Are arbitrators immune from liability?
International Arbitration (2nd Edition)
In domestic arbitration, an arbitrator may be held liable if a party challenges its final award by filing a recourse of complaint (recurso de queja) before the Court of Appeals. As stated in Article 545 of the Code of Judicial Organization (CJO), the recourse of complaint purpose is to correct faults and serious abuses committed in the rendering of the final award, which may also be set aside by the local court. According to Article 548 of the CJO, parties have 5 business days from the notice of the final award to file the recourse of complaint. Also, parties may seek for an arbitrators’ liability by filing against them a disciplinary complaint before local courts (queja).
As for international arbitration, the International Commercial Arbitration Law No 19.971 does not contains specific provision regarding arbitrators’ liability and the Santiago Arbitration and Mediation Center (CAM Santiago) Rules of International Commercial Arbitration, exclude in Article 4 the arbitral tribunal’s liability for “acts or failures relating to the arbitral process they are conducting”.
Finally, arbitrators may be liable under Chilean criminal law for acts that are crime constitutive for judges, such as the crime of prevarication.
Arbitrators cannot be held liable for damages arising from decisions issued except in the cases in which the State judges may also be held liable. Such liability is limited and regards mostly gross errors in which there may have been intent or serious negligence. Also, the liability is only towards the parties.
Arbitrators may also be held liable for damages in specific cases such as when they unjustifiably refuse to exercise its functions after having accepted the position to arbitrate (art. 12 (3) LAV) or when they unjustifiably hamper that an arbitral award is issued within the determined period (art. 43 (4) LAV).
There are no rules providing for arbitrators’ immunity from suit under Luxembourg law.
The legal relationship between the arbitrator and the parties (receptum arbitri) is to be qualified according to the law at the seat of arbitral tribunal (lex arbitri). According to Swiss case law and the legal doctrine, the arbitrator is obliged to personally fulfill all his/her duties with all due care. Throughout the proceedings, arbitrators are committed to independence and impartiality.
The liability of arbitrators is considered to be limited to the event of unlawful intent or gross negligence. However, in case of breach of duties by the arbitrator, parties are likely to in the first instance challenge the arbitration award and only subsequently attempt to hold the arbitrator liable for damages. In addition, an arbitrator may be liable if he/her accepts an appointment without disclosing a reason for refusal that finally leads to refusal or revocation of the arbitration award in appeal proceedings.
In Swiss Rules arbitration, art. 45 Swiss Rules declares the exclusion of liability of, inter alia, the arbitrators for any act or omission in connection with arbitration conducted under the Swiss Rules, except if such act or omission is shown to constitute intentional wrongdoing or gross negligence.
No, arbitrators are not entirely immune from liability. Instead, arbitrators are liable to parties in the same way state court judges are. This cannot be derived from any explicit provision. Instead, the Bundesgerichtshof drew a comparison between the work of arbitrators and judges and thus granted arbitrators the same immunity privileges as judges (so called Spruchrichterprivileg). Consequently, arbitrators are not liable for the correctness of their decision, unless the erroneous application constitutes a deliberate criminal offence.
However, aside from the correctness of their decisions, arbitrators may be liable under general German law for contractual breaches of their agreement to act as arbitrator or tortious behavior. This could for example be the case if the arbitrator fails to disclose circumstances giving rise to doubts as to the arbitrator’s impartiality or independence, leading to damage.
Parties may, however, agree in advance to limit the arbitrators’ liability to the extent permitted under German law (i.e., no exclusion of liability for intentional or grossly negligent conduct).
Ukrainian law does not establish expressly immunity for the members of arbitration tribunal. The Criminal Code of Ukraine provides for criminal liability for abuse of powers by the "treteiskyi" arbitrator, which is normally understood as an arbitrator in domestic arbitration. Nevertheless, the term "treteiskyi" may be used in relation not only to domestic arbitration but also to international arbitration. To our knowledge, there has not yet been a reported court decision involving this issue.
The Panama Arbitration Law is silent as to the liability of arbitrators.
We are not aware of any case in Panama where the parties have sought the liability of the arbitrators.
An English translation of the recent amendment to Article 257 of the UAE's Federal Law No. 3 of 1987 by Federal Decree Law No. 7 of 2016 (the “Penal Code”) provides that:
‘Temporary imprisonment shall be inflicted on whoever issues a decision or expresses an opinion or submits a report or presents a case or proves an incident, in favour of a person or against him, contrary to the duty of fairness and unbiasedness, in his capacity as an arbitrator, expert, translator or investigator who is appointed by a judicial or an administrative authority or elected by the parties.’
The introduction of the above caused significant concern amongst the arbitration community, with both experts and arbitrators rejecting potential appointments.
The concern within the arbitration market has however subsided, assisted by the fact that no arrests nor convictions of either arbitrators or experts have occurred since the promulgation of the above amendment.
The DIAC Rules (Article 40) provides for immunity for any act or omission in connection with the arbitration, by an arbitrator. The terms of reference, should the be produced, normally limit a tribunal’s liability to acts of bad faith.
UAE Off-Shore Jurisdictions
DIFC Arbitration Law (Article 22) provides that an arbitrator will only be liable for his / her acts or omissions where such have caused ‘damage by conscious and deliberate wrongdoing’.
Whereas the SCC Rules provide for a general exclusion of liability for arbitrators, the Arbitration Act does not contain any provision concerning immunity from liability for arbitrators. Hence, arbitrators can be held liable for damages under general contract liability, unless a separate agreement between the parties and the arbitrators exists.
Section 21.1 of the SAA determines that acceptance requires arbitrators, and, arbitral institutions ─in the event that an institutional arbitration was chosen by the parties─ to comply with such an assignment in good faith. Should they; (i) not comply in good faith; and/or (ii) act recklessly or fraudulently, they would be incurring in legal liability damages. Under institutional arbitration proceedings, the damaged person will be allowed to direct a lawsuit against the injurer.
Arbitrators and arbitral institutions are obliged under Spanish law to contract a liability insurance policy. Nevertheless, public entities and arbitral systems which are integrated in governmental authorities are exempted from this obligation.
Serbian law does not contain rules on immunity of arbitrators from liability. Without an explicit provision regulating such immunity, arbitrators would be subject to a general regime of liability prescribed under Serbian Law on Obligations. In that regard, arbitrators could be found liable to compensate damages they incurred to a party provided that this damage could be ascribed to their willful intent or negligence. In reality, an arbitrator faced with such a request would likely argue that it acted with due care and that it therefore cannot be liable. Thus, in practice it would be difficult to establish such liability. The only exception would be in extreme situations, such as in case of criminal conviction of an arbitrator for an offense made in relation to arbitration proceedings.
Arbitrators are not immune from liability. ADR providers and practitioners (including arbitrators) shall have the same civil liability for acts done in the performance of their duties as that of public officers, as provided in Section 38 (1), Chapter 9, Book I of the Philippine Administrative Code of 1987. Thus, arbitrators shall be civilly liable for acts done in the performance of official duties if there is a clear showing of bad faith, malice or gross negligence.
There is no provision under the Arbitration & Conciliation Act, 1996 which provides any kind of immunity to the arbitrator. However, in general parlance, while challenging the Award of the Arbitrator, an Arbitrator is not liable before the Hon’ble Court.
Arbitrators are not immune from liability. The Criminal Code establishes that if the arbitrators issue their award in violation of, or against, an express rule to the detriment of one of the parties, act against an express law by doing anything prohibited or failing to act as required when conducting the arbitration proceeding, or make decisions or issue a ruling in proceedings in which they acted as the defense attorneys of one of the parties, then they will be punished with prison time from three to five years. In addition, arbitrators may incur in civil liability and could be sued when violation of the law, as indicated above, causes damage to any of the parties.
There is no default immunity under the Arbitration Law. Immunity granted by the parties under the agreement to arbitrate, or through institutional rules, may be challenged in cases of fraud and gross fault (gross negligence or intentional fault).
There is no provision to the effect that arbitrators are immune from liability. There is a general consensus that an action based upon error in fact or in law, will not succeed. However, there may be basis for a claim against an arbitrator in the event of serious misconduct or breach of the criminal law, such as corruption. There have been no such cases in Norway.
Arbitrators are not immune from liability.
There are no laws or rules which provide for arbitrator immunity but the Common Law principles will apply by virtue of the provisions of our Courts Of Justice Law 14/1960.
Nothing under French law provides that arbitrators are immune from liability. French courts, however, have established that arbitrators are generally immune from liability for rendering incorrect decisions. Such immunity, however, is not absolute. Arbitrators may be found liable for gross negligence, wilful misconduct, denial of justice or fraud (see Court of Cassation, First Civil Chamber, 16 December 1997, No. 96-10703; Paris Tribunal de grande instance, 16 September 2009, Case 06/10155; Court of Cassation, First Civil Chamber, 15 January 2014, No. 11-17196).
Pursuant to Article 813-ter CCP, arbitrators may be held liable for damages suffered by the parties in the event of: (i) fraudulent or grossly negligent omission or delay in the procedure; resignation without a proper cause; or (ii) fraudulent or grossly negligent omission or delay in issuing the award.
Each arbitrator is only liable for his/her own actions. Where the proceedings are pending, an action for damages can be brought only on the ground sub (i) above. In the absence of fraud, compensation for damages cannot exceed three times the arbitrators’ fees. Further, if an appointed arbitrator is held to be liable, the parties do not have to pay that arbitrator’s fees (Article 813-ter, para. 3-4, CCP).
Except for the cases outlined above, arbitrators enjoy the same immunity from liability in tort or gross negligence as national judges—i.e., liability cannot arise from either the interpretation of the regulations or the evaluation of the facts or the evidence, see Article 813-ter, para. 2, CCP and Article 2, paras. 2 and 3 of Law No. 117 of April 13, 1988.
Arbitrators are not accorded any statutory immunity under the ACA. There is no provision governing liability for negligence of the arbitrator and in such a circumstance an action is likely to be maintainable. The Lagos Law grants arbitrators statutory immunity unless they act in bad faith. Generally, public policy favours immunity for arbitrators from liability for their judicial acts. The recourse that parties have against arbitrators that do not perform their tasks with all due diligence is to terminate the mandate of such arbitrators.
In principle, arbitrators are liable if they do not or not timely fulfil their obligations under any accepted appointment. According to jurisprudence, however, the setting aside of the award is generally a precondition for any liability. Moreover, also the setting aside of an award does not automatically trigger the involved arbitrators’ liability.
The FAA does not address immunity for arbitrators, but U.S. courts have held that an arbitrator is immune from civil liability for actions in the execution of the arbitrator’s decision-making function. See e.g., Sacks v. Dietrich, 663 F.3d 1065, 1069-70 (9th Cir. 2011).
Arbitrators are not immune from liability. Nevertheless, pursuant to article 881 GrCCP the arbitrators may be held liable only for gross negligence or intentional breach of their duties. Same rule applies to judges regarding the violation of their duties. In case the conduct of the arbitrator constitutes a criminal act, such as bribery for example, apart from the fact that he may be subject to prosecution, the aggrieved party may bring a tort claim against him under article 914 of the Greek Civil Code.
Specific procedural requirements apply. Claims against arbitrators shall take the form of a special remedy provided for under article 73 para. 5 of the Introductory Law to the GrCCP, the so-called action for judicial misconduct. This remedy must be filed within 6 months from the time the arbitrator’s wrongful act or omission takes place (see however the analysis below).
In case the claim against the arbitrator is premised upon an erroneous award, it is argued in legal literature, that, by analogy to what is applicable to State Court judges, the aggrieved party must first exhaust all available remedies against the award. In case the aggrieved party succeeds in his request for setting aside the award, an action for judicial misconduct is precluded for lack of damage. On the contrary, in case the request is dismissed, the aggrieved party must file side action within six months.
No. Pursuant to Section 30 of the Arbitration Law, an arbitrator who agreed to his appointment must act with loyalty towards the parties. If the arbitrator breaches such duty, the affected party in addition to any remedy under the Arbitration Law, is also entitled to compensation payable for breach of contract. However, the arbitrator enjoys immunity against a civil or criminal lawsuit for defamation with respect of what was said or published during the arbitral proceeding (Section 13(5) of the Prohibition of Defamation Law 5725-1965) as well as immunity against a claim in torts due to negligence (Section 8 of the Tort Ordinance [New Version]).
Under the 1996 Act, an arbitrator is not liable for anything done or omitted in the discharge or purported discharge of his functions as arbitration unless the act or omission is shown to have been in bad faith (s.29(1)). Another exception is where the arbitrator resigns (s.29(3)). A procedure is provided in s.25 for the courts to deal with the resignation.
Arbitrators are generally immune from liability in respect of decision making, considering their power to assess the case according to their “intimate conviction”. The Code of Civil Procedure provides that arbitrators are to be held liable for the damage incurred as a result of their following actions:
- withdrawal from serving (abandoning their duty as arbitrators) in the case with no justified reason;
- failure to participate in the adjudication of the case;
- failure to render the award within the established time limit;
- failure to comply with the duty of confidentiality; and
- breach of their other duties, intentionally or by reckless negligence.
The relationship between the parties and the arbitrators is contractual. This contract is made once arbitrators accept their appointment. Therefore, the liability of the arbitrators can be assessed according to the general provisions of the Code of Obligations. The arbitrators must act in consideration of their duty of care. Local Law states that unless otherwise agreed by the parties, the arbitrator is obliged to compensate the parties’ damage arising from his/her failure to fulfill his/her duties without a valid reason. However, it must be noted that there are none other causes of the arbitrators’ liability.