{"id":2196,"date":"2024-04-19T09:08:57","date_gmt":"2024-04-19T09:08:57","guid":{"rendered":"https:\/\/blog.nicarb.org\/?p=2196"},"modified":"2024-04-19T09:08:57","modified_gmt":"2024-04-19T09:08:57","slug":"iba-guidelines-on-conflicts-of-interest-in-international-arbitration-recent-amendments","status":"publish","type":"post","link":"https:\/\/blog.nicarb.org\/index.php\/2024\/04\/19\/iba-guidelines-on-conflicts-of-interest-in-international-arbitration-recent-amendments\/","title":{"rendered":"IBA Guidelines on Conflicts of Interest in International Arbitration: Recent Amendments"},"content":{"rendered":"\n

Singleton Urquhart Reynolds Vogel LLP<\/strong><\/a><\/p>\n\n\n\n

Canada \/ April 8 2024<\/p>\n\n\n\n

Introduction<\/u><\/strong><\/p>\n\n\n\n

As arbitration practitioners will appreciate, the International Bar Association\u2019s (the \u201cIBA<\/em><\/strong>\u00a0Guidelines<\/em><\/strong>\u201d)[1]<\/a>\u00a0are widely considered to be the authoritative resource on conflicts of interests for arbitrators; as such, they are a topic of particular interest. The\u00a0IBA Guidelines<\/em>\u00a0were initially published in 2004, and were revised in 2014. Given the passage of another ten years, the\u00a0IBA Guidelines<\/em>\u00a0were therefore ripe for further revision. Arbitration has continued to grow as a preferred mechanism for dispute resolution and the law on conflicts of interest has continued to evolve, such that those participating in arbitration will wish to ensure that the most recent changes are adhered to.<\/p>\n\n\n\n

The\u00a0IBA Guidelines<\/em>\u00a0are used by legal professionals across common law and civil law jurisdictions, and have been recognized as persuasive authority in Canadian courts.[2]<\/a>\u00a0As noted in the foreword in the\u00a0IBA Guidelines<\/em>, they are \u201crecognised as a solid soft law instrument reflecting standards expected to apply to impartiality and independence of arbitrators, as well as disclosures in specific circumstances.\u201d[3]<\/a>\u00a0While the\u00a0IBA Guidelines<\/em>\u00a0do not override any applicable legislation or rules chosen by parties, they can be used as general guidance for practitioners and can be binding by agreement by the parties.<\/p>\n\n\n\n

The\u00a0IBA Guidelines<\/em>\u00a0are comprised of two parts. Part I set outs the \u201cGeneral Standards\u201d regarding impartiality, independence and disclosure, along with accompanying explanatory notes on those standards. Part II provides three different non-exhaustive lists of situations that may occur in arbitration. The lists are broken down into Red, Orange, and Green, and are commonly known as the Traffic Light system (i.e. red means stop, orange means caution, and green means go).<\/p>\n\n\n\n

While the recently revised\u00a0IBA Guidelines<\/em>\u00a0(the \u201c2024 Guidelines<\/strong>\u201d) offer relatively modest amendments to both Part I and Part II, below we highlight some of the key changes and consider their implications.<\/p>\n\n\n\n

Part I Changes<\/u><\/strong><\/p>\n\n\n\n

Changes were made to the following Sections in Part I:<\/p>\n\n\n\n

(3) Disclosure by the Arbitrator<\/strong><\/p>\n\n\n\n

The 2024 Guidelines now expressly provide that \u201cin determining whether facts or circumstances should be disclosed, an arbitrator should take into account all facts and circumstances known to the arbitrator.\u201d[4]<\/a>\u00a0While similar language was in the explanatory notes in the 2014 version, this has now become an express obligation of the arbitrator.<\/p>\n\n\n\n

Another critical change in the 2024 Guidelines is with respect to professional secrecy rules affecting an arbitrator\u2019s duty to disclose. The 2024 Guidelines now provide that if an arbitrator must make disclosure, but is prevented from doing so by professional secrecy rules or other rules of practice or professional conduct that preclude disclosure, the arbitrator should reject the appointment or resign.[5]<\/a><\/p>\n\n\n\n

Lastly, the 2024 Guidelines have clarified that a failure to disclose when required does not automatically result in a conflict of interest. In particular, the new rule provides that an \u201carbitrator\u2019s failure to disclose certain facts and circumstances that may, in the eyes of the parties, give rise to doubts as to the arbitrator\u2019s impartiality or independence, does not necessarily mean that a conflict of interest exists, or that a disqualification should ensue.\u201d[6]<\/a><\/p>\n\n\n\n

(4) Waiver by the Parties<\/strong><\/p>\n\n\n\n

The 2024 Guidelines have introduced a new rule which incentivizes parties to conduct investigations into any potential conflicts of interest. The 2024 Guidelines provide that a party is deemed to have learned of any facts or circumstances that could constitute a potential conflict of interest for an arbitrator that a \u201creasonable enquiry\u201d would have yielded if conducted at the outset or during the proceedings.[7]<\/a><\/p>\n\n\n\n

(5) Relationships<\/strong><\/p>\n\n\n\n

In general, the recent amendments have broadened the relationship considerations throughout the 2024 Guidelines with respect to the arbitrator\u2019s employment. For example, the term \u201cor employer\u201d has been added throughout the 2024 Guidelines when a rule makes reference to an arbitrator\u2019s law firm (i.e. the Guidelines no longer assume that employment related conflicts of interest only arise via employment at a law firm). In addition, the 2024 Guidelines provide a modern description of the concept of a \u201claw firm\u201d to account for the evolution in the structure of legal practices.[8]<\/a><\/p>\n\n\n\n

The 2024 Guidelines have also created a new general rule that \u201c[a]ny legal entity or natural person over which a party has a controlling influence may be considered to bear the identity of such party.\u201d[9]<\/a><\/p>\n\n\n\n

(6) Duty of the Parties<\/strong><\/p>\n\n\n\n

The 2024 Guidelines have amended the list of relationships that a party must disclose to the arbitrator so as to include any relationship between the arbitrator and \u201ca person or entity over which a party has a controlling influence\u201d,[10]<\/a>\u00a0and a party must disclose any relationship between the arbitrator and \u201cany other person or entity it believes an arbitrator should take into consideration when making disclosures\u201d.[11]<\/a>\u00a0This accordingly encompasses a very broad scope of potential relationships, although it does not extend as far as relationships that the parties\u00a0ought to have known\u00a0<\/em>about, thus refraining from introducing a more challenging (and fraught) standard for parties to meet.<\/p>\n\n\n\n

A new accompanying explanatory note to Section (7) also provides that the parties are required to explain the persons\u2019 and entities relationship to the dispute \u201c[w]hen providing the list of persons or entities the parties believe an arbitrator should take into consideration when making disclosures\u201d.[12]<\/a><\/p>\n\n\n\n

Part II Changes<\/u><\/strong><\/p>\n\n\n\n

In Part II, the Red Lists (both Waivable and Non-Waivable) did not undergo any significant substantive change. Notably, though, the 2024 Guidelines for the Red List have clarified that an \u201caffiliate\u201d also includes \u201can individual having a controlling influence on the party in the arbitration, and\/or any person or entity over which a party has a controlling influence\u201d.<\/p>\n\n\n\n

The majority of the substantial changes in the 2024 Guidelines in Part II were to the Orange List. As readers will appreciate, the Orange List is a \u201cnon-exhaustive list of specific situations that, depending on the facts of a given case, may, in the eyes of the parties, give rise to doubts as to the arbitrator\u2019s impartiality or independence.\u201d[13]<\/a><\/p>\n\n\n\n

The following situations were added to the Orange List:<\/p>\n\n\n\n