Stockholm Chamber Practice Note On Arbitrator Challenges

The Arbitration Rules of the Stockholm Chamber of Commerce provide, like most institutional rules, that an arbitrator must disclose, before being appointed, any circumstances that may give rise to doubts as to his or her impartiality or independence (Article 18), and that if new such circumstances arise during the arbitration, arbitrators must immediately disclose them, at which time, if a party considers the disclosed circumstances give rise to justifiable doubts as to the arbitrator’s independence or impartiality, the party may challenge the arbitrator under Article 19.

In August 2019, the Chamber released a Practice Note which reviews the SCC Board’s decisions on challenges to arbitrators during the years 2016-2018. The authors note that from January 2016 through December 2018, 551 arbitral proceedings were initiated at the SCC; a total of 46 challenges to arbitrators were filed; only three of these challenges resulted in the arbitrator stepping down voluntarily or because of party agreement; in the remaining 43 cases, the Board was required to decide, sustaining the challenge on 8 occasions and rejecting the rest.

Following a review of a selection of decisions, the authors conclude with the following:

In each challenge, the SCC Board considers applicable law, jurisprudence, and best practices in international arbitration. The IBA Guidelines on Conflicts of Interest are taken into account, but the Board may also choose to deviate from those Guidelines.

The SCC Board has considered several challenges where the party alleged that the arbitrator was biased because of an opposing-counsel relationship in a separate but parallel proceeding. This circumstance, on its own, is rarely considered grounds for justifiable doubts as to the arbitrator’s impartiality.

A challenge will generally not be sustained if it is based on circumstances or relationships that ceased to exist several years ago. For example, a relationship between the arbitrator and a party or counsel that ended more than three years before the start of the arbitration typically does not give rise to justifiable doubts regarding the arbitrator’s impartiality. The time frames set out in the IBA Guidelines serve as a reference but are not necessarily decisive.

The SCC Board has consistently found that a client of any local law firm office is a client of the whole firm, however global that firm may be. This is in line with the IBA Guidelines. Similarly, a lawyer is generally seen to assume the identity of the firm; a relationship between a party and one of the firm’s partners is often, though not always, imputed to the other partners.

When a party presents several grounds for challenge, the SCC Board will make an overall assessment, taking all relevant circumstances into consideration. It may be that several relationships or circumstances, when viewed in combination, are sufficient to sustain a challenge, even where, seen separately, they would not warrant release of the arbitrator.

While previous decisions may be indicative of how the Board would rule in the future, the Board considers each challenge on its own merits and in the context of all relevant circumstances.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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