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The Process and Grounds for Removing an Arbitrator

First published on 03 October 2023 – on the BBaC Website

One of the core principles in arbitration is the requirement for arbitrators to remain unbiased and autonomous throughout the proceedings. Arbitration’s position as the preferred dispute resolution mechanism for resolving cross-border commercial disputes hinges significantly on the dual requirement of impartiality and independence of arbitrators. Indeed, for the process to work efficiently, all parties must trust the arbitrator. Trust stems not only from expertise but from evident transparency in their actions. When this trust becomes uncertain, it is essential to understand the grounds and procedures for removing an arbitrator.

In this article, part 17 of our “Understanding Arbitration: A Guide for Businesses” series, we address those critical junctures, offering clarity on maintaining the integrity of arbitration.


Why Would One Consider Removing an Arbitrator?

Arbitrators play an important role in shaping the outcomes of disputes. They balance arguments, assess evidence, and make judgments that affect all parties involved. Their decisions should epitomise fairness, transparency, and expert knowledge.

Yet, challenges can arise. There might be instances when an arbitrator appears to lean noticeably towards one party or when they fail to disclose information that could present a conflict of interest. In some cases, an arbitrator may not have the required expertise to address the specific challenges of a dispute.

When these concerns emerge, parties find themselves at a crossroads. The integrity of the arbitration process may hang in the balance. It becomes imperative for parties to recognise these concerns early and understand their options. Addressing the potential removal of an arbitrator ensures that arbitration retains its credibility and that a just outcome remains the primary objective.

Grounds for Removing an Arbitrator

1. Perceived or Actual Bias

Bias, whether perceived or genuine, undermines the arbitration process. For a process that promises impartiality, even the perception of bias can weaken its credibility. Addressing and eliminating such bias becomes paramount to retaining confidence in the arbitration mechanism. Two primary standards are applicable here:

a. The Real Likelihood Test: This test does not require one to prove actual bias but asks whether an informed individual would believe bias is likely after reviewing the relevant facts. It focuses on perceptions of the arbitrator’s actions and decisions from an outsider’s viewpoint. This test, therefore, values the outward appearance of impartiality over the arbitrator’s internal intentions or beliefs.

b. The Reasonable Suspicion Test: The bar is set somewhat lower here. This test concerns itself with hints or suggestions of bias. If even a hint of prejudice or favouritism emerges, it could lead to the removal of an arbitrator. The aim is to eliminate any doubt, however slight, about the fairness of proceedings.

While both tests aim to preserve the integrity of arbitration, they differ in their approach. The real likelihood test demands a more pronounced indication of bias, whereas the reasonable suspicion test acts on subtler, more nuanced signs of potential bias.

2. Failure to Meet Required Qualifications

Arbitrators must have the necessary expertise appropriate to the specific dispute at hand. For instance, a commercial disagreement involving complex financial derivatives necessitates an arbitrator versed in financial markets rather than solely acquainted with general commercial law. Choosing an arbitrator without a precise skill set jeopardises the accuracy of the decision and prolongs the proceedings, as parties might need to focus on foundational concepts rather than addressing the main issues directly.

3. Consistent Unavailability or Non-responsiveness

Timeliness is critical to effective arbitration. Consistent delays or inattention from an arbitrator can escalate costs and worsen tensions between disputing parties. If an arbitrator frequently postpones hearings or takes excessive time to respond to communications, it disrupts the momentum of the arbitration. It also places undue stress on the parties awaiting resolutions. Extended delays could also risk evidence or witnesses becoming irrelevant or unavailable, significantly impacting the arbitration’s fairness and correctness.

4. Ethical Breaches

The arbitration system depends on the moral standing of its arbitrators. Any action or behaviour that questions an arbitrator’s ethical position jeopardises the whole process. Examples include an arbitrator discussing case details outside the official channels or misusing sensitive information. Such actions can influence the arbitration’s outcome and damage the reputation of all involved. Upholding the highest ethical standards remains non-negotiable for maintaining trust in the system.

5. Contractual Stipulations

The arbitration agreement often contains specific conditions that parties must observe. Within this agreement, parties might define certain circumstances under which they can remove an arbitrator. For example, the clause might specify that any employment change for an arbitrator that results in a potential conflict of interest would constitute grounds for their removal. Respecting these stipulations ensures that both parties adhere to the standards they initially set and maintains the process’s credibility.

The Process for Removing an Arbitrator

1. Raising the Initial Concern

Before seeking the removal of an arbitrator, parties must first validate their concerns. Proper documentation is critical in this stage. Parties should systematically record events, statements, or behaviours that led to doubts about the arbitrator’s impartiality or competence. These records serve two primary purposes: first, to provide a factual basis for the concern, and second, to establish a clear timeline of events. Methodical preparation helps present a compelling case when seeking an arbitrator’s removal. Moreover, adhering to established procedures ensures that the process remains transparent, fair, and consistent for all involved.

2. Engaging the Designated Authority

In institutional arbitrations, parties should approach the designated authority once they’ve collected compelling evidence. For ad hoc arbitrations, parties often follow mutually agreed rules or, if none exist, default to provisions like Article 13 of the UNCITRAL Model Law.

Parties must articulate their concerns clearly in institutional or ad hoc settings, submitting relevant documentation. The reviewing entity, be it an institution, tribunal, or an external authority, relies on this information for a well-informed decision, assessing the weight and consistency of the alleged bias or incompetence. Hence, in challenging an arbitrator, parties should present their submissions with the rigour and clarity they would employ in the arbitration’s main proceedings.

3. Transitioning to a New Arbitrator

When the appointing authority or tribunal finds the challenge well-founded, the procedure to introduce a new arbitrator commences. Care is essential during this stage to preserve the integrity and momentum of the process. To this end, all involved parties should collaborate to identify a suitable replacement. An efficient and comprehensive assessment is crucial to ensure the incoming arbitrator is unbiased and holds the relevant expertise for the specific dispute.

Once a new arbitrator steps in, a catch-up phase is often necessary to acquaint them with the nuances and progression of the ongoing dispute. Parties should cooperate fully during this stage, providing any requested information promptly.

Best Practices to Avoid the need for Removing an Arbitrator

a. Stringent Arbitrator Vetting Process

Choosing the right arbitrator is critical in establishing trust in the arbitration process. A detailed vetting procedure is paramount. This entails reviewing qualifications and assessing the arbitrator’s experience and reputation. Examining their past decisions in similar cases is beneficial to gauge their approach. Tools such as Arbitrator Intelligence can help here. Adopting this rigorous analysis offers insights into their decision-making patterns, revealing any predispositions. Early detection and disclosure of potential conflicts of interest, no matter how remote, further ensures the arbitration is impartial from the outset.

b. Maintaining Open Channels of Communication

Clear and frequent communication forms the foundation of effective dispute resolution. All parties, including the arbitrator, should foster an environment where concerns and reservations are voiced without hesitation. This pre-emptive measure can defuse potential tensions. Establishing routine touchpoints, whether formal meetings or informal check-ins, is invaluable. Such interactions ensure that issues, however minor, are addressed promptly, preventing them from escalating into more significant complications that could threaten the arbitration’s progress.

c. Frequent Reviews and Updates

Arbitration is dynamic, reflecting evolving legal norms and industry standards. Parties should not remain static in this changing environment. Committing to regular evaluations of the ongoing process is essential to ensure that all aspects of the arbitration align with current best practices. Immediate intervention when inconsistencies or discrepancies emerge helps restore equilibrium, strengthening the entire procedure’s transparency and efficiency.

Practical Steps for the Stakeholders

Maintaining impartiality and neutrality within the arbitral tribunal will lead to an efficient arbitral process. Stakeholders may find the following steps helpful:

a. For Parties involved: It is important to consult with legal counsel experienced in arbitration matters. They can provide guidance on the specific grounds for removal available in your jurisdiction and under the arbitration rules applicable to your case.

b. For Arbitrators Themselves: If there are issues or concerns about an arbitrator’s conduct or impartiality, it is advisable to attempt an informal resolution first. This may involve discussions among the parties and the arbitrators to address and resolve the concerns without resorting to removal.

c. For Institutions and Counsel: All parties involved in the arbitration should be informed of the request for removal. Transparency is important to maintain the integrity of the process and consider the arbitration agreement or rules provided.

Conclusion and The Path Forward

Every participant in an arbitration bears the responsibility of ensuring a just process. From arbitrators to the parties in dispute, the commitment to fairness and transparency must be steadfast. Vigilance is not a mere virtue; it is a necessity. Acting swiftly and effectively at the slightest hint of discrepancy is imperative so parties can address and rectify concerns before they escalate.

Arbitration relies on a mutual understanding of shared responsibility. Recognising that each stakeholder shapes the arbitration’s direction and outcome sets the stage for more effective dispute resolution.


Disclaimer:

The insights presented in this blog post aim to furnish readers with a broad understanding of arbitration within the context of global business. This material does not purport to provide legal advice, but rather serves as an informative resource. Specific decisions concerning arbitration and its relevance should always be made in consultation with qualified legal experts. Given the intricate variations and legal implications of arbitration across different jurisdictions, it is paramount to collaborate with legal professionals well-acquainted with the precise legal framework pertinent to your circumstances.

If you find this content valuable and have further questions, or if you require guidance on the detailed aspects of arbitration, please feel free to reach out to our dedicated team at [email protected]. We stand ready to guide you through these processes and address any areas of concern.


Previous Articles:

Combatting Delays in Arbitration: Expediting the Process

Managing Recalcitrant Parties in Arbitration


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