IBA Conflict IBA Guidelines on Conflicts of Interest in International Arbitration (2024)
IBA Conflict
IBA Guidelines on Conflicts of Interest in International Arbitration (2024)
(a) The arbitrator is in principle considered to bear the identity of the arbitrator’s law firm or employer, but when considering the relevance of facts or circumstances to determine whether a potential conflict of interest exists, or whether disclosure should be made, the activities of an arbitrator’s law firm or employer, if any, the law firm’s or employer’s organisational structure and mode of practice, and the relationship of the arbitrator with the law firm or employer, should be considered in each individual case. The fact that the activities of the arbitrator’s law firm or employer involve one of the parties shall not necessarily constitute a source of such conflict, or a reason for disclosure. Similarly, if one of the parties is a member of a group with which the arbitrator’s law firm or employer has a relationship, such fact should be considered in each individual case, but shall not necessarily constitute by itself a source of a conflict of interest, or a reason for disclosure.
(b) Any legal entity or natural person having a controlling influence on a party, or a direct economic interest in, or a duty to indemnify a party for the award to be rendered in the arbitration, may be considered to bear the identity of such party.
(c) Any legal entity or natural person over which a party has a controlling influence may be considered to bear the identity of such party.
Explanation to General Standard 6:
(a) There is a need to balance the interests of a party to appoint the arbitrator of its choice, who may be a lawyer at a large law firm or employed by a company or another kind of organisation, and the importance of maintaining confidence in the impartiality and independence of international arbitrators. The arbitrator must, in principle, be considered to bear the identity of the arbitrator’s law firm or employer, but the activities of the arbitrator’s law firm or employer should not automatically create a conflict of interest. The relevance of (i) the activities of the arbitrator’s law firm or employer, such as the nature, timing, and scope of the work by the law firm or employer; (ii) the law firm’s or employer’s organisational structure and mode of practice; and (iii) the relationship of the arbitrator with the law firm or employer, should be considered in each case. General Standard 6(a) uses the term ‘involve’ rather than ‘acting for’ because the relevant connections with a party may include activities other than representation on a legal matter. When a party to an arbitration is a member of a group of companies, special questions regarding conflicts of interest arise. Because individual corporate structure arrangements vary widely, a catch-all rule is not appropriate. Instead, the particular circumstances of an affiliation with another entity within the same group of companies, and the relationship of that entity with the arbitrator’s law firm or employer, should be considered in each individual case.
Evolution in the structure of international legal practices gives rise to questions about what constitutes a law firm for purposes of General Standard 6(a). As a general proposition, a law firm for these purposes is any firm in which the arbitrator is a partner or with which the arbitrator is formally associated, including in the capacity of an employee of any designation, as counsel, or of counsel. Structures through which different law firms cooperate and/or share profits may provide a basis for deeming an arbitrator to bear the identity of such other firms. Similarly, although barristers’ chambers should not be equated with law firms for the purposes of conflicts, disclosure may be warranted in view of the relationships between and among barristers, parties, and/or counsel.
(b) Particularly where a party in international arbitration is a legal entity, other legal and natural persons may have a controlling influence on this legal entity, and/or a direct economic interest in, or a duty to indemnify a party for, the award to be rendered in the arbitration. Each situation should be assessed individually, and General Standard 6(b) clarifies that such persons may be considered effectively to be that party. Such control, interests, or indemnification obligations may also arise for natural persons, and the same result is obtained.
Third-party funders and insurers may have a direct economic interest in the prosecution or defence of the case in dispute, a controlling influence on a party to the arbitration, or influence over the conduct of proceedings, including the selection of arbitrators. These distinctions may be relevant when considering whether such entities should be considered to bear the identity of a party.
(c) With respect to companies, General Standard 6(c) means that where a parent company is a party to the proceeding, its subsidiary may be considered to bear the identity of the parent company when the parent company has a controlling influence over it. The same result is obtained for natural persons. For example, if a natural person is a party to the proceeding, their closely held company, over which they have a controlling influence, may be considered to bear their identity.
With respect to States, their organisation typically comprises separate legal entities such as regional or local authorities, or autonomous agencies, which may be legally and politically independent from the central government. Such relationships are not necessarily covered by the criteria of ‘controlling influence’ or ‘direct economic interest’. Because the relationships between such entities vary widely, a catch-all rule is not considered appropriate. Instead, the particular circumstances of the relationship and their relevance to the subject matter of the dispute should be considered in each individual case. Thus, whenever a State or a State entity, subdivision, or instrumentality is party to the arbitration, even when the status of such entity is disputed, the arbitrator should consider disclosing relationships with entities such as regional or local authorities, autonomous agencies, or State-owned entities, irrespective of whether they are part of the organisation of the State or have a private status, and vice-versa.
Imported: