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An arbitration is only as good as the arbitrator

Dossiers VIII
This frequently used maxim acts as an invitation to use arbitration but also as a
scarecrow warning users off arbitration.
IS ARBITRATION ONLY AS GOOD AS
Disputing parties are of course free to choose their arbitration tribunal, which allows
them to begin an arbitration with a certain tranquility. Once the arbitration has begun,
should the parties become concerned if the arbitrators' qualities do not meet their
THE ARBITRATOR?
expectations? Unlike court judgments, arbitral awards are not subject to ordinary
judicial remedies. Thus, a disastrous award may well remain disastrous for a party with
STATUS, POWERS AND ROLE OF THE ARBITRATOR
no remedy available to right certain wrongs.

This publication looks at the relationship between the qualities of the arbitrators and Edited by Yves Derains and Laurent Lvy
the arbitrators' work-products, namely the award and the arbitral process itself.

IS ARBITRATION ONLY AS GOOD AS THE ARBITRATOR? STATUS, POWERS AND ROLE OF THE ARBITRATOR
There are proven methods for the parties to detach at least part of "their" arbitration
from the arbitrators. They may impose certain constraints on their intended
arbitrators, be it in the agreement they conclude with the arbitrators or through the
operation of the legal, customary, ethical or statutory rules that regulate the arbitrators'
activities, in what has now become a true profession. The parties may also consider
having an institution oversee their arbitration, which will bring an additional measure
of control over the exercise of the arbitrators' mission. Finally, the picture would be
incomplete without a discussion of the role played by certain substantive rules, such as
the duty of confidentiality.

The contributions in this Dossier VIII, Is arbitration only as good as the arbitrator ?
Status, powers and role of the arbitrator tackle these complex issues from different
vantage points, bringing to bear the knowledge and experience of some of today's
leading experts in the field of arbitration.

The contributors to this Dossier include:

Antonias Dimolitsa Alexis Mourre


Bernard Hanotiau Jos Emilio Nunes Pinto
Kap-You Kim William W. Park
Julian D.M. Lew V.V. Veeder
Pierre Mayer

This Dossier VIII, Is arbitration only as good as the arbitrator ? Status, powers and
role of the arbitrator, is published under the auspices of the ICC Institute of World
Business Law, chaired by Yves Derains. With this publication, the ICC Institute of
World Business Law fulfils its dual mission: training and acting as a think-tank for the
International Chamber of Commerce particularly in the field of arbitration.
Cover illustration: Images.com/CORBIS/Wieslaw Rosocha

The International Chamber of Commerce, the World Business Organization, based in


Paris, is the global leader in the development of standards, rules and reference
guides for international trade.

ICC Publication No.714E


ISBN: 978-92-842-0109-9

D O S S I E R S
ICC Institute of World Business Law
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Is Arbitration Only As
Good as the Arbitrator?
Status, Powers and Role of
the Arbitrator

D O S S I E R S
ICCInstituteofWorldBusinessLaw
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IS aRBItRatIOn OnLy aS gOOD aS thE aRBItRatOR?StatuS,pOWERS anD ROLE Of thE aRBItRatOR

This text is the work of independent authors and does not necessarily
represent the views of ICC. No legal imputations should be attached to
the text and no legal responsibility is accepted for any errors, omissions
or misleading statements caused by negligence or otherwise.

Copyright 2011
International Chamber of Commerce

allrightsreserved.nopartofthisworkmaybereproducedorcopiedinanyformor
byanymeansgraphic,electronicormechanical,includingphotocopying,scanning,
recording,tapingorinformationretrievalsystemswithoutwrittenpermissionof
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ICC Publication No. 714E


ISBn:978-92-842-0109-9

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taBLE Of COntEntS

CONTENTS

fOREWORD ...................................................................................................................5
by Yves Derains

IntRODuCtIOn..............................................................................................................7
by Yves Derains and Laurent Lvy, Co-Editors

1. Alexis Mourre
SED quIS CuStODIEt IpSOS CuStODES?On juRIDICtIOn upOn aRBItRatORS....................13

2. William W. Park
thE fOuR muSkEtEERS Of aRBItRaL Duty:nEIthER OnE-fOR-aLL
nOR aLL-fOR-OnE.................................................................................................25

3. Pierre Mayer
thE LaWS OR RuLES Of LaW appLICaBLE tO thE mERItS Of a DISputE anD thE
fREEDOm Of thE aRBItRatOR................................................................................47

4. Kevin K.Kim
aRBItRatORS anD ChOICE-Of-LaW DECISIOnS.........................................................65

5. Antonias Dimolitsa .
thE aRBItRatOR anD thE LItIgantS (SOmE ExCEptIOnaL CLaShES).........................69

6. V.V. Veeder
aRBItRaL DISCRImInatIOn unDER EngLISh anD Eu LaW............................................91

7. Julian D.M. Lew


thE aRBItRatOR anD COnfIDEntIaLIty................................................................105

8. Jos Emilio Nunes Pinto


CECI nESt paS un aRtICLE...............................................................................131

9. Bernard Hanotiau
COnCLuDIng REmaRkS........................................................................................137

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InDEx .........................................................................................................................141

COntRIButORS..........................................................................................................159

ICCataglance..............................................................................................................166

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fOREWORD

FOREWORD

byYVES DERAINS
memberoftheparisBar
IncomingChaiman,ICCInstituteofWorldBusinessLaw

Eachyear,theannualmeetingoftheInstituteofWorldBusinessLawattracts
alargenumberofparticipantsandproducesmaterialofhighqualitywhichis
publishedintheDossiers de lInstitut,aseriesthathasgainedinternational
prestige.thissuccessisexplainedbyseveralfactors:thechoiceoftopicsof
practicalinterest;theirtreatmentbyeminentandexperiencedspecialistsfrom
manypartsoftheworld;theaccesstotheexceptionalthinktankofferedby
theInstituteCouncil.theannualmeetingoftheInstituteistheplacewhere
practitionersareabletoexploretogetherissueswhichreallyimpacttheir
professionalactivities,eitherinthefieldofinternationalarbitrationor,more,
generally,inthefieldsofinternationalbusinesslawandpractices.

theInstitutesannualmeetingheldon6December2010wasnoexception
to the rule, as reflected in this new Dossier prepared under the efficient
supervisionofDr.LaurentLevywhowasthemaindesigneroftheConference.
theStatus,thepowersandtheroleofthearbitratorscentralissuestothe
practice of international arbitration that international practitioners often
approachwitherroneousviews,tothedetrimentofthewholearbitration
process.

thecontractualoriginofarbitrationisnolongerseriouslydisputed.But,what
isthearbitrator'scontract?Isitacontractwiththepartiesorinthecaseof
institutionalarbitrationwiththeinstitution?Onthecontrary,istheinstitution
only representing the parties? Is there a profession of arbitrator? those
questionsmustbeansweredinorderedtoassessthearbitratorsresponsibility
towardsthepartiesandhisorhersocialresponsibility.thelattermaynotbe
ignored.

thearbitratorenjoysaverylargefreedomastothelawapplicabletothe
meritsofthedisputeand,unlessthereisabreachofinternationalpublic
policy,norecourseisavailableagainstanarbitralawardwhichissubstantially
wrong,evenifitcondemnsapartytohugeamountsofmoney!moreover,

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although the arbitrator has been given a mission by the parties, its
implementationmayaffectthirdparties,publicauthoritiesandthepublicat
large.theexistenceornon-existenceofadutyofconfidentialityinarbitration,
therelationsofthearbitratorswiththepress,thequestionwhethertheymay
haveareportingobligation,e.g.incaseoflaundering,corruptionorother
offences,areissuesattheheartoftheproblem.

Butitisobviouslyinhisorherrelationswiththepartiesandtheircounsel
thatthearbitratorsstatusandpowersplaythemoresignificantrole.the
arbitratorscontractincludestheobligationstoconducttheproceedings.
When fulfilling such obligations, he or she has often to decide between
opposingviewsoftheparties.Sometimes,thearbitratorsarealsoconfronted
withcommonagreementsofthepartiesontheproceedingsthattheyfeel
unabletoacceptbecausetheyareunreasonablycostlyordelaythearbitration
unnecessarily. What are the arbitrators duties in this respect? and what
happenswhenthebehaviorofcounselisincompatiblewiththeethicsofthe
legalprofessionor,more,simply,withelementaryrulesofpoliteness.Should
thearbitratorplaytheroleofapoliceofficertomaintainorderandsubstitute
thevariousbarstoenforcedeontologicalrules?hasanarbitratorthepower
todoso?theanswertothosequestionsandmanyothersmaybefoundin
thisDossierandallowsthereadertodecidewhetherarbitrationisonlygood
asthearbitrator.

InhisintroductiontolastyearsDossier,SergeLazareffstressedthatto write
the foreword of our recurrent Dossierisone of the most pleasant yearly
tasks of the Chairman of the Institute.Iunderstandthefeeling,inparticular
whenmyfirstforewordisdevotedtotheresultoftheworksofanannual
meetingwhichwasdedicatedtohim.

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IntRODuCtIOn

INTRODuCTION

YVES DERAINS* AND LAuRENT LVY**

arbitration is only as good as the arbitrator. this proposition is readily


admittedbythearbitrationcommunity.Butwhatmakesforagoodarbitrator?
Whatarehisorherqualities?twoofthemcometomindimmediately,asthey
areoftheessenceofthearbitralfunction:independenceandimpartiality.
Whiletheyarenecessary,theyarenotsufficienttomakeagoodarbitrator,in
particularagoodinternationalarbitrator.Ifanindependentandimpartial
personhasnoabilitytodecide,heorshewillprobablybeapoorarbitrator.
Ifheorsheisnotavailableand/orlazy,thepartieswillbemostdisappointed.
Withoutdiplomacyandculturalneutrality,thearbitratorwillhavethegreatest
difficultyconvincingthepartiesofthebestproceduralsolutionsandrallying
theothermembersofthearbitraltribunaltothecorrectsolutionofthecase.
Independenceandimpartiality,abilitytodecide,availabilityandwillingness
toworkhard,diplomacyandculturalneutralityseemtobetheskillsrequired
from an arbitrator. Should the arbitrator also be a good lawyer and, in
addition,agoodcasemanager?althoughitmaybedisputed,theanswer,to
both questions is yes-with some nuances. Each of the above-mentioned
qualitiesrequiressomeexplanationandprecision.

Independenceandimpartialityaregenerallyconsideredtobetwodifferent
concepts:independenceistheobjectiveabsenceofanysubstantiallinktoany
ofthepartiesasthatmayalterthefreedomofjudgmentofthearbitrator;
impartialityisthesubjectivewillnottofavouranyoftheparties.Butwhat
abouttheindependenceofmindthathasbeendeclaredtobeoneofthe
essentialqualitiesofthearbitratorsbythefrenchSupremeCourt?1 Isitnot
moreaformofimpartialitythanaformofindependence?thisexplainswhy,
beyondsubtledistinctions,agoodarbitratormustguaranteethatheorsheis
bothindependentandimpartial.Whatmattersisthatthearbitratorbefree
ofanyprejudice vis--vis anyparty,whetherbecauseoflinkstooneofthem

* partner, Derains & gharavi, france; former Secretary general, International Court of
arbitrationoftheICC;Incoming-Chairman,ICCInstituteofWorldBusinessLaw.
** partner, Lvy kaufmann-kohler, Switzerland; Vice-Chairman, International Court of
arbitrationoftheICC;Councilmember,ICCInstituteofWorldBusinessLaw.

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orbecauseofpersonalpreconceivedviews.nationalprejudices(everything
isgoodorbadinacertaincountry),geographicalprejudices(northisbetter
thanSouth,orviceversa),politicalprejudices(statesversusprivateinvestors,
multinationals versus small companies) are commonly found within any
society.agoodarbitratormustignorethemandkeepanopenmind.

thepartiesexpectdecisionsfromanarbitratorgooddecisionsratherthan
wrongdecisions,but,aboveall,decisions.thisappliesnotonlytoissuingan
awardwithinareasonabletimeattheendoftheproceedings,butalsoto
decidingeachtimethereisadisagreementamongthepartiesduringthe
proceedings. Such disagreements can occur at any stage of the arbitral
process:whendraftingthetermsofreference,whenorganizingtheschedule,
whenthereisarequestfortheextensionofatimelimit,aboutdisclosureor
admissibilityofdocuments,aboutconfidentialityandsoforth.Duringthe
hearing,arbitratorsand,inparticular,thechairofthearbitraltribunal,make
severaldecisionsbythehour,aboutobjectionstoquestionstowitnesses,
abouttheuseofdemonstrativeevidenceand,asthecasemaybe,aboutan
arrayofothermatters.Ifanarbitratorisnotabletomakeuphisorhermind
anddeciderapidly,thewholeprocessisjeopardized.theworstarbitratoris
probablytheonewhohatestodispleasetheparties.thisaffectshisorher
freedom of mind, as after issuing a legitimate ruling against a party this
arbitratorisinclinedtoruleagainsttheotherpartynexttime,regardlessof
whetheritisrightorwrong.thisisnotonlyunfairbutdoesnotevenhave
the expected effect. the favoured party does not see the favour, as it is
convincedthatthedecisionwasjustified,whiletheotherpartyisshockedby
theinjustice.Ifthisisrepeatedseveraltimes,everybodybutthearbitrator
whowantedtopleaseeverybodyisunhappyattheendofthearbitration.the
purposeofarbitrationisneithertopleasethearbitratorsnortopleaseeither
partyatoneormorediscretejunctures.Rather,theparties(andhopefully
hence the arbitrators) should be satisfied with the conduct of the entire
proceedings.

goodarbitratorsmustworkandhavethetimetowork.arbitrationfilesare
becomingmoreandmorecomplex,ofteninvolvingthousandsofpagesof
documents.agoodarbitratormustcopewiththem.thisistime-consuming.
Overbookingbysomearbitratorsisseenasaserioussourceofdelaybymany
usersofarbitrationandissometimesarealproblem.themostcommonand
visiblemanifestationofarbitratoroverbookingisthedifficultyinfindinga
convenientdateforthehearing.however,overbookingmayalsohaveless
apparent,andyetmoredetrimental,consequences.anoverbookedarbitrator
lacksthetimetoefficientlymanageproceedingspriortotheactualhearing,
whichreduceshisabilitytogiveusefulguidancetotheparties,asexplained
below. In addition, applications for time extensions may be granted or

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IntRODuCtIOn

dismissedinlightoftheireffectonthearbitratorsownscheduleratherthan
their intrinsic merit. Last but not least, an overbooked arbitrator may
excessivelydelaythepreparationoftheawardafterthefinalhearing.

Withaviewtosolvingthisproblem,somearbitralinstitutions,amongthem
theICCCourtofInternationalarbitration,askarbitratorstoshowthatthey
areavailable.thisisamoveintherightdirectionbutnotapanacea.When
anarbitratorisinvitedtoacceptanewappointment,hisorherabilityto
anticipatethepotentialimpactoftheappointmentonhisorhercurrent
scheduleislimitedforvariousreasons.manycasesaresettledamicablybefore
thefilereachesthearbitraltribunal.Leavingamicablesettlementsaside,the
periodbetweentheacceptanceofanappointmentandthereceptionofthe
file by the arbitrators may last one month, two months, six months or
sometimesmore.thisdependsonmanycircumstancesthatarebeyondthe
arbitratorscontroland,generally,beyondtheirknowledge.Eachpartyand/or
theinstitutionaremoreorlessinthesamesituationwhentheycontactany
potentialarbitrator.moreover,whenthearbitratorsreceivethefile,theydo
notknowhowmanyhearingstherewillbe,whensuchhearingsmighttake
placeortheirpotentialduration.Consequently,thearbitratorscanmakeno
realisticplanbeforesuchtimeastheproceedingsareactuallyorganized,and
thisonlyoccurssomemonthsaftertheyhaveacceptedtheirappointment.
yet,takingallthosepracticaldifficultiesintoaccount,agoodarbitratormust
dohisorherbesttobeavailablewhenacceptinganappointmentandto
remainavailableduringthecourseoftheproceedings.

theabilitytomakedecisionsdoesnotmeanbrutalityindeciding.Whentime
permits,whichisrarelythecaseduringthehearing,agoodarbitratormust
havetheskilltoexplainhisorherdecisionsandconvincethepartiesoftheir
correctness.Veryoften,goodquestionsbythearbitratorspriortoreachinga
decisionwilldefusethetension,sometimesmakeadecisionunnecessaryand,
in all circumstances, make the decision more enlightened and more
acceptabletothepartiesonbothsides.Likewise,whendeliberatingwiththe
othermembersofthearbitraltribunal,thegoodarbitratormustmakean
efforttounderstandtheirviews,inordertobeabletomakethemacceptwhat
heorsheconsiderstobethecorrectdecisionifagreementisnotimmediate.
thisrequiresagoodknowledgenotonlyofthefactsofthecaseandthe
relevantlaw(s),butalsoofdiplomacyandpedagogy.however,noneofthem
canbeefficientlyimplementedwithoutculturalneutrality.Itisnecessaryto
beabletounderstandtheculturalcontextofthepositionsadoptedbythe
partiesandtheothermembersofthearbitraltribunal.thisrequiresboth
knowledgeandhumilityknowledgeofthemajordifferencesbetweenlegal
systemswithrespecttoproceduralandsubstantiveissues,andhumilityto
avoidthenaturalassumptionthatonesownsystemissuperiortoallothers.

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Shouldagoodarbitratorbeagoodlawyer?WhentheCourtofarbitrationof
the International Chamber of Commerce was created in 1923, it was a
commonideaamongitsfoundersthatarbitrationwasaworldwithoutlawyers.
Laymenwereseenasthebestarbitratorsandbusinessmenwereconvinced
thattheyweretheirownbestadvocates.thelegalnicetieswerelefttothe
courts.almost90yearsafterthismythicaltime,thesituationhaschanged
considerably.thevastmajorityofinternationalarbitratorsarelawyers,andno
partywoulddarenottoberepresentedbyoneorseveralcounsel.however,
therulesofthegamearenotthoseapplicableinnationalcourtsandtheskills
of arbitrators are not those required of a national judge. Serge Lazareff
demonstratedthiseloquentlyinhisfamousarticleLarbitresinge.2 first,the
arbitrator,inparticulartheinternationalarbitrator,isnotnecessarilyexpected
tohaveadeepknowledgeofthesubstantivelawthatisapplicabletothe
merits of the case. What is needed is a good knowledge of the general
characteristicsofthatlawandanintellectualwillingnesstofollowthemore
detailedexplanationsgivenbytheparties.moreover,thegoodarbitratormust
befamiliarwiththegeneralprinciplesofinternationalarbitrationproceedings
andthespecificitiesofthearbitrationlawoftheseatofthearbitration.those
limitsontherequiredlegalknowledgeexplainwhy,inanarbitrationworld
dominated by lawyers, a number of non-lawyers happen to be excellent
arbitrators.

thelackofpropercasemanagementbyarbitraltribunalsisoftencriticized
byusersofinternationalarbitration,andrightlyso,sinceitcausesdelaysand
unnecessarycosts.thegoodarbitratormustbeagoodcasemanager.this
does not only mean devising procedural rules that give each party a
reasonableopportunitytopresentitscase;italsoimpliesthatsuchprocedural
rulesshouldbeadaptedtothecharacteristicsofeachdispute.Standardization
andgoodarbitrationareoftenatodds.however,inordertoachievesuccess,
thearbitratormustenterintothesubstanceofthecaselongbeforethestart
ofthehearinginordertoprovideappropriateguidancetothepartiesasto
the most efficient way to deal with the case. the parties may decide to
disregardsuchguidance,buttheywillexpecttoreceiveit.Ifthehearingis
thefirstseriousoccasionforthearbitratortofullyunderstandtherespective
positionsoftheparties,todrawadistinctionbetweentheadmittedfactsand
thedisputedfactsaswellastoassesstherelativeimportanceofthelegal
issues,itistoolate.forinstance,howcanarbitratorsmakeproperdecisions
aboutthedisclosureofdocumentswithoutaclearideaofwhatisrelevantto
thesolutionofthedispute?

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IntRODuCtIOn

Ifthemembersofanarbitraltribunalhaveallthequalitiesthathavebeen
describedsofar,willthearbitrationbeasgoodassucharbitrators?theanswer
tothisquestionisprobablynot.therearetoomanyotherfactorsonwhich
the success of a given arbitration procedure depends; the talent of the
arbitrators is only one of them. a pathological arbitration clause, poor
arbitrationrulesorabadlychosenseatofarbitrationwithhostilejudgesmay
beenoughtotransformagivenarbitrationintoanightmare.Eveninthe
absenceofanyofthosenegativefactors,thepartiesand,moresignificantly,
their counsel provide each arbitration procedure with its own specific
features. the issue is not so much whether they employ dilatory tactics,
unreliablewitnesses,forgeddocumentsoranyotherincorrectbehaviour
aimedatderailingtheproceedings:goodarbitratorsaresupposedtocope
withthemandgenerallydo.however,althougharbitratorsareinchargeof
makingdecisionsontheconductoftheproceedingsundermostarbitration
rulesandlaws,theirinterventionislimitedbytheviewsofthepartiesasto
thebestwaytopresenttheircase.thearbitratorsareresponsibleforthe"nuts
andbolts"oftheproceedings,buttheoverall"design"ofsuchproceedingsis
amatterforthepartiesandtheircounsel.

allthisleadstoamoregeneralquestion.Whatisagoodarbitration?the
answertothisquestionisverysubjective.thatbeingsaid,arbitrationusers
are unanimous in expecting fast and efficient proceedings at a relatively
reasonablecost.however,thisisanabstractconcern.thesameusers,when
involved in a concrete case, forget their general views as to what a good
arbitrationshouldbe.Whattheywantistowintheircase,andthisisperfectly
normal.Iftheythinkthatitistothebestoftheirrespectiveinterests,they
willnothesitatetoincreasethedurationandthecostsoftheproceedings.as
amatteroffact,thestatisticsoftheICCCourtshowthatthemainpartofthe
costsofagivenarbitrationprocedureconsistsofthecostsincurredbythe
partiestopresenttheircase(lawyersfeesandexpenses,expensesrelatedto
witnessandexpertevidence,internalcostsofthecompany,etc.).3 Suchcosts
arenotimposedbythearbitrators.theyreflectstrategicchoicesoftheparties
thatmayresultinlongandcomplicatedproceedings.thisseemstobethe
mainexplanationfortheexcessivedurationandcostofsomearbitrations.
Doesthatmeanthatsucharbitrationsarebadarbitrations?notnecessarily.It
dependswhetherthedisputeanditsefficientsettlementdeservedthetime
andmoneyinvestedbytheparties.however,goodarbitratorshavearoleto
playinthisrespect,inparticularascasemanagers.

Inconclusion,whilethepartiesmayhopethatagivenarbitrationwillbeat
least as good as their appointees, president included, but the reverse is
inescapable:badarbitratorsproducebadarbitrations.

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EnDnOtES

1. Cass.2eciv.,13april1972,Revue de larbitrage (1975)p.235,casenotebyE.Loquin.


2. S.Lazareff,Larbitresingeoucommentassassinerlarbitrage,ing.aksenetal.,eds., Global
Reflections on International Law, Commerce and Dispute Resolution Liber Amicorum
Robert Briner (paris,2005pp.477-490).
3. administrativeexpensesoftheICC:2%;arbitratorsfeesandexpenses:16%;costsborne
bythepartiestopresenttheircase:82%.Statisticsbasedonthosecaseswhereafinalaward
wasissuedin2003-2004.See Techniques for Controlling Time and Costs in Arbitration,
ICCpublicationno.843(2007).

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