F. The Arbitral Tribunal
Because of their significant role and their peculiarities when compared to state courts, it seems worth taking a closer look at arbitral tribunals. The composition of the arbitral tribunal will often have a significant impact on the way the proceedings are conducted and may also make a difference as to the arbitral award. What is more, also the competence of an arbitral tribunal to rule on its own jurisdiction and the question whether arbitrators can be hold liable for any breaches of their obligations are worth looking at in order to get an overview over international commercial arbitration.
I. Appointment of an Arbitrator
The appointment procedure for the arbitral tribunal varies depending on the law or rules applicable to the arbitral proceedings. In most cases, the arbitral tribunal consists of either a sole arbitrator or of three arbitrators. If the arbitral tribunal consists of a sole arbitrator, the parties usually have to agree on the person to be appointed. If the arbitral tribunal consists of three arbitrators, the nomination procedure usually requires that each party nominates one arbitrator and that those party-appointed arbitrators will appoint the presiding arbitrator. Should the parties fail to agree on a sole arbitrator or if, in cases of a three arbitrator panel, a party fails to nominate an arbitrator within the time specified by the arbitration rules or by the administering arbitral institution, most rules provide for a fallback mechanism according to which the arbitral institution may appoint the missing arbitrator(s).
II. Confirmation of an Arbitrator
Once an arbitrator is appointed, he usually has to declare his acceptance, his availability, his impartiality and his independence to the arbitral institution. Moreover, he has to disclose any facts, which could raise doubts as to his independence or impartiality. The institution generally will forward the information to the parties and will give them a chance to comment on the information disclosed. Under most arbitration rules, the arbitral institution decides on that basis about the confirmation of the arbitrators; often without having to communicate any reasons for the decision.
To be independent, an arbitrator should not have a financial interest in the outcome of the case, he should not be dependent on one of the parties for any other benefits and the arbitrator should not have a close relationship to either of the parties. To be impartial, the arbitrator should not have any other reason to favor one of the parties, nor should he have any preconceived notions about the issues that are in dispute in the respective case. Further guidance on the information to be disclosed by the arbitrators or on how specific situations of conflicts of interests should be handled can be derived from the IBA Guidelines on Conflicts of Interests in International Arbitration drafted by the International Bar Association (IBA).
If an arbitrator is not confirmed for the reasons given above, a new arbitrator will have to be appointed. Depending on the applicable lex arbitri, and depending on whether the arbitral proceedings are administered by an arbitral institution or conducted as ad hoc proceedings, a successful challenge of an arbitrator will usually either be followed by a repetition of the initial nomination process or by the appointment of a new arbitrator by one of the bodies of the arbitral institution or another authorized appointment authority.
III. Challenge of an Arbitrator
The arbitrator’s obligation to disclose any (new) facts and circumstances giving rise to doubts as to his independence or impartiality continues to exist also after the constitution of the arbitral tribunal. Should any doubts as to an arbitrator’s independence or impartiality arise at a later stage of the proceedings, he can generally be challenged by the parties within a certain (usually short) timeframe. At this stage, however, usually the arbitral tribunal (including the arbitrator challenged) will decide over the challenge of an arbitrator at such a stage and not the arbitral institution.
If the challenge is successful, usually either the initial appointment method will be repeated or the arbitral tribunal or another authorized authority will appoint a replacement arbitrator. If the challenge, however, is unsuccessful, under many lex loci arbitri the challenging party may try to have the arbitrator removed in a local state court procedure.
IV. Emergency Arbitrator
Since the ordinary procedure for the composition of the arbitral tribunal may take too long in cases where interim measures are urgently needed, some arbitral institutions have recently implemented a procedure into their arbitration rules specifically designed for cases where time is of the essence. These procedures allow for the appointment of a so-called emergency arbitrator, usually within just a couple of days. The emergency arbitrator can issue orders before the constitution of the arbitral tribunal is completed.
Under most national laws and arbitration rules, the arbitral tribunal will have the so-called competence-competence. According to this doctrine, the arbitral tribunal has the power to rule on its own jurisdiction. While this may not be strictly logical, the doctrine is usually justified by the argument that it can be assumed that the parties also conferred this power to the arbitral tribunal when concluding an arbitration agreement.
VI. Liability of Arbitrators
It is an interesting question whether an arbitrator can be hold liable for any damages that the parties suffered because of a failure of the arbitrator to comply with his obligations. The answer to this question once more depends on the applicable law. In many civil law countries there seems to be a tendency that an arbitrator may be hold liable in cases of gross negligence or intentional misconduct. Under many common law jurisdictions, the requirements to hold an arbitrator liable for any damages for a breach of his obligations appear to be a lot stricter.
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