Choosing an Arbitrator in International Commercial Arbitration
One of the most important things you can do as a party in international commercial arbitration is to actively engage in picking the arbitrator.
Here’s why. Court litigation is unlike arbitration when it comes to the selection of the person (or group of persons) to manage the process of resolving your dispute. In litigation, disputes are assigned to judges as they are filed with the court and as a consequence parties risk the “luck of the draw” on which judge gets picked. The judge assigned your case may have deep subject matter knowledge of, say, slip and fall accidents, or criminal law, but likely won’t have a clue about engineering issues or trade disputes which your dispute happens to be about. By contrast to court litigation, parties in international arbitration cases get to select their “judge", called an arbitrator. Indeed, your active role in selecting an arbitrator may well be instrumental in whether you win or not.
One or three arbitrators? Most international commercial arbitrations are decided either by a single arbitrator or by a group of three arbitrators. Which applies to your arbitration? The first place to look is the arbitration clause of your business contract, or if none is found, some other written agreement between the parties on the topic. No clause? No problem. One can be fashioned after the dispute arises if the parties want to arbitrate their dispute.
If a single arbitrator, the disputing parties must agree on who this person is. Otherwise someone else will pick that arbitrator (called an “appointing authority”). In disputes requiring a three-arbitrator tribunal, each party will select an arbitrator (called a “party appointed” arbitrator) and the two thus selected will then pick a third arbitrator to chair the tribunal (called the “Chair” or “President” of the tribunal).
What are the mandatory qualifications of arbitrators? The starting point for an answer to this question is the arbitration clause in your contract. It may specify the qualities sought in an arbitrator, such as having a “master’s degree in chemical engineering”, or “at least ten years experience as a quantity surveyor” or “having a working knowledge of both French and Arabic”. The general rule to apply is this: the qualifications set out in the written agreement to arbitrate must be satisfied if the award is to be enforced.
Unless the arbitration clause mandates it, there is absolutely no requirement that an arbitrator be a lawyer – a common misperception - indeed there are many excellent non-lawyer arbitrators.
By law, arbitrators are also required to be both ‘impartial’ and ‘independent’. This may pose a bit of challenge to someone new to the game of selecting an arbitrator, as the natural but irresistible impulse will be to select an arbitrator who you think will only see the merits of your case, and will view with distain anything presented before them by your opposing side. The reality is that there are a lot of impartial and independent arbitrators out there, and the other side must go along with your choice, because if not, the award issued in your favor may well be unenforceable.
How does one access the pool of arbitrators? The “list method” for administered arbitrations. If your arbitration is being administered by a dispute resolution organization such as the American Arbitration Association (AAA), the International Center for Dispute Resolution (ICDR), JAMS, the ICC , BVI International Arbitration Center, the Arbitration and Mediation Court of the Caribbean (AMCC), or Dialogue Solutions, and others, each party will be sent “lists” of potential arbitrators comprising a few names. The parties then work from the lists, conducting their due diligence on each of the candidates and then prioritizing the candidates, and then picking one. If none (or not enough) of the candidates is acceptable, a fresh list should be requested. There is no obligation to accept only from the first list provided.
Where the arbitration is “ad hoc” (so called because there is no administering organization), it’s up to the parties to come up with, and agree to, arbitrator selections. Your due diligence can be done through word of mouth, following recommendations from outside counsel, or by accessing accredited lists of arbitrators provided by professional networks for dispute resolution, such as the Chartered Institute of Arbitrators (CIArb). If parties cannot agree on an arbitrator within a specified time period, then the administering organization or courts may select the arbitrator. You should studiously avoid this situation.
When choosing an arbitrator, you should not only take into account the arbitrator’s professional knowledge and expertise but also, just as importantly, their practical experience as a successful arbitrator and manager of the arbitration process involving business disputes. With this in mind, I opine that it is worth exercising caution when vetting prospective arbitrators who are academics with no business experience or self-important intellectuals who seek out opportunities to demonstrate their brilliance at every turn. These are a couple of categories of people who are unlikely to understand the nuts and bolts of business or fit well in the business world, or be unable to give proper weight to things that matter. The result? An uncertain outcome.
Another factor is availability. Some of the very top tier arbitrators are booked years in advance, and are in high demand. As a consequence, although they are fully prepared to commit to taking your arbitration on, it is going to be on their schedule not yours. This factor is worth paying attention to. One option: select your arbitrator from other than the “A-listers”. Go ahead, the water is fine!
Determining an arbitrator’s practical experience and availability on your schedule can be compared to a job interview in which the employer considers factors such as a candidate’s interest in and ability to discuss a wide number of important topics, a natural inquisitiveness and evidence of empathy. Just as these qualities are important in the business world they are important for an arbitrator. After all, this arbitration is a business dispute, right?
Contributor: Philip W. "Whit" Engle
Philip Engle is a business-focused, culturally fair-minded lawyer, who provides business consulting services and resolves business disputes across the Americas with 20 plus years C-Suite experience as an in-house General Counsel. As a business lawyer, he has operated both as an executive level business Attorney and Solicitor with domestic and international experience building businesses and resolving disputes in the fields of energy, construction, facilities management, personal injury, real property, intellectual property (IP), and mergers and acquisitions (M&A). JD, MPA and MBA. Qualified as attorney (USA) and solicitor (England and Wales), he is a fellow of the Chartered Institute of Arbitrators (FCIArb) and has resolved thousands of claims and disputes over 30 years, mostly through negotiation, but also by mediation, arbitration and litigation, including Online Dispute Resolution (ODR). He is an ICDR/AAA, FINRA panelist, a Certified Arbitrator and Mediator (Georgia), and a frequent trainer, publisher and speaker on the topic of alternative dispute resolution in the USA, Canada, Caribbean, Latin America, and Europe.