Introduction
The result of every dispute settlement lies in ‘fairness, and justice’ of the process. These end products are indispensable in dispute resolution. The expectation of every party in an arbitral proceeding is a fair and just process. In strict legal sense, justice is the end product of the effective application of the law. An arbitrator is expected to manage the arbitration process efficiently and accord fair and equal treatment to the parties. To achieve these, the arbitrator has to amongst other duties, ensure fairness and impartiality in the arbitral proceeding in order to arrive at an effective and binding award. Arbitrators have the responsibility to remain independent and impartial in their functions.
This paper examines the role of Arbitrators in ensuring fairness and impartiality in arbitral proceedings.
Arbitration is a quasi-judicial and consensual method of dispute resolution wherein a third party makes a final determination which is binding on the parties to the dispute. Because of the finality and binding nature of the decisions, which are often significantly shielded from judicial review, transparency and trust in the conduct of the arbitration proceedings are necessary to ensure the legitimacy of the process and the award rendered. The parties must have confidence that the Arbitrator has the requisite knowledge, skills and experience to handle the process, the arbitrator must be impartial, independent, possess the relevant qualifications, be fair-minded and will be able to effectively dispense justice. Arbitrators must at all times act without bias for decisions to be fair and just. An arbitrator can routinely engage in training, and self-assessments to ensure they remain conscious of any form of bias.[1].
For an arbitration to be effective, the code of justice and fairness must not be compromised. Justice is a three-way traffic, justice for the plaintiff, justice for the defendant and justice for the society as a whole. ‘Justice must not only be done, it must be seen to be manifestly done’ as was coined by Lord Hewart, the Lord Chief Justice of England in 1924. The phrase implies that justice should serve not only the rules but also the values of society. There must be public confidence in and understanding of the integrity and fairness of the process. The arbitrator in conducting arbitral proceedings has a duty not only to parties but to the courts and also the public at large and must exert high standards so that the fairness of the process is preserved as the appearance of bias is enough to invalidate an arbitral decision.
Fairness and Impartiality remain fundamental to arbitration as an arbitrator has a duty to uphold the integrity and fairness of the arbitration process at all times.
Ethical Conducts of Arbitrators
Ethical conduct refers to standards /code of conduct required of an arbitrator in an arbitral proceeding. These are codes of conduct which an arbitrator must comply with in the discharge of their duties and failure to which can invalidate the arbitral process. Ethical conducts are governed by legal frameworks and statutes which are binding to both arbitrators and parties, e.g., Article 18 of the UNCITRAL Model Law ensures equal treatment and a reasonable opportunity for parties to present their case, enhancing commitment to fairness within arbitral proceedings. Article 13 of Nigeria Institute of Chartered Arbitrators (NICArb) Rules provides for independence and impartiality of arbitrators and Article 14 provides for the challenge of an arbitrator on grounds of impartiality or independence.
The arbitrator has an obligation to treat both parties fairly and equally and ensure that each party is given full opportunity of a fair hearing[2]. Section 30 of the Nigerian Arbitration and Mediation Act which reflects Article 18 of the Model law and Article 15 of the UNCITRAL Arbitration Rules and states thus:
‘…in any arbitral proceedings, the arbitral tribunal shall ensure that the parties are accorded equal treatment and that each party is given full opportunity of presenting his case.’
The courts are not left out as they serve as guardians to enforce ethical arbitration, correct breaches of ethical conduct and ensure that arbitrators conform to ethical conduct in the discharge of duties and provide recourse, should the arbitral process fail to meet ethical standards.
The Court of Appeal in the case of Umar v. Onwudiwe [3]upheld the arbitrator’s duty to conduct arbitration fairly wherein the arbitrator must, among other things, (i) hear both sides and consider all material issues in the case before reaching a decision and (ii) give equal treatment, opportunity and consideration to all concerned. The arbitrator must hear from both parties and allow the parties reasonable time to present their case. This is based on the natural justice principle of audi alteram partem[4].
Where an arbitrator is faced with a conflicting situation or he foresees that existing factors will not permit him to discharge his duties accordingly, then, it is more honourable for him to decline the appointment peacefully.
Parties have the right to choose their arbitrators in an arbitration process but this right does not extend to compromise the process or the ethical norms of arbitrators. Parties can only act within their powers.
Duty Imposed by Arbitral Institution
Arbitral institutions play a significant role in ensuring arbitration best practices and strengthening party’s confidence in the arbitral process. These institutions also offer regular training on the importance of transparency, fairness and impartiality and guide arbitrators on best practices. They implement Arbitration Rules, and policies as guides to the arbitration process and monitor the adherence to Rules during proceedings. These Rules serve as an ethical compass for arbitrators, shaping the conduct of proceedings and ensuring they meet high ethical standards. Below are some of the duties of an arbitrator:
An arbitrator must comply with the Arbitration Agreement.
Where an arbitrator’s power is derived from an arbitral agreement, he shall not exceed the power and must conduct the proceeding in accordance with such agreement set forth therein. He must equip himself with training manuals and must be updated about industry trends. In a nutshell, he must be knowledgeable and experienced in arbitration proceedings. The arbitrator must comply with laid down procedures/ rules governing the arbitral process.
An arbitrator shall conduct themselves in a manner that is fair and just in word and action. Where it is a court-administered arbitration, and the arbitrator fears that he cannot act impartially, he shall decline the appointment or withdraw from the process notifying the parties and the court.
The Concept of Fairness in Arbitration
Impartiality of an arbitrator refers generally to the state of mind of an arbitrator and involves a subjective standard which makes it difficult to ascertain whether this standard is genuinely met or merely perceived. The concept of impartiality is generally connected to the actual or apparent bias of an arbitrator which is something more abstract, a mental attitude being a state of mind that can only be proven through facts and, as such, harder to evaluate.
In essence, an arbitrator’s impartiality is the ability of an arbitrator to carry out their functions without bias, thus mitigating significant challenges that may arise during proceedings (Anh. 2023)[5]. Arbitrator’s impartiality is a duty imposed. It entails the absence of external control as well as any bias and predisposition towards a party. Fairness and impartiality are two key qualifications of an arbitrator recognized by ICSID in paragraph (1) of Article 14. The duty of impartiality, independence and duty to disclose relevant circumstances of bias is a common duty for arbitrators as established by most arbitration rules and national laws.
Fairness and impartiality are key ethical standards required of an arbitrator to ensure that arbitration proceedings remain impartial, transparent and fair. These principles are enshrined in various legal sources and guidelines which collectively uphold the Arbitrator’s code of conduct.
The UNCITRAL Arbitration Rules state that doubts as to the independence or impartiality of an arbitrator become justifiable if they give rise to an apprehension of bias in the eyes of an objective, reasonable observer. Under Article 11 of UNCITRAL Arbitration Rules, it states: ‘’….When a person is approached in connection with his or her possible appointment as an arbitrator, he or she shall disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties and the other arbitrators unless they have already been informed of these circumstances…’’
The 2012 arbitration rules of the International Chamber of Commerce (ICC) provide in article 11(1) that “Every arbitrator must be and remain impartial and independent of the parties involved in the arbitration.”
The London Court of International Arbitration (LCIA) Rules provide that All arbitrators conducting an arbitration under these Rules shall be and remain at all times impartial and independent of the parties, and no arbitrator shall have the right to act as advocate for any party; whether before or after appointment, he must act on a neutral ground.
In the discharge of his duties, the arbitrator must avoid communicating with one party without the knowledge of the other. Section 8 of the Arbitration and Mediation Act imposes the duty of impartiality and independence on arbitrators. He neither favours one party nor is predisposed as to the question in dispute. Independence on the other hand means that there should be no existing relationship between parties and the arbitrator which may affect or likely to appear to affect the arbitrators’ freedom of judgment.
The lack of fairness and impartiality may constitute grounds for the challenge of an arbitrator or the award of the tribunal.
Fairness and justice are important elements that parties value in arbitration. The fairness and justice of a case are not equivalent to a winning result but rather, getting the result/outcome in the right way.
The requirement of fairness is not foreign to model laws wherein Article 18 of the UNCITRAL Model laws states directly that ‘all parties be treated with equality’[6] this means that all parties are given the opportunity to a just outcome of dispute resolution process. A result that is acceptable by losers, winners or parties as just. In other words, it could mean that all parties are given an equal chance for a fair hearing[7].
Accordingly, Article 6 of the European Convention on Human Rights[8] Provides for fair hearing which guarantees not only access to fair hearing but also justice that includes compliance with requirements of impartiality, independence and concluding matter within a reasonable time frame.
By arbitration rules and policies, fairness is an imposed duty on the arbitrator, which is arguably a far better-suited means for the achievement of procedural justice than litigation as it is primarily concerned with dispute resolution, peacekeeping, consensus-building and preservation of contractual relationships (Carrie 2002)[9]. The importance of fairness and justice is less significant in litigation as winning is the primary aim of the parties involved.
Transparency and trust in the conduct of the arbitration proceedings are necessary to ensure the legitimacy of the process and the award rendered. The parties in an arbitral proceeding must have confidence that the Arbitrator has the necessary experience, is impartial, independent, possesses the relevant qualifications, is fair-minded and will render a fair just award. It has often been said that the quality and success of arbitration are as good as the quality of the arbitrators involved in it. The quality of the arbitrator is equally important as the arbitration proceeding itself “The arbitrator is the sine qua non of the arbitral process. The process cannot rise above the quality of the arbitrator”,[10] In other words, the arbitrator’s quality and credibility are important in maintaining the parties’ faith in the overall arbitration process. In the society of labour relations, arbitration is seen as the ‘most ethical institution.[11], which allows arbitrators to exercise their ethical powers as to what is good or bad, right or wrong.” The principles of impartiality, fairness and independence must always be complied with.
Conclusion
An arbitrator’s obligation of fairness and impartiality begins upon acceptance of appointment and continues throughout all stages of the proceeding.
However, it is important that while we recognize the concept of impartiality, fairness and integrity as integral to the success of arbitration proceedings, there are other equally important elements which contribute to the quality of arbitration. The arbitration process is a wholesome process, which requires the arbitrator to possess many elements including, amongst others, the qualifications, ability, personality, age, and experience, to ensure a smooth process and outcome. By acceptance of appointment, ethics and integrity of arbitrators are no longer only matters of impartiality and fairness but also issues which cover the criminal aspects of an arbitrator’s conduct.
References
- Anh T.D.N(2023): Standards of independence and impartiality in the context of international commercial Arbitration. Journal of Social Sciences and Humanities, vol.2
- Bozimo I.& Israel E. (2023). Ethical Standards in Arbitration: Maintaining Integrity available at brodrickbozimo.com/ethical-standards-in-arbitration-maintaing-integrity/#:text=for%20decisions last visited 24/9/2024 at 3 pm.
- Carrie Menkel-Meadow (2002), practicing in the interest of Justice in the Twenty-first Century: Pursuing Peace as Justice.
- Convention for the Protection of Human Rights and Fundamental Freedoms art.8, Nov. 4, 1950.
- Herbert L .M Jr (2007), Arbitration as an Ethical Institution in our Society, 37(3) ARB. J. 52 (1982). The Independence and Impartiality of Arbitrator in International Commercial Arbitration.
- Julian D.M. Lew et al (2003), Comparative international commercial arbitration.
- Matti S. Kurkela, Due Process in International Commercial Arbitration (2005)
- Umar v. Onwudiwe(2002) 10 NWLR PT.774 P.150
- The Arbitration and Mediation Act LFN 2023
- UNCITRAL Model Law on International Commercial Arbitration (1994)
[1] Bozimo I.& Israel E.(2023). Ethical Standards in Arbitration: Maintaining Integrity available at brodrickbozimo.com/ethical-standards-in-arbitration-maintaing-integrity/#:text=for%20decisions last visited 24/9/2024 at 3 pm.
[2] Section 30 of the Arbitration and Mediation Act LFN 2023
[3] (2002) 10 NWLR PT.774 P.150
[4] A Latin phrase with the literal meaning ‘hear the other side’ or ‘hear both sides’.
[5] Anh T.D.N(2023): Standards of independence and impartiality in the context of international commercial Arbitration. Journal of Social Sciences and Humanities, vol.2
[6] UNCITRAL Model Law on International Commercial Arbitration (1994)
[7] Matti S.Kurkela, Due Process in International Commercial Arbitration 448(2005)
[8] Convention for the Protection of Human Rights and Fundamental Freedoms art.8, Nov.4, 1950.
[9] Carrie Menkel-Meadow(2002), practicing in the interest of Justice in the Twenty-first Century: Pursuing Peace as Justice.
[10] Julian D.M. Lew et al (2003), Comparative International Commercial Arbitration.
[11] Herbert L .M Jr(2007), Arbitration as an Ethical Institution in our Society, 37(3) ARB. J. 52 (1982). The Independence and Impartiality of Arbitrator in International Commercial Arbitration.
