The Dos and Don’ts of the Arbitral Tribunal

By: Mrs. Aanuoluwapo Omoloju, MCArb

Anyone who observes courtroom proceedings is probably aware that there are many rules and procedures that have to be followed in court. Arbitration is no different in that it has its own rules and procedures that must be followed. However, there are many important differences between the rules of litigation and a courtroom, compared to those of arbitration.

Arbitral Tribunals are governed by Mandatory Rules and Ethical Rules.

Mandatory Rules: The law applicable to arbitration proceedings often states explicitly that due process must be observed by the arbitral tribunal, for example – Section 14 Arbitration and Conciliation Act talks about equal treatment of parties and Sec.15(2) of the Act speaks to ensuring fair hearing, also NICArb Arbitration Rules, 2021 – Article 18. This is an extremely important provision. It is a mandatory provision which cannot be derogated from either by the parties or the tribunal. An Arbitrator acting in breach of this can be removed. More significantly awards made in breach of it are open to challenge and would face enforcement difficulties.

1. Independence & Impartiality: In order to ensure confidence in the arbitral process, the arbitrator is required to observe the following Mandatory Rules: This is required both by law and by the rules of many institutions e.g. Sec. 8(1) ACA, ICC Rules Art 7(1) and NICArb Arbitration Rules, Article 13(2).

(a). Independence

“Independence” is said to be concerned with the relationship between an arbitrator and one of the parties or with someone closely connected with one of the parties (usually the party that appoints him) whether financial, by blood or otherwise.

However, an arbitrator does not become partial, biased, or prejudiced simply by having acquired knowledge of the parties, the issues or arguments, or the applicable law.

(b). Impartiality/No Bias

Impartiality may be concerned with the absence of bias of the arbitrator either in favour of a party or in relation with issues in dispute. The test of bias is whether the circumstances give rise to justifiable doubts as to the Arbitrators impartiality. There must be a real likelihood of bias or reasonable suspicion of bias not just a flimsy doubt or allegation of bias but one that is justifiable. e.g. (1) where he stands to gain or lose by the decision which he may give. Even where he does not stand to gain or lose, there may also be a reasonable likelihood of bias (2) Where he has earlier taken a position such as expressing himself on any of the issues for decision or (3) Where he has decided some issue of fact or law in the course of arbitration between different parties.

An Arbitrator is expected to maintain impartiality toward all participants during all stages of the arbitration in order to uphold the integrity and fairness of the arbitration. An arbitrator must perform his or her duties impartially, without bias or prejudice, and must not, in performing these duties, by words or conduct manifest partiality, bias, or prejudice, including but not limited to partiality, bias, or prejudice based upon race, sex, religion, national origin, disability, age, sexual orientation, socioeconomic status, or the fact that a party might select the arbitrator to serve as an arbitrator in additional cases.

After accepting appointment, an arbitrator should avoid entering into any relationship or acquiring any interest that might reasonably create the appearance of partiality, bias, or prejudice. Partiality arises when an arbitrator favours one of the parties, or where he is prejudiced in relation to the subject-matter of the dispute.

• Equal Treatment of Parties: Treating parties equally is an obvious adjunct to independence and the appearance of impartiality. Arbitrator must communicate equally with the parties on no occasion should arbitrators communicate with or respond to either party to the exclusion of the other, not even in response to an enquiry made by only one party.

• Full Disclosure: In order to ascertain whether an arbitrator is prima facie independent, he should disclose any circumstance that may call his independence to question.  A prospective arbitrator should disclose all facts or circumstances that may give rise to justifiable doubts as to his impartiality or independence. Failure to make such disclosure creates an appearance of bias, and may of itself be a ground for disqualification even though the non-disclosed facts or circumstances would not of themselves justify disqualification. A prospective arbitrator should disclose:

a) any past or present business relationship, whether direct or indirect, including prior appointment as arbitrator, with any party to the dispute, or any representative of a party, or any person known to be a potentially important witness in the arbitration. With regard to present relationships, the duty of disclosure applies irrespective of their magnitude, but with regard to past relationships only if they were of more than a trivial nature in relation to the arbitrator’s professional or business affairs. Nondisclosure of an indirect relationship unknown to a prospective arbitrator will not be a ground for disqualification unless it could have been ascertained by making reasonable enquiries;

 b) The nature and duration of any substantial social relationships with any party or any person known to be likely to be an important witness in the arbitration;

 c) The nature of any previous relationship with any fellow arbitrator (including prior joint service as an arbitrator);

 d) The extent of any prior knowledge he may have of the dispute;

e) The extent of any commitments which may affect his availability to perform his duties as arbitrator as may be reasonably anticipated.

The duty of disclosure continues throughout the arbitral proceedings as regards new facts or circumstances. Disclosure should be made in writing and communicated to all parties and arbitrators. When an arbitrator has been appointed, any previous disclosure made to the parties should be communicated to the other arbitrators.

• Appointments: A prospective arbitrator shall accept an appointment only if he is fully satisfied that he is able to discharge his duties without bias. A prospective arbitrator shall accept an appointment only if he is fully satisfied that he is competent to determine the issues in dispute, and has an adequate knowledge of the language of the arbitration.  A prospective arbitrator should accept an appointment only if he is able to give to the arbitration the time and attention which the parties are reasonably entitled to expect. It is inappropriate to contact parties in order to solicit appointment as arbitrator.

Ethical Rules

1. Confidentiality: The arbitrator shall keep the proceedings; including the documents and the awards confidential; and shall not disclose them to a third party; except by consent of all the parties or in compliance with the order of a court. An arbitrator is in a relationship of trust to the parties and should not, at any time, use confidential information acquired during the course of the proceedings to gain personal advantage or advantage for others, or to affect adversely the interest of another.

2. Gifts and Favours: The arbitrator shall not accept gifts or favours from a party or anyone interested in the dispute.

1. Conflict of Interest: The arbitrator shall not accept any appointment that has a direct and close relationship with the parties or the subject matter of the dispute. Where the arbitrator is not sure whether his relationship with any of the parties or the subject of the dispute has the likelihood of creating an impression of bias; the arbitrator shall disclose such relationship to the other party. Facts which might lead a reasonable person, not knowing the arbitrator’s true state of mind, to consider that he is dependent on a party create an appearance of bias. The same is true if an arbitrator has a material interest in the outcome of the dispute, or if he has already taken a position in relation to it.

The appearance of bias is best overcome by full disclosure by the Arbitrator. Any current direct or indirect business relationship between an arbitrator and a party, or with a person who is known to be a potentially important witness, will normally give rise to justifiable doubts as to a prospective arbitrator’s impartiality or independence. He should decline to accept an appointment in such circumstances unless the parties agree in writing that he may proceed.

Examples of indirect relationships are where a member of the prospective arbitrator’s family, his firm, or any business partner has a business relationship with one of the parties.  Past business relationships will not operate as an absolute bar to acceptance of appointment, unless they are of such magnitude or nature as to be likely to affect a prospective arbitrator’s judgment.

Continuous and substantial social or professional relationships between a prospective arbitrator and a party, or with a person who is known to be a potentially important witness in the arbitration, will normally give rise to justifiable doubts as to the impartiality or independence of a prospective arbitrator.

• Communication: The arbitrator shall not confer privately or separately with any of the parties. All communications from the arbitrator shall be copied to both parties. Any communication received by the arbitrator from one party must be copied to the other party. If such communication should occur, the arbitrator should inform the other party or parties and arbitrators of its substance. If an arbitrator becomes aware that a fellow arbitrator has been in improper communication with a party, he may inform the remaining arbitrators and they should together determine what action should be taken. Normally, the appropriate initial course of action is for the offending arbitrator to be requested to refrain from making any further improper communications with the party. Where the offending arbitrator fails or refuses to refrain from improper communications, the remaining arbitrators may inform the innocent party in order that he may consider what action he should take. An arbitrator may act unilaterally to inform a party of the conduct of another arbitrator in order to allow the said party to consider a challenge of the offending arbitrator only in extreme circumstances, and after communicating his intention to his fellow arbitrators in writing.

• Delay: The arbitrator shall make every effort to ensure that the arbitration is not unduly delayed. All arbitrators should devote such time and attention as the parties may reasonably require having regard to all the circumstances of the case, and shall do their best to conduct the arbitration in such a manner that costs do not rise to an unreasonable proportion of the interests at stake.

• Fees: Unless the parties agree otherwise or a party defaults, an arbitrator shall make no unilateral arrangements for fees or expenses.

•  Misconduct: The arbitrator shall refrain from doing anything that is likely to lower his esteem in the conduct of any arbitral proceeding; including but not limited to; a) fraternity with any of the disputing parties or their agents ; b) accepting appointment without the requisite qualification; c) applying the wrong law to the case; d) writing an unenforceable award due to ignorance; e) patient, a good listener and avoid talking too much; f) descending into the arena of the dispute; and g) confrontation with any of the parties.

Conclusion: The above-mentioned standards/conducts expected of an Arbitrator are not exhaustive and more could be added to them. It is also not in all cases that an Arbitrator breaches the above rules that it could be used as a ground to set aside the arbitral award. If an Arbitrator endeavours to comply with the above rules/standards, the arbitration proceedings would be properly conducted in the highest international standard.

As stated earlier, there are no general provisions regulating the conduct of arbitration. If parties wish to adopt any rules they may add the following to their arbitration clause or arbitration agreement;

‘The parties agree that the Rules of Ethics for Arbitrators established by The Nigerian Institute of Chartered Arbitrators applicable as at the date of the commencement of arbitration under this clause, shall be applicable to the arbitrators appointed in respect of such arbitration.’

The normal sanction for breach of an ethical duty is removal from office, with consequent loss of entitlement to remuneration. Arbitrators are to maintain their awareness of Professional Ethics at all times. It may be particularly useful to do so during preparation for an Arbitration proceeding as well, whilst gaining their practical experience in the workplace.