) The arbitrator has given legal advice or provided an expert opinion on the dispute to a party or an affiliate of one of the parties.
(xvi) The arbitrator has previous involvement in the case.
(xvii) The arbitrator holds shares, either directly or indirectly, in one of the parties or an affiliate of one of the parties that is privately held.
(xviii) A close family member of the arbitrator has a significant financial interest in the outcome of the dispute.
(xix) The arbitrator or a close family member of the arbitrator has a close relationship with a third party who may be liable to recourse on the part of the unsuccessful party in the dispute.
It is pertinent to note that the same have been incorporated from the IBA Guidelines of Conflict of Interest in International Arbitration.
The Hon’ble Supreme Court of India in recent judgement in the case of TRF Ltd. vs. Energo Engineering Projects Ltd., Civil Appeal no. 5306 of 2017 (Arising out of S.L.P. (C) no. 22912 of 2016) has held that if a person is ineligible to be appointed as an Arbitrator, he is also debarred from being the Appointing Authority to appoint an Arbitrator. The Hon’ble Delhi High Court in West Haryana vs. National Highway Authority of India, O.M.P. (T) (COMM.) 28/2017, has held that a person who has advised the Respondent or acted as its Consultant cannot be an Arbitrator on behalf of such party.
In case that the arbitration agreement provides for arbitration in law, the arbitrators must necessarily be attorneys. This requirement does not apply in the case of arbitration in equity. Individuals who have no legal capacity to appear by themselves in litigation are not permitted to act as arbitrators. The reasons for excuses of arbitrators are those provided for judges by the Organic General Code of Procedures. When arbitrators are aware that they do not have capacity, they must immediately notify the Arbitration Center and request that a replacement be appointed. In addition, the grounds for challenging arbitrators are the same as for judges stipulated in the Organic General Code of Procedures.
Yes, there are limitations on who may serve as arbitrator. An arbitrator must not be a minor or under legal custody, and must not have been deprived of his or her civil rights by reason of criminal conviction in a felony, misdemeanor in crimes relating to honour or by reason of bankruptcy. Arbitrators have ethical duties. They are required to perform the role of the judiciary for the dispute in question and must therefore conform to the ethical standards of a judge which includes impartiality, neutrality and independence.
The Arbitration Act requires that the arbitrators be impartial and independent of the parties, and be qualified for the appointment.
Judges of Croatian courts can only be appointed as presiding arbitrators or sole arbitrators.
There are no provisions in the domestic legislation limiting the parties’ autonomy to select Arbitrators. With regard to international commercial disputes, pursuant to the provisions of section 11(1) and (2) of the ICA Law, the parties are free to determine the procedure of appointment of the Arbitrators and are free to select anyone as Arbitrator, irrespective of nationality. Depending on the nature of the dispute’s subject matter, the parties are able to select Arbitrators who are knowledgeable in the subject matter and with an expertise relevant to the dispute. However, the ICA Law provides that the appointement of an Arbitrator may be challenged if there are circumstances that give rise to justifiable doubts as to his/her impartiality and independence.
In both domestic and international arbitration, the parties are free to determine the number of arbitrators, directly or by reference to arbitration rules (Articles 1444 and 1508, CCP).
However, in domestic arbitration, the number of arbitrators cannot be an even number, so that if the arbitration agreement provides for an even number of arbitrators, an additional arbitrator must be appointed (Article 1451, CCP). There is no corresponding rule for international arbitration.
The CCP does not provide for a default number of arbitrators in the absence of an agreement.
French law imposes few requirements on arbitrators, none of which relate to the arbitrators’ nationality or professional qualifications.
Specifically, the CCP provides that only natural persons having full capacity can act as arbitrators in domestic arbitration proceedings.
Legal persons, if designated in the arbitration agreement, can only administer the arbitration (Article 1450, CCP). This provision does not apply to international arbitration.
The CCP also lays down a requirement of independence and impartiality, applicable in both domestic and international arbitration (Article 1456, CCP). Failure by the arbitrators to meet this requirement may result in their removal (see Question 15).
Pursuant to Article 812 CCP, parties are free to appoint as arbitrator the individual of their choice, provided that the appointed individual has the legal capacity to act.
The ACA does not provide for any qualifications as to who can act as an arbitrator. However, before persons can be appointed as arbitrators, certain factors are usually considered such as the relationship of the intended arbitrator to the issues and parties, the nature of dispute, the technical and commercial experience and ability of the arbitrator to resolve the dispute, ability to take charge and to conduct the proceedings expeditiously, arbitral experience in relation to reasonable legal knowledge and special qualification or expertise as stipulated in the arbitration agreement. Serving judges cannot act as arbitrators but retired judges can act as arbitrators.
No. The FAA does not restrict the appointment of arbitrators and state law provisions generally defer to the parties’ selection.
In domestic arbitration pursuant, to article 871 para. 2 GrCCP, as arbitrators may not be appointed (a) persons that have no legal capacity or have limited legal capacity, (b) persons deprived of their citizen right to vote and to be elected due to a prior criminal conviction, (c) legal entities. In addition, article 871A GrCCP provides for certain conditions and limitations regarding the appointment of acting judges as arbitrators. Further to said explicit restrictions it is unanimously accepted in case law and legal literature under the principle nemo iudex in causa sua and the maxim of fair trial that a person may not be validly appointed as arbitrator in a dispute involving his own interests. There is no restriction as to the nationality of the arbitrator.
In international commercial arbitral proceedings having their seat in Greece, article 11 para. 1 L. 2735/1999 applies incorporating verbatim the provisions of the Model Law. It provides in particular, that, unless otherwise agreed, no person shall be precluded by reason of his nationality from acting as an arbitrator. Furthermore, same article provides that in case the appointment of an arbitrator takes place by Court intervention, the Court shall duly consider any qualifications provided for under the agreement of the parties as well as matters pertaining to the independence and impartiality of the arbitrator. It is also provided that the Court shall examine whether it would be prudent to appoint an arbitrator of a nationality different than those of the parties.
The Arbitration Law does not require a person who is appointed to the office of an arbitrator to have any qualifications. Therefore, any person may be appointed as an arbitrator even if he lacks any legal education or indeed formal education (provided that there is agreement as to his appointment). Notwithstanding the foregoing, the Israeli case law determined that a serving judge is unable to serve as an arbitrator and also that a person who has interest in the results of the arbitration or is in conflict of interest due to any connection with one of the parties to the arbitration or otherwise is not suitable to serve as an arbitrator, since by doing so he violates the requirement of objectivity imposed on him in his office as arbitrator.
Arbitrators must act fairly and impartially as between the parties (s.33 of the 1996 Act).