Arbitral Tribunal (Appointment and Challenge)

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It is safe to say that the arbitral tribunal, being the decision-making body that determines the outcome of the dispute, is central to the entire arbitration process.

This chapter provides concise guidance on how the tribunal is put together and, if needed, challenged. In arbitration, everything ultimately comes down to the tribunal. Who is appointed, how they approach the case, and how they manage the process will shape not just the outcome, but also how smooth and efficient the proceedings are.

It also matters on a very practical level. Mistakes made at this stage are hard to undo later. An unclear clause, the wrong choice of arbitrator, or overlooked conflicts can lead to delays, extra costs, or even problems with enforcing the award.

Introduction

The starting point in determining the number of arbitrators, the procedure for their appointment and, more generally, the constitution of the tribunal, is to consider:

Arbitration agreement
Arbitration rules
Law of the seat

Each of the above will be addressed below.

Arbitration Clause

In practice, arbitration clauses fall into the following four categories:

Clauses that do not specify the number of arbitrators or who should appoint them: in such cases, it falls upon the applicable arbitration rules or the law of the seat to provide guidance as to the procedure for going forward.
Clauses that provide for three arbitrators: in practice, this category is considered to be the most common. The procedure is straightforward: each party appoints its arbitrator, and should the nominee overcome the issues concerning the conflict check or other similar hurdles, the two so appointed arbitrators will eventually appoint the third arbitrator, who will preside over the tribunal. It is sometimes the case that the arbitration clause will also provide for the timeline for such appointments. If not, the issue will again be governed by the applicable rules or the law of the seat.
Clauses that provide for two arbitrators: while it is less common, parties sometimes agree on two arbitrators, provided that, in the event of a disagreement between them, a third arbitrator will be appointed, often referred to as an umpire, to assist with the decision-making. This approach is employed in maritime arbitration, while many modern arbitration clauses or institutions prefer having a sole arbitrator or a three-member tribunal.
Clauses that provide for a sole arbitrator: the choice of a sole arbitrator is often made in lower-value or less complex disputes. These are the cases where the parties prioritise efficiency and cost, and the parties are expected to agree on the arbitrator between themselves. If they are unable to do so within the relevant timeframe, the appointment will be made by the relevant institution, appointing authority or court under the applicable rules or the law of the seat.

When it comes to issues concerning the appointment, parties sometimes agree on an arbitral institution or another body to act as the appointing authority. This can be particularly useful in avoiding delays or disagreements between the parties. Such an appointing authority may have a limited role, for example, stepping in only if a party fails to appoint an arbitrator, or a broader one, including appointing the entire tribunal.

What to do if the arbitration clause is unclear?

If the arbitration clause does not mention anything about the number or appointment of arbitrators, then the issue should be checked under the relevant arbitration rules, which will usually provide for the default number of arbitrators.

For instance, Article 5.8 of the LCIA Rules provides that unless the parties agree otherwise, a sole arbitrator should be appointed. Article 16 of the SCC Rules provides that if the parties have not agreed on the number of arbitrators, then the SCC Board should decide whether there should be a sole arbitrator or three arbitrators in view of the complexity of the dispute.

If the clause does not incorporate any arbitration rules, then the answer as to the way forward should be determined by the law of the seat, which will normally determine the default number of arbitrators. For example, if the arbitration is seated in London, the English Arbitration Act 1996 will apply. Section 15(3) of the Act provides that if there is no agreement on the number of arbitrators, the Tribunal shall consist of a sole arbitrator. If the arbitration is seated in Sweden, then the Swedish Arbitration Act will apply. Section 13 of the Act provides that in default of the parties’ agreement, “The arbitrators shall be three in number. Each party shall appoint one arbitrator, and the arbitrators so appointed shall appoint the third“.

How to appoint or nominate an arbitrator?

As already mentioned above, in cases of three arbitrators, each party appoints one arbitrator, and the two will then appoint the presiding arbitrator, also known as the chair of the tribunal. This is the position under section 16 of the English Arbitration Act 1996 and section 13 of the Swedish Arbitration Act.

In addition to the above, the arbitration clause or the applicable arbitration rules may also provide a set of rules as to how the appointment or nomination is to take place. For example, the LCIA Rules provide that the claimant should nominate its arbitrator in the request for arbitration by providing the nominee’s full name and contact details. The LCIA Court then considers the nomination and, if satisfied that the arbitrator is in a position to fulfil their duties, formally appoints them as a member of the tribunal.

Under Article 12 of the ICC Rules:

Three Arbitrators

4) Where the parties have agreed that the dispute shall be resolved by three arbitrators, each party shall nominate in the Request and the Answer, respectively, one arbitrator for confirmation. If a party fails to nominate an arbitrator, the appointment shall be made by the Court.

5) Where the dispute is to be referred to three arbitrators, the third arbitrator, who will act as president of the arbitral tribunal, shall be appointed by the Court, unless the parties have agreed upon another procedure for such appointment, in which case the nomination will be subject to confirmation pursuant to Article 13. Should such procedure not result in a nomination within 30 days from the confirmation or appointment of the co-arbitrators or any other time limit agreed by the parties or fixed by the Court, the third arbitrator shall be appointed by the Court.

If the arbitration clause provides for three arbitrators without referencing any applicable arbitration rules, then the parties must seek guidance under the law of the seat. In the case of arbitral proceedings seated in London, i.e. governed by the law of England and Wales, the procedure broadly coincides with that under the LCIA Rules: namely, each party must nominate its arbitrator, typically providing the arbitrator’s full name and contact details, after which the two arbitrators will appoint the presiding arbitrator.

Where the arbitration clause provides for one arbitrator and the arbitration is subject to some institutional rules, whether LCIA or others, it is normally the institution which will appoint the arbitrator. A party may propose certain candidates to the institution in its request for arbitration, but the institution is not obliged to follow the recommendations.

Where the arbitration clause provides for a sole arbitrator and the arbitral proceedings are not subject to any institutional rules, the parties are normally obliged to agree on the candidate. In such a case, a party should propose several candidates in its notice of arbitration and invite the respondent to agree to one of them. If the parties cannot agree on the candidate, then an application should be made to the court of the place of the arbitration, which will then appoint the sole arbitrator.

Challenging arbitrators

It is accepted across most jurisdictions that arbitrators should be impartial and independent:

Independence means that an arbitrator has no financial, professional or other relationship with any of the parties that could influence, or be seen to influence, their judgment.
Impartiality means that an arbitrator approaches the case with an open mind, without bias or predisposition towards any party or issue, and decides the dispute solely on the evidence and submissions before the tribunal.

Examples of when arbitrators are generally considered unfit to act due to their relationship with one of the parties or their pre-determined views can be found in the IBA Guidelines on Conflicts of Interest in International Arbitration, which can be downloaded for free at www.ibanet.org. These are not binding unless the parties agree otherwise, but they are normally taken into account as guidance by arbitral institutions and competent courts. Examples of situations where an arbitrator is considered unfit to act include the following circumstances:

The arbitrator has a significant financial or personal interest in one of the parties or the outcome of the case.
The arbitrator or his or her firm regularly advises the party, or an affiliate of the party, and the arbitrator or his or her firm derives significant financial income therefrom.
The arbitrator has given legal advice, or provided an expert opinion, on the dispute to a party or an affiliate of one of the parties.

As a note of caution, successful challenges to arbitrators are extremely rare. The test to demonstrate that an arbitrator is not independent and/or impartial is rather onerous. In 2018, the LCIA published a database of 32 arbitration challenge decisions made between 2010 and 2017, of which only 6 were upheld (approximately 19%) and one was partially upheld. More recent data published by the LCIA covering the period from 2017 to 2022 confirms an even lower success rate, with only 1 successful challenge out of 32 applications (approximately 3%).¹

In LCIA Reference No. 101642 (31 January 2011), the respondent challenged the appointment of the presiding arbitrator under Article 10.3 LCIA Rules (justifiable doubts as to the arbitrator’s independence or impartiality). The challenge was based on the fact that the arbitrator had, three years prior, been appointed as an arbitrator in ad hoc proceedings by an affiliate of the claimant. The challenge was dismissed because the arbitrator had not received any submissions from the parties to the ad hoc proceedings, and the issues in those proceedings were tangential to those in the arbitration where he was challenged.

In another LCIA decision (reference No. 173566), the respondents filed a challenge against the claimant’s appointed arbitrator, again under Article 10.3 LCIA Rules. The challenge followed a disclosure made by the arbitrator that he had represented the claimant and had had a working relationship with the claimant’s counsel. The challenge was dismissed, the LCIA Court noting that disclosure had been made following a full investigation by the co-arbitrator of the relevant facts, and that the relevant events had taken place 17 years earlier. No circumstances giving rise to justifiable doubts as to independence or impartiality could therefore be found.

An example of a successful arbitration challenge was reported in the LCIA decision with reference No. UN152998. One of the respondents challenged the appointment of the co-arbitrator appointed by the claimant, on the basis of negative comments made by the co-arbitrator about the respondent’s parent company in three separate publications. The challenge was made pursuant to Article 10 UNCITRAL Rules (the existence of circumstances that give rise to justifiable doubts as to the arbitrator’s impartiality or independence). The co-arbitrator did not consider this to be relevant and did not step down. The LCIA Court however upheld the challenge, since although the comments made by the co-arbitrator were not related to the proceedings, they were critical negative remarks aimed specifically at the respondent’s parent company. Such comments cast doubts as to whether the co-arbitrator could hear the case in an unbiased manner and with an open mind.

The procedure for challenging an arbitrator would normally be set either in the law of the place of the arbitration or in any applicable arbitration rules. Where the LCIA Rules apply, they provide, at Article 10, that the LCIA Court may remove an arbitrator where in its view circumstances exist that give rise to justifiable doubts as to his impartiality or independence. A party wishing to challenge an arbitrator must do so within 14 days of his appointment or within 14 days of becoming aware of the circumstances which give rise to doubts about the arbitrator’s impartiality. A challenge should be made by a written statement submitted to the LCIA Court, the tribunal and all other parties setting out the relevant facts and grounds for the challenge. If the other party agrees, the LCIA will remove the arbitrator. If the other party does not agree, it will have an opportunity to file its comments on the challenge, and the LCIA Court will then make its decision.

Where parties do not agree on a set of arbitration rules, a challenge to arbitrators should be submitted to the local court of the place of the arbitration.

Things to consider when selecting an arbitrator

When selecting an arbitrator, it might be useful to consider the following matters:

First, the arbitrator should be competent. While some parties prefer to appoint industry experts, this may not always be necessary. However, the arbitrator should at least understand the basic functioning of the relevant industry. It is generally undesirable for a tribunal to reach conclusions that are inconsistent with commercial or industry practice.

Second, the arbitrator should be available. It is advisable to approach a prospective arbitrator with a neutral and concise summary of the dispute and the full names of the parties, and to confirm availability prior to appointment or nomination. Difficulties may arise if an arbitrator declines the appointment after being nominated or lacks sufficient time to deal with the case efficiently, potentially causing delay.

Third, the arbitrator should ideally be legally qualified and/or possess recognised standing in international arbitration. Where the objective is to ensure that an award withstands scrutiny or challenge, it is important that the arbitrator is attentive to the requirements of the applicable arbitration law. Some parties prefer to appoint former judges on the basis that their decisions may be less susceptible to challenge before national courts.

As a practical matter, parties seeking to identify suitable arbitrators may consult lists published by arbitral institutions such as the London Court of International Arbitration, the Chartered Institute of Arbitrators, or the London Maritime Arbitrators Association, among others. Alternatively, arbitration chambers may be contacted, whose clerks are often able to suggest appropriate candidates.

Lists of arbitrators published by certain institutions and chambers include:

Institutions

Chambers