By Mr. Akinosun, SAN
Abstract
Arbitration, hailed globally as a proficient, timesaving, confidential and dynamic alternative dispute resolution mechanism, offers parties the liberty to select adjudicators, applicable law, venues, language and even whether the session can be online or onsite, tailored to their case’s intricacies, expertise, and expediency requirements. Despite its acclaim for resolving conflicts efficiently outside traditional courtrooms, arbitration is occasionally shadowed by the spectre of bias, particularly in the minds of dissatisfied parties. Despite best efforts to create an inclusive dispute resolution system where parties are a part of the process, it is impossible to satisfy the desires of all the people all the time largely because some biases are more benign than others. However, just as any adjudicator bears the responsibility to uphold fairness, equity, and justice, arbitrators are entrusted with the same duty including the responsibility to be independent and impartial. The ideal of impartiality is not always attained in practice, leading some parties to perceive instances of bias. This research aims to explore certain forms of bias that may unwittingly influence an arbitrator. By acknowledging and addressing these challenges, arbitration can solidify its reputation as a dependable dispute resolution mechanism increasing transparency and public trust in the process. While these instances may seem isolated, the implications extend far beyond, impacting a system still solidifying its reputation.
Introduction
Arbitrator bias can be described as an arbitrator’s inclination, whether intentional or unconsciously, to give preference to one party over another as a result of diverse reasons other than the facts and the merits of the case; including prior beliefs and experiences, financial interests, or relationships either voluntarily or coerced[1].
It is an inherent tenet of justice that justice must not only be done, but must manifestly and undoubtedly be seen to be done, and as such, in an evolving field like arbitration, it is crucial that the core tenets of justice, are manifestly done and public confidence in the system are upheld at all times[2]. The independence and impartiality of an arbitrator is a foundational requirement of any arbitration proceeding and applies to all judicial and quasi-judicial processes. With the added trust which allows parties to choose an arbitrator independently and following the provisions of their agreement, the need for impartiality is placed on a pedestal. To fulfil this responsibility, an arbitrator must be deliberate about doing justice to the case at hand[3].
Even though arbitration has a sense of finality, it is human nature for the losing party to try to have the arbitral award set aside. A common strategy resorted to by the party who lost to contest an award is to allege that an arbitrator was biased in favour of the other party. Although the basis for challenging an award is case-specific, parties frequently rely on bias, and may even argue that the arbitrator ought to have been removed from the hearing because of the uncovered bias[4].
It is a daunting task for courts to establish a test for determining what constitutes bias and not just the result of an arbitrator’s mistake in failing to disclose to the parties a link that does not warrant disqualification. With a lot of the sessions being held in private and the lack of public participation, the reasonable man test cannot be effectively employed to determine if an unbiased observer can deduce that justice was done[5]. Also, proving a case of bias against an arbitrator can be inherently difficult, as it would require evaluating a lot of information, thereby making it difficult to detect and prove since a lot of arbitrators tend to specialize in certain spheres of endeavour, be in constant touch with the practitioners in those fields, form networks and connections; examining whether an arbitrator must look into possible conflicts of interest before hearing a case between parties who they may have crossed paths with becomes truly herculean and time-consuming[6].
Claudia Salomon, the President of the International Chamber of Commerce (ICC) in 2022 examined the concept of “the bias of process”, and cited how before the Covid-19 pandemic, virtual hearings were almost difficult to agree on but since after then, it has become a feature of our process. She argued that the bias of familiarity with the process should be considered closely and that where procedures and processes are the challenge, answers can always be found for them[7].
Bias in Arbitration
Bias is often not as easy to identify as it can be either direct or indirect. Direct bias can be deduced from an arbitrator’s statements, actions and inactions motivated by reasons not disclosed to one of the parties. The interest of this research is in indirect bias which is often characterized as a subtle reliance on rote memory to perform a task often viewed as routine, and sometimes confirming the held opinions and beliefs of the arbitrator at the expense of the entirety of evidence presented to the arbitrator[8].
However, it is possible that some arbitrators may unintentionally exhibit bias. Suspicion of bias can arise from their failure to adhere to certain formalities or from the rationale presented in the award itself. Some authors also argue that a lot more arbitrators have been trained sufficiently in the principles of bias and can be somewhat more detached than others about every given case before them and be relatively removed from ties to parties and being willing to listen to all sides of an argument even though extremely few people are completely free of such predilections[9].
Many national arbitration laws, including those based on the UNCITRAL Model Law, recognize impartiality as a ground to challenge an arbitrator and seek their removal and potentially the setting aside of any resulting award[10]. Under other rules as well, parties may challenge an award under Article 14 of the International Chamber of Commerce (ICC) Arbitration Rules if there are circumstances that raise reasonable doubts about the impartiality or independence of the arbitrator[11]. Under Article 7 of the American Arbitration Association (AAA) International Arbitration Rules[12], an award can be challenged as well based on an arbitrator’s failure to disclose a bias or prospective conflict of interest that was known at the time of appointment or developed later are also permitted. Well-established arbitral rules refuse objections brought out of mere suspicion often providing that there must be a solid basis for concerns about the arbitrator’s potential for bias or lack of independence.
Direct Bias
Direct biases are a result of an apparent and deliberate interest in the subject matter. It is the most widely recognized form of bias, especially where an arbitrator has an undisclosed pecuniary interest in the matter, a relationship that extends beyond the case with one of the parties which is without the knowledge of the other party[13].
Like all professions, arbitration is reliant on networking and relationships. It has been argued that arbitrators who are often chosen by particular parties in a dispute could be motivated to rule in favour of that party to improve their chances of being reappointed because arbitrators “have a financial stake in”[14]. Also, it has been argued that bias may arise when an arbitrator has access to information between the parties from other cases which may have put them in a bad light in the current case as a result of their actions or inactions[15].
Where an arbitrator has a personal relationship with one of the disputing parties, it has become more ethical to disclose such a relationship and in prudent cases to not sit on the case as it has been repeatedly held that failure to recuse oneself in such circumstances may influence the perceptions of fairness and impartiality, especially where an arbitrator has become romantically entangled with a lawyer representing one side in the case or with one of the parties[16].
Indirect Bias
Some researchers have argued that not all bias is intentional or premeditated in an attempt to sway an award; rather, some bias may be indirect due to some benign psychological causes or innocuous obstacles such as long-standing cultural differences, linguistic perceptions, and religious perspectives, might add difficulties to cross-border disputes that are frequently missing[17]. Admittedly, while dedicated research on bias in this context is limited, studies reveal how unconscious biases can influence decision-making, and arguments have been made as to the conclusiveness of the debate on whether the data available is sufficient to prove that there is some form of subconscious bias that influences decisions of arbitrators[18].
Justice Scalia of the US Supreme Court views that “While computers function solely on logic, human beings do not as all sort of extraneous factors, emotions, biases, preferences can intervene, most of which you can do absolutely nothing about”[19]. In the Halliburton Case, one of the questions that were raised was if Ken Robinson QC’s involvement in a related arbitration with a single common party had affected him cognitively, or if he was vulnerable to unconscious bias that would have subverted the required, or at least perceived, equality between the parties[20].
Arbitrators may unconsciously seek information that confirms their pre-existing beliefs or opinions about the case, overlooking evidence that contradicts their initial impressions. An arbitrator may as a result of their experience have reason to be confronted with the same topic that has been brought before them or they might have handled it as a result of their legal practice as an advocate in a different case, or as a scholar in scholarly publications. It is easy to forget that an arbitrator ought to examine each case on its merit and such circumstances could jeopardize the arbitral process’s integrity. Even unconsciously, the arbitrator may be inclined to include a sentence in an award that is subsequently used as support in a different case. Such could unwittingly become a ratio decidendi or an endorsement of a position of a similar nature[21].
The space of arbitration bias has gotten more intricate over the years, with delicate questions being asked including if one’s country of origin matters, like if a Chinese arbitrator was to preside over an Arbitration involving America’s state or corporate interest with the realization of the delicate nature of the Chinese and American international relation in recent years, if the American state will agree to that[22]. In other cases, there is an argument that where an arbitrator published a paper or gave a lecture in which they took a firm stance on issues that are crucial and contentious to the dispute they are currently handling, it could be perceived as bias considering their predisposition to the matter before them[23].
Behavioural economics have argued extensively on the nature of human bias and how it affects human decision-making. Jan-Philip postulated on how judges and arbitrators are impacted by diverse cognitive biases such as anchoring bias where arbitrators rely extensively on the first set of information they receive when making a decision and are often unwilling to change position when the subsequent information differs from their expectations. Even if new cases have different characteristics, arbitrators who have recently heard or seen exceptionally vivid cases may unintentionally consider that information more highly when rendering decisions in new cases. The accuracy and fairness of arbitration decisions may be impacted by the existence of such biases[24].
Implications of Indirect Arbitrator Bias:
The implications of indirect bias can be more difficult to detect compared to direct bias, as the arbitrator might be unaware of their own biases. This can be a concern because arbitrators, often legal practitioners, rely heavily on precedent and past experiences in their decision-making. However, unconscious bias can still influence their judgments in subtle ways[25].
It’s well-established that biased decisions, even unintentional ones, can lead to unfair outcomes that don’t reflect the merits of the case. This can lead to dissatisfaction and potentially costly legal battles as parties challenge the arbitration award in court[26]. While perceptions of bias can’t be ignored entirely, there needs to be a reasonable basis for such concerns. Striking a balance involves considering the seriousness of the perceived bias and its potential impact on the fairness of the process. In some cases, an arbitrator might choose to step down to alleviate concerns and ensure trust in the arbitration system[27].
Addressing Arbitrator Bias:
Arguments have been made on how to address cognitive bias in arbitrators. Unlike other biases where disclosure of financial interests and potential conflicts of interest can promote transparency and accountability, these measures might not be as effective in mitigating cognitive bias[28]. The lack of diversity among arbitrators, particularly in international settings, has been criticized for perpetuating biases and a perceived exclusion from the process. Critics argue that the power dynamics of arbitration disadvantage countries in the Global South, which often lack sufficient bargaining power. As a result, these countries frequently find themselves on the losing end of arbitration awards due to entrenched prejudices. As such, promoting diversity and inclusion can help mitigate bias by inculcating diverse perspectives and experiences in the arbitration process to ensure appreciation and understanding of all perspectives thereby reducing the likelihood of unconscious bias[29].
A lot of researchers in the field of cognitive bias have argued that training arbitrators comprehensively on what is considered cognitive bias will undoubtedly lead to their being able to identify and mitigate against their own bias as a form of self-awareness which can enhance their ability to remain impartial and make fair decisions, improving the overall integrity of the arbitration process[30].
The International Chamber of Commerce (ICC) has been at the forefront of integrating technology into its arbitration proceedings. This includes providing resources like sample clauses for technology use and guides for conducting virtual hearings. These resources can potentially help make arbitration more efficient and streamlined[31]. However, the use of technology in arbitration also raises concerns. Some worry that technology could introduce bias, or that parties with fewer resources might be disadvantaged if they lack access to certain technology or information. Despite these challenges, technology offers interesting possibilities for the future of arbitration. The need to adapt to these new tools can be a driver for growth and innovation in the field. The benefits of streamlining processes and increasing efficiency can be felt across various types of arbitration, including those involving gas disputes[32]
Conclusion:
An important yet subtle threat to the arbitration process’s credibility and integrity is subconscious arbitrator bias. Our experiences, knowledge, and encounters with a certain group of people who we met at a point in our lives and impacted us in a manner we do not remember fondly may not allow arbitrators to be entirely objective. The memory of encountering several people from a particular region or country who lied and misled us may make us harbor the notion that people we encounter from those regions have a culture of misleading and lying to others. It is not a deliberate bias that is so manifest as to allow for a legitimate review of the arbitral award. It is something an arbitrator may not even know about themselves unless they are told that their experiences may positively or negatively impact their decision. Though the word bias is often used in a negative connotation, the idea in this work is to bring to awareness this subtle form of bias. By acknowledging prejudice, recognizing inherent biases, utilizing technology, and promoting transparency and accountability, arbitrators can enhance the perception of arbitration as a fair and equitable conflict resolution method. Addressing arbitrator bias in all its forms is essential not only to uphold the principles of justice but also to maintain confidence in the effectiveness of alternative dispute resolution processes.
[1] Lester R. Kurtz, “Encyclopedia of Violence, Peace, and Conflict” 2nd Edition, (2008) Academic Press
[2] Lawson & Lundell LLP, “The Apprehension of Bias in Arbitral Proceedings: A Cautionary Tale for Counsel and Arbitrators”, < https://www.lawsonlundell.com/Commercial-Litigation-and-Dispute-Resolution-Blog/the-apprehension-of-bias-in-arbitral-proceedings-a-cautionary-tale-for-counsel-and-arbitrators > Accessed on 20/04/2024
[3] Pooja Chakrabarti and Adheesh Agarwal, “India: Law Of Bias In Arbitrators – Certain Interesting Aspects”, (2019), < https://www.mondaq.com/india/trials-appeals-compensation/802850/law-of-bias-in-arbitrators–certain-interesting-aspects > Accessed on 20/04/2024
[4] Lee Korland, “What an Arbitrator Should Investigate and Disclose: Proposing a New Test for Evident Partiality under the Federal Arbitration Act”, 53 Case W. Rsrv. L. Rev. 815 (2003) < https://scholarlycommons.law.case.edu/caselrev/vol53/iss3/16 > Accessed on 20/04/2024
[5] Lisa Blomgren Amsler et al., Dispute System Design and Bias in Dispute Resolution, 70 SMU L. REV. 913 (2017) < https://scholar.smu.edu/smulr/vol70/iss4/7 > Accessed on 23/04/2024
[6] Ibid
[7] Claudia Salomon, “Maslows Hammer; An Over-Reliance on Familiar Tools”, being a paper presented at the 2022 Arbitration week in Tel Aviv, Israel, < https://iccwbo.org/wp-content/uploads/sites/3/2022/03/tel-aviv-arbitration-week-keynote-claudia-salomon-140322-1.pdf > Accessed on 23/04/2024
[8] Sarwar, Mohammad Golam, “Determining the Standard of Proof Required to Remove an Arbitrator on the Ground of Bias” (2019). Dhaka University Law Journal The Dhaka University Studies Part-F Volume 30, 2019,< https://ssrn.com/abstract=4034352 > Accessed on 23/04/2024
[9] Ibid
[10] Article 13, UNCITRAL Model Law on International Commercial Arbitration < https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration > Accessed on 23/04/2024
[11] Article 14 of the International Chamber of Commerce (ICC) Arbitration Rules
[12] Article 7 of the American Arbitration Association (AAA ) International Arbitration Rules
[13] Matthew Gearing, ‘“A Judge in His Own Cause? Actual or Unconscious Bias of Arbitrators” in (2000) 3 Int’l Arb. L Rev. 46.
[14] Gus Van Harten, Investment Treaty Arbitration and Public Law (2007), pp. 152–153
[15] Noah Rubins, ‘Opening the Investment Arbitration Process: At What Cost, For Whose Benefit?’ in Christian Klausegger et al.(eds.), 2009 Austrian Arbitration Yearbook (2009), p. 483.
[16] Matheus López CA. “Independence and Impartiality of Arbitrators”, The Cambridge Handbook of Judicial Control of Arbitral Awards. Cambridge Law Handbooks. Cambridge University Press; 2020:12-28.
[17] Frederico Singarajah, “Unconscious Bias in International Arbitration”, < http://arbitrationblog.practicallaw.com/unconscious-bias-in-international-arbitration/ > Accessed on 24/04/2024
[18] Sussman, Edna, Arbitrator Decision Making: Unconscious Psychological Influences and What You Can Do About Them (December 20, 2013). American Review of International Arbitration, Vol., No. 3, 2013 , < https://ssrn.com/abstract=2372307 > Accessed on 24/04/2024
[19] Antonin Scalia, “Making Your Case, The Art of Convincing Judges”, (2008),
[20] Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48
[21] William W. Park, Arbitrator Bias, in 12 Transnational Dispute Management Journal (2015). Available at: https://scholarship.law.bu.edu/faculty_scholarship/15 > Accessed on 24/04/2024
[22] Ilhyung Lee, “Practice and Predicament: the Nationality of the International Arbitrator” in (2008) 31 Fordham Int’l LJ 603. < https://ir.lawnet.fordham.edu/ilj/vol31/iss3/1 > Accessed on 24/04/2024
[23] Ibid
[24] Elm, Jan-Philip, “Behavioral Insights into International Arbitration: An Analysis of How to De-Bias Arbitrators”, The American Review of International Arbitration (2017) 2016/Vol.27 No.1, U. of St. Gallen Law and Economics Working Paper No. 2017-01, < https://ssrn.com/abstract=2973266 > Accessed on 05/05/2024
[25] Ibid
[26] Jan Kunstyr, Sagar Gupta, “Applicable Tests For Arbitrator Bias: Recent Practice In Select Common Law Jurisdictions”, < https://arbitrationblog.kluwerarbitration.com/2022/11/24/applicable-tests-for-arbitrator-bias-recent-practice-in-select-common-law-jurisdictions/ > Accessed on 05/05/2024
[27] Sarah Rudolph Cole, Arbitrator Diversity: Can It Be Achieved?, 98 WASH. U. L. REV. 965 (2021). < https://openscholarship.wustl.edu/law_lawreview/vol98/iss3/11 > Accessed on 05/05/2024
[28] Pichrotanak Bunthan, “Arbitrators as Flamingos of Many Colors”, < https://arbitrationblog.kluwerarbitration.com/2021/02/09/arbitrators-as-flamingos-of-many-colors/ > Accessed on 05/05/2024
[29] Roberts, Anthea. “Power and Persuasion in Investment Treaty Interpretation: The Dual Role of States”. American Journal of International Law. 104. < doi:10.2139/ssrn.1514410. > Accessed 05/05/2024
[30] Ibid
[31] ICC Report on Arbitration and ADR “Leveraging Technology for Fair, Effective and Efficient International Arbitration Proceedings” < https://iccwbo.org/wp-content/uploads/sites/3/2022/02/icc-arbitration-and-adr-commission-report-on-leveraging-technology-for-fair-effective-and-efficient-international-arbitration-proceedings.pdf > Accessed on 06/06/2024
[32] Payel Chatterjee, Aman Singhania, Yuvraj Singh Sharma “Technology And Artificial Intelligence: Reengineering Arbitration In The New World”, < https://www.ibanet.org/tchnology-and-artificial-intelligence-reengineering-arbitration-in-the-new-world > Accessed on 06/06/2024
