Navigating arbitrator conflicts: The IBA Guidelines and the UNCITRAL Code

Introduction

Identifying and avoiding arbitrator conflicts of interest remains a key concern for parties to arbitrations. Conflicts can impair the integrity of the proceeding or give rise to setting aside an award, yet arbitral institution rules and applicable domestic laws often lack clear disclosure requirements or robust guidance regarding arbitrator conflicts.

In the absence of such guidance, two sets of non-binding guidelines have emerged to help bridge the gap between different jurisdictions’ practices and create global best practices as to conflicts of interest. The first is the IBA Guidelines on Conflicts of Interest in International Arbitration (the IBA Guidelines), which were first issued in 2004, revised in 2014, and most recently updated in early 2024 to reflect the modern arbitration landscape.

The second is the UNCITRAL Code of Conduct for Arbitration in International Investment Disputes (the UNCITRAL Code), the final version of which was published earlier this year. First proposed in 2015 and in development by UNCITRAL’s Working Group III since 2017, the UNCITRAL Code seeks to address critiques of a perceived lack of independence and impartiality of ISDS participants. The UNCITRAL Code, which reflects many of the same principals as the IBA Guidelines, marks a first-of-its-kind development focused purely on international investment disputes.

Together, these texts exhibit a robust approach to mitigating conflicts of interest. This article highlights some of the key aspects of the recently published versions of both the IBA Guidelines and the UNCITRAL Code.

The 2024 IBA Guidelines

The IBA Guidelines are divided into two sections: (i) General Standards (and explanatory commentary); and (ii) the Practical Application of the General Standards, which categorizes various situations into non-exhaustive lists of potential conflicts colorcoded in green, orange, waivable red and non-waivable red. The 2024 IBA Guidelines retain the same structure and core principals as in earlier versions, but make some notable changes.

The IBA Guidelines are divided into two sections: (i) General Standards (and explanatory commentary); and (ii) the Practical Application of the General Standards

Conflicts of Interest

General Standard 2 retains the UNCITRAL Model Law’s objective “reasonable third person” test for determining whether there are justifiable doubts as to an arbitrator’s independence and impartiality; where such doubts exist, so does a conflict. The Non-Waivable Red List sets out circumstances where a conflict exists and mandates that an arbitrator decline or resign an appointment.

The Waivable Red List circumstances are also conflicts, but instead require disclosure and can be waived. The 2024 Guidelines’ Red Lists are mostly unchanged, except that now non-waivable legal representation of a party must be either 1) in the arbitration itself, or 2) current/regular and a source of “significant financial income” for the arbitrator or their employer – otherwise, it is waivable.

Disclosure

General Standard 3, Disclosure by the Arbitrator, converts two comments from the 2014 commentary into provisions of the standard itself: The first new provision instructs arbitrators to decline or resign an appointment if they determine that a disclosure would violate secrecy or confidentiality rules.

The second instructs that a failure to disclose does not per se mean that a conflict exists. As the commentary explains, this is because the arbitrator must apply a subjective standard in determining what to disclose (that is, what the parties may consider a conflict), but General Standard 2 requires an objective determination (the reasonable third person test) of whether a conflict indeed exists.

The first new provision instructs arbitrators to decline or resign an appointment if they determine that a disclosure would violate secrecy or confidentiality rules.

In the 2024 IBA Guidelines, the Orange List of potential conflicts that require disclosure is significantly expanded to include:

• assisting a party with mock-trials or hearing preparation on two or more occasions, or assisting a lawyer or firm in the same manner on three or more occasions, in a three-year period;
• serving as an expert in an unrelated matter for a party, or on three or more occasions with the same lawyer or firm, in a three-year period;
• current service on another tribunal alongside a fellow arbitrator or counsel for a party;
• association with an expert in a professional capacity, such as employee or partner, or currently instructing an expert in another arbitration as counsel;
• advocating for a position on the case in online spaces.

Notably, an arbitrator’s firm having acted for or against a party in an unrelated matter was removed from the list, although unrelated and current/regular representation by an arbitrator or their firm may trigger disclosure if it creates a significant commercial relationship.

Reasonable Inquiry

The 2024 Guidelines now require arbitrators to conduct a reasonable inquiry into potential conflicts for the purposes of disclosure. Further, General Standard 4 requires the parties to do the same to avoid waiving the right to challenge an arbitrator on the basis of facts that they would have learned in the course of such an inquiry.

The 2024 Guidelines now require arbitrators to conduct a reasonable inquiry into potential conflicts for the purposes of disclosure.

General Standard 6 has been broadened to include conflicts arising from arbitrators’ non-firm employers, and details what entities, affiliates, and structures may give rise to a conflict – including the circumstances described in the color-coded lists. Similarly, General Standard 7 now requires the parties to disclose any person or entity over which they have a controlling influence, and in-line with General Standard 4’s revisions, mandates that the parties undertake a “reasonable enquir[y]” and disclose “ all relevant information.”

The UNCITRAL Code of Conduct

The UNCITRAL Code, published in February 2024, is a set of rules primarily for arbitrators in investor-state cases. It references the previous 2014 IBA Guidelines as “useful guidance” and, like the IBA Guidelines, includes, inter alia, obligations to disclose potential and actual conflicts of interest and obligations to refuse or resign an appointment in certain circumstances. It also incorporates the UNCITRAL Model Law’s requirement that an arbitrator should be independent and impartial.

The UNCITRAL Code, like the IBA Guidelines, mandates that arbitrators disclose circumstances that are “likely to give rise to justifiable doubts.” This ongoing disclosure obligation includes:

1. relationships with any party, counsel, arbitrators, experts, or interested parties, including third-party funders;
2. interests in the proceeding’s outcome;
3. appointments as counsel, arbitrator, or expert for the past 5 years that relate to international investments or involve a party or their counsel;
4. prospective parallel counsel or expert appointments in other international investment disputes or related proceedings.

The UNCITRAL Code notably limits so-called “double hatting” by barring arbitrators’ participation as counsel or expert in parallel proceedings involving the same measures, parties, or agreement provisions. It also bars participation as counsel or expert in subsequent proceedings involving the same parties or measures for three years, and those involving the same provision of the instrument of consent for one year. These provisions reflect a compromise between the drafters after much debate, as earlier drafts controversially prohibited double-hatting altogether.

The UNCITRAL Code applies where parties consent to its application or it is required by their instrument of consent – therefore, the impact of these guidelines is unlikely to be felt until a new wave of treaties or instruments emerges. Notably, however, the UNCITRAL Code lacks any sanctions or means of enforcement and does not provide any independent basis for disqualifying an arbitrator.

Conclusion

Understanding and managing conflicts of interest requires careful review of the laws and guidelines applicable to a particular arbitral proceeding. Such diligence empowers parties to ensure independence and impartiality of their Tribunals and challenge unfair proceedings. It is therefore important that clients and counsel stay abreast of the evolution of these texts and other applicable rules that pertain to conflicts of interest.