Introduction

International construction contracts often include a multi-tiered dispute resolution clause under which the final stage is to refer the dispute to arbitration. 

The arbitration process tends to be lengthy and expensive for both the claimant and the respondent.^[1]Vivian Ramsey & Stephen Furst, Keating on Construction Contracts (9th edn, Sweet & Maxwell 2015) 1-036.Disputes that are referred to arbitration therefore typically relate to complex issues and large sums of money. 

When large sums of money are in dispute, parties will typically seek to retain barristers to act as counsel (“barrister-advocates”) for a party and/or arbitrator(s) (“barrister-arbitrators”) to sit on a tribunal to decide the case.

The UK is home to an array of highly-regarded barristers who specialise in construction disputes.  The grouping under which English barristers operate are known as chambers or sets of chambers.

Despite operating from chambers in the UK, English barristers are often retained for international arbitrations in which there is little or no connection with English law.^[2]Chambers & Partners, ‘UK-Bar Guide: Construction – London (Bar)’ (2018) https://www.chambersandpartners.com/11841/15/editorial/14/2

It is not uncommon for one party to instruct a barrister-advocate who operates from the same chambers as the barrister-arbitrator(s).  However, in recent years, this practice has led to objections, with regards to conflict of interest, from international parties who are unfamiliar with the organisation of barristers’ chambers and the culture of the English bar.^[3]John Kendall, ‘Barristers, Independence and Disclosure Revisited’ (2000) 16(3) ArbIntl 343 https://doi.org/10.1023/A:1008982917157

This issue has been considered in guidelines and case law, both of which have concluded that there is no risk of a conflict of interest arising when a barrister-advocate appears before a barrister-arbitrator from the same chambers.

The purpose of this article is to review some of the guidelines, statute, institutional rules and case law on this issue. 

Independence & impartiality

Conflicts of interest in this context are considered by reference to the independence and/or impartiality of the arbitrator(s).  Whilst often considered collectively, and even used interchangeably, independence and impartiality are distinct, discrete, concepts. 

Under the following rules, laws and guidelines which govern international arbitrations, a tribunal is required to be both impartial and independent:

• International Chamber of Commerce Rules of Arbitration;^[4]International Chamber of Commerce, ‘Arbitration Rules’ [2017] Article 11(1).
• London Court of International Arbitration Rules;^[5]London Court of International Arbitration, ‘LCIA Arbitration Rules’ [2014] Rule 5.3.
• United Nations Commission on International Trade Law (“UNCITRAL”) Arbitration Rules 2013;^[6]United Nations Commission on International Trade Law, ‘UNCITRAL Arbitration Rules’ [2013] Article 6(7).
• UNCITRAL Model Law on International Commercial Arbitration;^[7]United Nations Commission on International Trade Law, ‘UNCITRAL Model Law on International Commercial Arbitration’ [2006] Article 11(5).
• American Arbitration Association Construction Industry Arbitration Rules;^[8]American Arbitration Association, ‘Construction Industry Arbitration Rules’ [2015] R-20.
• International Bar Association (“IBA”) Rules of Ethics for International Arbitrators;^[9]International Bar Association, ‘IBA Rules of Ethics for International Arbitrators’ [1987] Rule 3. and,
• IBA Guidelines on Conflicts of Interest in International Arbitration.^[10]International Bar Association, ‘IBA Guidelines on Conflicts of Interest in International Arbitration’ [2014] General Principle 1.

In contrast, the Arbitration Act 1996^[11]Arbitration Act 1996, s 1(a), s 24(1)(a) and s 33(1)(a). provides that the tribunal shall only be impartial, whereas the International Centre for Settlement of Investment Disputes (“ICSID”) Rules of Procedure for Arbitration Proceedings^[12]International Centre for Settlement of Investment Disputes, ‘Rules of Procedure for Arbitration Proceedings’ [2006] Rule 6. provide that the tribunal shall only be independent. 

The question that arises is whether it is a deliberate decision against imposing the missing requirement from each, or due to other reasons. 

With regards to the 1996 Act, the omission of the requirement to be independent is deliberate.^[13]Julian Lew, Loukas Mistelis, Stefan Kroll, Comparative Commercial International Arbitration (1st edn, Kluwer Law Arbitration 2003). 255-273.  This is clear from a report produced on the Arbitration Bill by the Department of Advisory Committee on Arbitration Law (“the DAC Report”).  Paragraph 102 states that:

“[T]he inclusion of independence would give rise to endless arguments, as it has, for example, in Sweden and the United States, where almost any connection (however remote) has been put forward to challenge the ‘independence’ of an arbitrator.  For example, it is often the case that one member of a barristers’ chambers appears as counsel before an arbitrator who comes from the same chambers. Is that to be regarded, without more, as a lack of independence justifying the removal of the arbitrator?  We are quite certain that this would not be the case in English law.  Indeed, the Chairman has so decided in a case in the Commercial Court.”^[14]Lord Justice Saville, ‘Departmental Advisory Committee on Arbitration Law 1996 Report on the Arbitration Bill’ [1997] 13(3)102 ArbIntl … Continue reading

From this passage, it appears that the term ‘independence’ was deliberately excluded from the 1996 Act, and it was a conscious decision to refer to impartiality in isolation. 

There is no analogous report from which inferences can be drawn in relation to the omission of the requirement to be impartial from the ICSID Rules.

The omission from the 1996 Act suggests that the two terms ought to be distinguished from one another.^[15]Lew (n 13) 255-273.

Further, the above passage from the DAC Report suggests that, at the time of drafting the 1996 Act, the intention was that an arbitrator’s impartiality could not be questioned merely because he is a member of the same chambers as counsel. 

Case Law

In Laker Airways Incorporated v FLS Aerospace Ltd,^[16]Laker Airways Incorporated v FLS Aerospace Ltd [1999] EWHC B3. the court considered an application brought under the recently enacted Arbitration Act 1996.^[17]Armen H Merjian, ‘Caveat Arbitor: Laker Airways and the Appointment of Barristers as Arbitrators in Cases Involving Barrister-Advocates from the Same Chambers’ (2000) 217(1) ArbIntl, … Continue reading  The question for determination was whether a barrister who has been appointed as arbitrator by one party to the arbitration should be removed by the court on the ground that another barrister from the same chambers had been instructed as counsel in the arbitration by one of the parties.  Put in terms of the 1996 Act,^[18]Arbitration Act 1996, s 24(1)(a). the question was whether circumstances exist that gave rise to justifiable doubts as to the arbitrator’s impartiality.^[19]Donald Valentine, Arbitration Law, Practice and Procedure (2nd edn, Chartered Institute of Arbitrators 2006).

The decision states that arbitration would become impossible if one party could require an arbitrator to resign by making unjustified allegations about impartiality or bias.  Further, the court must find that (a) circumstances exist, and are not merely believed to exist and (b) those circumstances must justify doubts as to impartiality. An unreasoned doubt is not sufficient. 

The decision also considers Paragraph 102 of the DAC report on the Arbitration Bill.^[20]Saville (n 14) 102.  The judge commented that it was not in the minds of the draftsman of the 1996 Act that an arbitrator’s impartiality could be questioned merely because he came from the same chambers as counsel. 

In summary, it was held that an arbitrator who comes from the same chambers as counsel for one of the parties does not give rise to justifiable doubts as to the impartiality or independence of the arbitrator.^[21]Lew (n 13) 255-273. It was emphasised that:

• The barristers were not in partnership (unlike partners in a law firm);
• The barristers were not sharing income and that neither party had a financial interest in the success of the other;
• The fees of counsel were not in any way dependent on success in the arbitration;
• There was no conflict of interest because there was no partnership;
• There was no evidence of any breach of confidence; and,
• It is impossible to generalise in suggesting that an arbitrator might favour the advocate he knew.  Each case must therefore turn on its own facts.^[22]Armen (n 17).

IBA Guidelines

The IBA Guidelines on Conflicts of Interest in International Arbitration^[23]International Bar Association, ‘IBA Guidelines on Conflicts of Interest in International Arbitration’ [2014]. set out examples of scenarios in which there may be an actual or perceived bias.^[24]The Bar Council, ‘Information Note Regarding Barristers in International Arbitration’ (2015) 31, … Continue reading  The scenarios are divided into four Application Lists:

• Non-Waivable Red List;
• Waivable Red List;
• Orange List; and,
• Green List.

The Orange List is particularly relevant to this article. This list describes circumstances that, depending on the facts of a given case, may, in the eyes of the parties, give rise to doubts as to the arbitrator’s impartiality or independence.  However, the parties are deemed to have accepted the arbitrator if, after disclosure, no timely objection is made.^[25]IBA Guidelines on Conflicts of Interest (n 24) 1(3).

Item 3.3.2 of the Orange List relates to the relationship between an arbitrator and another arbitrator or counsel.  More specifically, it provides that disclosure ought to be made if an arbitrator and counsel for one of the parties are members of the same chambers.^[26]IBA Guidelines on Conflicts of Interest (n 24) 2(3.3.2). The fact that this situation is on the Orange List makes it clear that the IBA consider it relevant to disclose, but not so important that it cannot be waived.

Conclusion

In conclusion, statute, case law and institutional guidelines all support that an arbitrator who comes from the same chambers as counsel for one of the parties does not give rise to justifiable doubts as to the impartiality or independence of the arbitrator. However, in the interest of good practice, and in accordance with IBA Guidelines disclosure should be made if a barrister-arbitrator and a barrister-advocate are from the same chambers.

About The Author

Stuart Allan is a Senior Consultant at HKA who works in the Expert Services division in the Middle East & Asia region.

He is a qualified quantity surveyor with over 11 years’ industry experience working on projects throughout Europe, Middle East, South Africa and South East Asia. 

Stuart has a LLM in Construction Law and Arbitration and is a Member of the Chartered Institute of Arbitrators.

This article has been adapted from Stuart’s LLM dissertation of the same title.