CAN A NON-INDEPENDENT ARBITRATOR ACTS INDEPENDENTLY?

​CAN A NON-INDEPENDENT ARBITRATOR ACTS INDEPENDENTLY?

Postscript: An interesting paper shed some lights on the subject of ‘independence’, a rarely explore subject in the field of arbitration.[1] It states, the requirements for impartiality has been enshrined in ICC-Rules[2], LCIA-Rules[3], UNCITRAL-Rules[4], UNCITRAL-Model Law[5], AAA-Construction Industry Arb. Rules[6], IBA-Rules on Ethic[7], IBA-Guidelines on Conflicts[8], ICSID-Rules[9] and also the Malaysia Arbitration Act 2005[10]. Interestingly the UK arbitration Act 1996 is silence on this provision of being, ‘independent’ and the question is why? Such omission is deliberate as in the ‘DAC Report’[11], ‘[Inclusion] of independence would give rise to endless arguments […] almost any connection (however remote) has been put forward to challenge the ‘independence’’.[12] This shows that the term, independent and impartial ought to be distinguished.[13] The dictionary prescribed, independent as, ‘free from outside control’.[14] Challenge on the notion of ‘independence’ has been diverse, i.e. conflict of counsel and the nominated arbitrator[15], in a personal injury case where the recorder is in conflict with both counsels[16] and the classic case of Porter v Magill[17].

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[1] Stuart Allen, Barristers’ Chambers in England and Wales: The Role of Impartiality and Independence in International Arbitration, LLM,RGU[2018]
[2] Art.11(1),ICC[2017]
[3] R.5.3,LCIA[2014]
[4] Art.6(7),UNCITRAL-Rules[2013]
[5] Art11(5),UNCITRAL-ML[2006]
[6] R-20,AAA[2015]
[7] R.3,IBA-Ethics[1987]
[8] Pr.1,IBA-Conflicts[2014]
[9] R.6,ICSID-Rules[2006]
[10] S.14(1) Malaysian Arbitration Act 2005 (AA)
[11] Julian, Loukas, Stefan, Comparative Commercial International Arbitration (1st ed. Kluwere Law Arbitration 2003),p.255-273
[12] Lord Justice Saville, ‘DAC on Arbitration Law 1996 Report on Arbitration Bill’[1997] 13(3)102
[13] Op-cit,(n.10)
[14] Oxford Dictionary (3rd.ed.Oxford University Press 2018)
[15] Brescia Calcio SpA v West Ham FC Plc [2012] ISLR, SLR40; ICC Case No.1653/GZ
[16] Smith v Kvaerner Cementation Foundation [2006] EWCA Civ 242
[17] [2001] UKHL 67

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Neutrality, independence and impartiality, the three key criteria of dispute resolutions be it arbitration, adjudication, determination or mediation. Various attempt has been made to clarify the positions of these criteria, but the notion of independence herewith is given a different perspective as to: what is the meaning of independence? Can a person who is not independent acts independently? If so, can a decision by an arbitrator who is not independent be challenged?

Definition given to ‘independence’ are generally referred to private, professional or business-related relationships of the arbitrator to the parties or counsels involved in the arbitration[1];  “likely to give rise to justifiable doubts”[2]; Whereas an independent arbitrator is one who does not have any type of personal and/or employment relationship, needed to ensure that justice is seen to be done[3]; Independence refers to objective and external manifestation of the relationship between the parties, counsels and co-arbitrators[4]; and  shall not only be independent but he shall also be perceived as independent by third parties[5].

The standard of independence however, is subject to the institution’s rules or the seat of the arbitration but generally, common law jurisdiction will follow the English position of “the real danger of bias” test which are very specific.[6] Thus, the question of independence and bias boils down to, can a person who is not independent acts independently?

Who is a person deemed not independent? In this context, can a person under an employment of another person be deemed independent? Unlikely so, because this person under employment is constantly under the influence of the employer, via the employment agreement, bound in some jurisdiction under the Employment Act. There is no obligation for the employer to make any disclosure to its employee, thus how can an employee in this instance, and in return, has sufficient knowledge to make any disclosure, while acting as an arbitrator without risking the “real danger of bias” implication? Even if the employer has consented, it will be very subjective through a third-party perspective that such an employed arbitrator can discharged its duty independently.

If so, can a decision by an arbitrator who is not independent be challenged? The law holds that a person who is approached in connection with that person’s possible appointment as an arbitrator shall disclose any circumstances likely to give rise to justifiable doubts as to that person’s impartiality or independence.[7] An arbitrator may be challenged only if, the circumstances give rise to justifiable doubts as to that arbitrator’s impartiality or independence.[8]

In summary, it is important for institution administered arbitration, to make sure not only a declaration is made that the potential arbitrator could discharged its duty independently, it must also confirm that the arbitrator is independent, unlikely to be under an employment of any private entities, as the rule under the “real danger of bias” test is also held in Malaysia.[9]

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[1] <https://www.ciarb.org/resources/features/independence-and-impartiality-of-arbitrators/>: Bruno Manzanares Bastida, ‘The Independence and Impartiality of Arbitrators in International Commercial Arbitration from a Theoretical and Practical Perspective’ (2007) 6 Revist@ e-mercatoria 1, 3 < https://ssrn.com/abstract=1491528> accessed 5 April 2012
[2] Model Law generally follows the IBA Guidelines: Nathalie Bernasconi-Osterwalder, Lise Johnson and Fiona Marshall, ‘Arbitrator Independence and Impartiality: Examining the Dual Role of arbitrator and counsel’ (2011) International Institute for Sustainable Development (IISD) 12 < http://www.iisd.org/pdf/2011/dci_2010_arbitrator_independence.pdf > accessed 5 April 2018.
[3] <https://globalarbitrationnews.com/the-double-requirement-that-the-arbitrator-be-independent-and-impartial-20150227/>
[4] Malintoppi, L., Part III Procedural Issues, Chapter 20 - Independence, Impartiality, and Duty of Disclosure of Arbitrators, in Muchlinski, P. T., Ortino, F. and Schreuer, Ch. (eds.), The Oxford Handbook of International Investment Law, 2008, p. 807
[5] < https://jusmundi.com/en/document/wiki/en-arbitrators-impartiality-and-independence>
[6] <http://www.davidyek.com/adr/lessons-on-arbitrals-impartiality-halliburton-v-chubb>: Halliburton v Chubb[2020]UKSC48: the ‘real possibility of apparent bias’ by Lord Hodge
[7] S.14(1) Malaysian Arbitration Act 2005 (AA)
[8] S.14(3)(a)AA
[9]  Low Koh Hwa @ Low Kok Hwa (practising as sole Chartered Architect at Low & Associates) v Persatuan Kanak-Kanak Spastik Selangor & Wilayah Persekutuan and another case [2021] MLJU 430