The Arbitration Committee of the IBA has revised in February 2024 its Guidelines on Conflicts of Interest in International Arbitration (Revised Guidelines), which were adopted by the IBA Council in 2004, and last revised in 2014.

For two decades now, the Guidelines have provided us with a useful soft law instrument reflecting the standards expected to apply to the impartiality and independence of arbitrators, as well as relevant disclosures. Primarily, the modernization and changes introduced in the Revised Guidelines relate to: (i) arbitrator disclosures; (ii) third-party funding; (iii) conflicts of interest; (iv) organizational models for legal professionals in different jurisdictions (e.g., barristers’ chambers, vereins, etc.); (v) expert witnesses; (vi) sovereigns or their agencies; (vii) non-lawyer arbitrators; and (viii) social media.

The following is an overview of the Revised Guidelines, which you can download here, with special mention of those aspects that have been amended and introduced in the 2024 version:

1. Emphasis on Part 1: General Standards

The Revised Guidelines have emphasized the importance of the General Standards contained in Part I of the Guidelines:

• The General Standards have been designed as the primary source for assessing the existence of conflicts of interest (adopting an objective, ‘reasonable third person test’) and the obligation to disclose (adopting a subjective, ‘in the eyes of the parties’ test).
• The principles contained in Part I should always be taken into account. They are not subordinate to the Application Lists contained in Part II, which cover a non-exhaustive range of situations that commonly arise in practice.

2. Scope of Application

The Guidelines apply to all arbitrations, whether the parties are represented by lawyers or non-lawyers, and irrespective of whether non-lawyers act as arbitrators.

In this regard, no changes have been made to the Scope of application (General Standard 5). The Guidelines apply (a) equally to tribunal chairs, sole arbitrators, and co-arbitrators, howsoever appointed, as well as (b) to arbitral or administrative secretaries and assistants.

3. Part 1: General Standards

• General Standard 1 on Impartiality: The basic principle underlying the Guidelines is that every arbitrator must be impartial and independent of the parties at the time of accepting an appointment and must remain so until the final award has been rendered or the proceedings have been terminated.
  • If, following annulment or other proceedings, the dispute is referred back to the same Arbitral Tribunal, the new wording of the Revised Guidelines requires a new round of disclosure and review of potential conflicts of interests (see Explanation to GS 1).
• General Standard 2 on Conflicts of Interest:
  • Under General Standard 2(a), arbitrators must decline an appointment or refuse to continue to act when they harbor doubts about their ability to be impartial or independent.
  • General Standard 2(b) imposes the same conduct on the arbitrator where facts or circumstances exist, or have arisen since the appointment, which, “from the point of view of a reasonable third person”, would give rise to justifiable doubts as to the arbitrator’s impartiality or independence, unless such an objective conflict is waived pursuant to General Standard 4.
    • This principle echoes that of Article 12 of the UNCITRAL Model Law, according to which the test for a disqualification is objective and based on an appearance test (the ‘reasonable third person test’) (see Explanation to GS 2(b)).
  • Under General Standard 2(c), doubts are justifiable if a reasonable third person, having knowledge of the relevant facts and circumstances, would conclude that the arbitrator is likely to be influenced by factors other than the merits of the case.
• General Standard 3 on Disclosure by the arbitrator: an arbitrator must disclose facts or circumstances that may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or independence, bearing in mind the arbitrator’s duty to make reasonable enquiries to identify any conflict of interest under General Standard 7(d).
  • Under the new General Standard 3(e), if an arbitrator finds that the arbitrator should make a disclosure, but rules of professional secrecy or other rules of practice or professional conduct prevent such disclosure, the arbitrator should not accept the appointment, or should resign. This rule was previously part of the Explanation to General Standard 3, and has now become a principle.
  • According to the new General Standard 3(g), the arbitrators’ failure to disclose certain facts and circumstances that may, in the eyes of the parties, raise doubts as to their impartiality or independence, does not necessarily mean that a conflict of interest exists, or that a disqualification should occur. This rule was also previously part of the Explanation to General Standard 3, and has now become a principle.
• General Standard 4 on Waiver by the Parties imposes a duty of diligence on the parties to raise an express objection within 30 days of (i) receipt of any disclosure by the arbitrator or (ii) knowledge of facts or circumstances that could constitute a potential conflict of interest.
  • General Guideline 4(a) now expressly includes a presumption that a party will have become aware of any facts or circumstances that a “reasonable enquiry” would have revealed had it been conducted at the commencement or during the proceedings, and waived the right to object if it fails to do so within 30 days.
• General Standard 6 on Relationships: This rule addresses relationships between an arbitrator and a party that could cause conflicts of interest.
  • General Standard 6(a): The general rule is that the arbitrator should be deemed to bear the identity of the arbitrator’s law firm or employer, but the activities of the law firm or employer should not automatically create a conflict of interest.
    • Bearing in mind the different structures through which different law firms cooperate and/or share profits, the Revised Guidelines have addressed the meaning of the term ‘law firm’ and have indicated that, for these purposes, a law firm is any firm in which the arbitrator is a partner or with which the arbitrator is formally associated, such as an employee, as counsel, or of counsel (see Explanation to GS 6(a) second paragraph).
    • Similarly, although barristers’ chambers should not be equated with law firms, disclosure may be justified in view of the relationships between and among barristers, parties, and/or counsel (see Explanation to GS 6(a)).
  • General Standard 6(b): Any legal or natural person that has a controlling influence over a party, or a direct economic interest in, or a duty to indemnify a party for, the award rendered, may be deemed to have the identity of that party (see Explanation to GS 6(b) first paragraph).
    • The new wording of the Revised Guidelines provide that whether third-party funders and insurers have a direct economic interest in the prosecution or defense of the case, a controlling influence on a party, or influence over the conduct of proceedings, including the selection of arbitrators, may be relevant to determine whether such entities should be considered to have the identity of a party (see Explanation to GS 6(b) second paragraph).
    • It should be noted that ‘third-party funder’ and ‘insurer’ are no longer defined in the Guidelines. In the 2014 version, these terms were said to “refer to any person or entity that is contributing funds, or other material support”.
  • Under the new General Standard 6(c), any legal entity or natural person over which a party has a controlling influence may be considered to bear the identity of such party. This new principle aims to address concerns regarding the various structures of companies, including public and state-owned, as well as the organization of States themselves.
    • With respect to companies, where a parent company is a party to the proceeding, its subsidiary may be considered to bear the identity of the parent company where the parent company bears a controlling influence over it. The same applies for natural persons that are a party to the proceeding (see Explanation to GS 6(c) first paragraph).
    • As for States, the Revised Guidelines note that their organization typically comprises separate legal entities such as regional or local authorities, or autonomous agencies, which may be legally and politically independent from the central government. Because the relationships between such entities vary widely, a catch-all rule is not considered appropriate. Instead, the Revised Guidelines provide that the particular circumstances of the relationship and their relevance to the dispute should be considered in each individual case. Thus, arbitrators should consider disclosing relationships with regional or local authorities, autonomous agencies, or State-owned entities, irrespective of whether they are part of the organization of the State or have a private status, and vice-versa (see Explanation to GS 6(c) second paragraph).
• General Standard 7 on Duty of the Parties and the Arbitrator:
  • General Standard 7(a) and (b) imposes a duty on the parties to make reasonable enquiries and to inform the arbitrator, the Arbitral Tribunal, the other parties and the arbitral institution or other appointing authority of

i. any relationship, direct or indirect, between the arbitrator and the party; another company of the same group; a person or an entity having a controlling influence on the party or a person or entity over which a party has a controlling influence; or any person or entity with a direct economic interest in, or a duty to indemnify a party for, the award rendered in the arbitration; and

ii. any other person or entity it believes an arbitrator should take into consideration when making disclosures.

• General Standard 7(c) imposes an obligation on the parties to inform everyone of the identity of their counsel in the arbitration.
• The Revised Guidelines add that, in providing the list of persons or entities that the parties believe an arbitrator should consider in making disclosures, they must explain their relationship to the dispute (see Explanation to GS 7(a) second paragraph).

4. Part II: Practical Application of the General Standards

• The Application Lists cover a range of circumstances, which are divided into three colors, according to their relevance in determining a conflict of interest.
• The Red List consists of two parts: ‘a Non-Waivable Red List’ and ‘a Waivable Red List’. These lists are non-exhaustive and detail specific situations that, depending on the facts of a given case, give rise to justifiable doubts as to the arbitrator’s impartiality and independence. Thus, in assessing the situations covered by the Red Lists, arbitrators are required to adopt an objective, ‘reasonable third person test’.
  • The Non-Waivable Red List includes situations arising from the overriding principle that no person can be their own judge, and arbitrators should decline appointment or refuse to continue to act (see Explanation to GS 2(c)). Therefore, acceptance of such a situation cannot cure the conflict.
  • For its part, the Waivable Red List covers situations that are serious but not as severe. Where there are justifiable doubts, the arbitrator may make a disclosure (see Explanation to GS 2(c)). The parties, being aware of the conflict of interest situation, may expressly state their willingness to have such a person act as arbitrator and thus waive the conflict (GS 4(c)).
• With regard to the Orange List, arbitrators are asked to conduct a subjective, ‘in the eyes of the parties’ test (see Part II.3). The arbitrator needs to assess on a case-by-case basis whether a given situation may give rise to doubts in the eyes of the parties as to the arbitrator’s impartiality or independence (see Part II.6).
• Finally, the Green List is a non-exhaustive list of specific situations in which neither appearance nor actual conflict of interest may exist (see Part II.7).
• The Revised Guidelines have introduced relevant changes to the Application Lists. A comprehensive overview of these changes can be found in Appendix 1. However, some modifications deserve special attention and will be addressed below:
  • Identity between the party and the arbitrator:
    • The Red List already covered the situation where the arbitrator regularly advises a party, and their firm or employer derives significant financial income therefrom. It now also includes where the arbitrator currently advises (not only regularly) a party or an affiliate (item 1.4).
    • The Orange List already covered the situation where an arbitrator currently serves, or has served within the past three years, as arbitrator in another arbitration on a related issue involving a party, or an affiliate. This situation has been amended to include where the arbitrator has acted as counsel in that other matter, not only as arbitrator (item 3.1.5).
  • The role of experts:
    • In the Orange List, the following situations are now covered:
      • If the arbitrator acts or has acted as an expert in an unrelated matter to one of the parties (item 3.1.6);
      • If the arbitrator has been appointed as an expert, in the last three years, over three times by the same counsel or law firm (item 3.2.9); and,
      • If the arbitrator is instructing an expert that appears in an arbitration where the arbitrator acts as counsel (item 3.4.3).
    • In the Green List, it is now included when an arbitrator hears the same expert in another matter in which they also act as arbitrator (item 4.5.1).
  • Co-arbitrators:
    • In the Orange List, two new circumstances have been included: (i) where an arbitrator and counsel for one of the parties act together as arbitrators in another arbitration (item 3.2.12); and, (ii) where an arbitrator and their fellow arbitrator(s) currently serve together as arbitrators in another arbitration (item 3.2.13).
  • Mock-trials:
    • In the Orange List, former item 3.1.4 has been amended to include the situation when an arbitrator has been appointed to assist in mock-trials or in the preparation of hearings on two or more occasions by one of the parties, or by an affiliate of one of the parties in unrelated matters, within the past three years. A related circumstance has been introduced as 3.2.10 where the appointment in those cases is made by the same counsel, or the same law firm. Unfortunately, the term ‘mock-trial’ has not been defined in the Revised Guidelines.

Concluding remarks

The Revised Guidelines made by the IBA Arbitration Committee have succeeded in addressing several issues that have been of concern in recent years regarding situations that could affect the impartiality of arbitrators, particularly with respect to experts. At the same time, they have reaffirmed the spirit of the Guidelines by extending their application to situations that were not expressly covered by broadening terms of reference, such as law firm or third-party funders.

Other relevant changes include the provision for a waiver of facts and circumstances if they are not raised within 30 days of a party becoming aware of them, which will bring certainty to the parties and to the arbitration process (General Standard 4).

We expect that these Revised Guidelines will continue to serve as a standard, for all intents purposes, even if they are only guidelines, and shed light on the arbitrator’s duty of impartiality and independence, as a means of preserving the integrity of arbitration and ensuring its effectiveness.

A comparison of the 2014 and 2024 versions prepared by the IBA can be downloaded here.

APPENDIX 1: Relevant changes to the Application Lists

1. Non-Waivable Red List:
   • Amended 1.1: There is an identity between a party and the arbitrator, or the arbitrator is a legal representative in the arbitration, or employee of ana person or entity that is a party in the arbitration.
   • Amended 1.4: The arbitrator currently or his or her firm regularly advises thea party, or an affiliate of thea party, and the arbitrator or the arbitrator’s firm or employer derives significant financial income therefrom.
   • Affiliate is now defined as follows: the term ‘affiliate’ “encompasses all companies in a group of companies, including the parent company, and/or an 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.”
2. Waivable Red List:
   • 2.3 Arbitrator’s relationship with the parties or counsel
     • Amended 2.3.1: The arbitrator currently or regularly represents or advises one of the parties, or an affiliate of one of the parties, but does not derive significant financial income therefrom.
     • Old 2.3.7 removed: The arbitrator regularly advises one of the parties, or an affiliate of one of the parties, but neither the arbitrator nor his or her firm derives a significant financial income therefrom.
3. Orange List:
   • The distinction between previous and current services for one of the parties is eliminated (3.1 and 3.2).
   • 3.1 Services for one of the parties or other involvement in the case:
     • Amended 3.1.4: The arbitrator’s law firm arbitrator has, within the past three years, acted forbeen appointed to assist in mock-trials or againsthearing preparations on two or more occasions by one of the parties, or an affiliate of one of the parties, in an unrelated matter without the involvement of the arbitrator. matters.
     • Amended 3.1.5: The arbitrator currently serves, or has served within the past three years, as arbitrator or counsel in another arbitration on a related issue or matter involving one of the parties, or an affiliate of one of the parties.
     • New 3.1.6: The arbitrator currently serves, or has acted within the past three years, as an expert for one of the parties, or an affiliate of one of the parties in an unrelated matter.
     • Amended 3.1.7: The arbitrator’s law firm or employer is currently rendering or regularly renders services to one of the parties, or to an affiliate of one of the parties, without creating a significant commercial relationship for the law firm or employer and without the involvement of the arbitrator, and such services do not concern the current dispute.
     • Amended 3.1.8: A law firm or other legal organisation that shares significant fees or other revenues with the arbitrator’s law firm or employer renders services to one of the parties, or an affiliate of one of the parties, before the Arbitral Tribunal.
     • Old 3.2.3 removed: The arbitrator or his or her firm represents a party, or an affiliate of one of the parties to the arbitration, on a regular basis, but such representation does not concern the current dispute.
   • 3.2 Relationship between an arbitrator and another arbitrator or counsel:
     • Amended 3.2.1: The arbitrator and another arbitrator are lawyers in the same law firm or have the same employer.
     • Amended 3.2.4: A lawyer in the arbitrator’s law firm is an arbitrator in another dispute on a related issue or matter involving the same party or parties, or an affiliate of one of the parties.
     • New 3.2.9: The arbitrator has, within the past three years, been appointed as an expert on more than three occasions by the same counsel, or the same law firm.
     • New 3.2.10: The arbitrator has, within the past three years, been appointed to assist in mock-trials or hearing preparations on more than three occasions by the same counsel, or the same law firm.
     • New 3.2.12: An arbitrator and counsel for one of the parties currently serve together as arbitrators in another arbitration.
     • New 3.2.13: An arbitrator and their fellow arbitrator(s) currently serve together as arbitrators in another arbitration.
   • 3.3 Relationship between arbitrator and party and/or others involved in the arbitration
     • Amended 3.3.2: The arbitrator has been associated with an expert, a party, or an affiliate of one of the parties, in a professional capacity, such as a former employee or partner.
     • New 3.3.6: The arbitrator is instructing an expert appearing in the arbitration proceedings for another matter where the arbitrator acts as counsel.
   • 3.4 Other circumstances
     • Amended 3.4.2: The arbitrator has publicly advocated a position on the case, whether in a published paper, or speech, through social media or on-line professional networking platforms, or otherwise.
     • Amended 3.4.3: The arbitrator holds an executive or other decision-making position with the administering institution or appointing authority with respect to the dispute, and in that position has participated in decisions with respect to the arbitration.
4. Green List:
   • 4.2 Current services for one of the parties
     • Amended 4.2.1: A firm, in association or in alliance with the arbitrator’s law firm or employer, but that does not share significant fees or other revenues with the arbitrator’s law firm or employer, renders services to one of the parties, or an affiliate of one of the parties, in an unrelated matter.
   • New 4.5: Contacts between the arbitrator and one of the experts
     • New 4.5.1: The arbitrator, when acting as arbitrator in another matter, heard testimony from an expert appearing in the current proceedings.