The UN Commission on International Trade Law (UNCITRAL) has approved a Code of Conduct for arbitrators in international investment arbitration (available here). The Code is intended to apply to members of an ICSID arbitral tribunal or ad hoc committee, and to candidates for such roles, and also to apply to other investor-state arbitrations. The precise mechanics by which this will be achieved is unclear, and the commentary to the Code suggests that it may come to be incorporated into the UNCITRAL Arbitral Rules. Parties are free to agree that the Code should apply in their arbitrations and it is likely that this will become common.
The Code of Conduct is a mixture of codifying existing best practice, such as a prohibition on ex parte communications outside the remit of an initial appointment, and a requirement for independence and impartiality.
The Code also, however, contains a number of far-reaching new rules, in relation to so-called “double-hatting” where the same person acts as both arbitrator and party-appointed counsel in relation to the same actions by particular states or the same treaty provisions; in relation to the a requirement to maintain an arbitration’s confidentiality; and requirements for arbitrator disclosure.
The rules against “double-hatting” are found in Article 4 of the Code. Unless the parties otherwise agree, under the Code no arbitrator may concurrently act as either a legal representative or expert witness in another case involving: (i) the same state measure(s); (ii) the same or related parties; or (iii) the same provisions of the same instrument which provides the underlying consent to arbitrate – usually an bilateral investment treaty, domestic legislation giving protections to foreign investors, a multilateral treaty like the Energy Charter Treaty, but also (potentially) a contract between an investor and a state.
Further, the prohibition against concurrent “double-hatting” will run after the end of the arbitrator’s tenure. Unless the parties otherwise agree, the prohibitions in relation to the same measures, and the same or related parties, will run for three years, while the prohibition in relation to the same provisions will run for one year.
The rules on confidentiality are found in the Code’s Article 8. This requires that an arbitrator, unless the parties otherwise agree (which could have been done through the underlying agreement to arbitrate, or the agreed-upon arbitral rules), shall not disclose any information relating to the proceedings, or a draft of any decision rendered in the arbitration. Further, an arbitrator will be prevented from publicly commenting on a decision unless that decision has itself already been made public, and even then not while the proceedings remain ongoing or are subject to review or court challenge.
Disclosures going to independence or impartiality
Disclosure by arbitrators is governed by Article 11 of the Code. It starts with the broad statement of principle: “A Candidate and an Arbitrator shall disclose any circumstances likely to give rise to justifiable doubts as to his or her independence or impartiality”. The article then proceeds to flesh this out without prejudice to the broader principle. For example a Candidate or Arbitrator will now be required to disclose “any financial, business, professional or close personal relationship in the last five years” with: (i) a disputing party; (ii) the legal representative of a disputing party; and (iii) the other arbitrators and expert witnesses in the proceeding.
Also included are disclosure requirements in relation to any financial interest in the outcome of the proceeding, or any other proceedings involving the same state measure, or any other case involving the same or related parties.
A Candidate or Arbitrator will further be required to disclose all investor-state, or related, proceedings they have been involved in as either arbitrator, legal representative, or expert, in the last five years; any appointment as arbitrator, legal representative or expert, in any kind of proceeding in the last five years; and any prospective appointments which would run concurrently as a legal representative or expert in another investor-state case or related proceeding.
Importantly, the duty to disclose is stated to be continuing and not a one-off. Arbitrators are further required to take “all reasonable efforts” to become aware of disclosable information, and are enjoined to “err in favour of disclosure”.
Party challenges to arbitrators have become more and more common in recent years. The extent to which the Code will lead to more challenges or less remains to be seen, as does how those bodies responsible for deciding arbitrator challenges will enforce and treat breaches of the Code. In any event, the approval of the Code is to be welcomed in providing clarity to parties, and to arbitrators, on what is expected and what is not permitted.