TY - JOUR AU - Pérez, Ana Fernández AB - Abstract Conflict of interest is one of the greatest challenges faced today by law firms with wide-reaching international scope which offer a special transcendence in arbitration. In recent years, arbitration laws and regulations and ethical codes have addressed this issue, although there are still many voids and questions left to be solved. The purpose of this article is to study international practice regarding conflicts of interest arising from arbitrators’ membership of large law firms and the appropriate solutions for resolving them. 1. INTRODUCTION Conflicts of interest are present in most professional activities, not least of which the practice of law,1 and correspondingly giving rise to the need to adopt the most appropriate methods for the identification, prevention and discouragement of them. As international arbitration has increased, so has the aggregate group of arbitrators expanded in parallel, diversifying cultural and legal traditions, and this has brought with it a substantial change in the relationship between arbitrators and parties. Whereas the companies dedicated to international business have acquired greater volume, so have the large law firms, which have adopted more complex, diversified structures, giving rise to a new relational framework, with the consequent increase in conflicts of interests among their members who act as arbitrators and the parties who turn to arbitration. In the world of international dispute resolution, the presence of such conflicts is a constant concern when determining what is right in terms of the conduct of the arbitrator, giving rise to substantial reconsideration of the ethical principles present within the arbitration framework,2 which has three fundamental effects: (i) the promotion and safeguarding of their employment and their acceptance as an efficient method of conflict resolution; (ii) respect for the autonomy of the parties’ will to solve their dispute; and (iii) the state’s interest in arbitration that is conducted within their territory being perceived as fair.3 The huge amounts that are handled within this sector inexorably lead to unwanted behaviour on the part of some arbitrators and administrative centres, within the scope of what is known as ‘institutional bias’, tending to favour one class of litigant over others.4 A telling indication of this concern is a certain disillusionment with arbitration as a method of dispute resolution,5 perverting its essential characteristics of simplicity and trust. It should not surprise us that attempts are made to mitigate this negative trend through unusual activity, which is already starting to turn up results, guided by the drafting of codes of conduct and other ethical arbitration provisions,6supplemented by the arbitration laws and regulations in place above all for the procedures of selection and refusal of arbitrators and the mechanisms established for cancellation of awards. In other words, a series of sources combine to establish arbitrators’ ethical obligations. But for now, this has not prevented poor management of conflicts of interest being incorporated into the ‘dérivés arbitrales’, decried in their day by Pierre Lalive,7 establishing a grave threat to prestige and trust in arbitrators.8 In this context, the already-complex system of controlling the independence and impartiality of arbitrators, and the consequences of non-compliance with the obligation to disclose, reveal a particular dimension when this affects lawyers or counsellors who belong to a law firm with broad-reaching international scope.9 Recent years have shown a significant diaspora, defined by the abandonment by prestigious arbitrators of the firm where they provided their services, to setup on their own, under the designation of ‘independent arbitrator’,10 so as not to be embroiled in the inevitable ‘conflicts of interests’ arising from a large clientele which calls, or has in the past called, for consultancy by their former firm. But these conflicts persist when members of the firm remain in it, conferring a special dimension, and indeed extraordinary complexity, on the duty of disclosure, due to the connection with the activities of the firm of those who are supposed to act as arbitrators.11 The issue exposed has broadly transcended the framework of the individual responsibilities of the arbitrators nominated, becoming the subject of careful consideration by arbitration administrative centres.12 Testimony of the importance of the issue is the interest shown recently by the Bureau of the International Court of Arbitration of the ICC with the drafting of the ‘Guidance Note on Conflict Disclosures by Arbitrators’, on 12 February 2016.13 Cancellation of an arbitral award due to breach of the duty of disclosure of the arbitrator can be a very serious sanction for arbitrators, and one which affects their image for the future and reduces their chances of being appointed in other procedures,14 entailing an unjustified loss of time and money for all parties which may be a basis for future claims. In freely formulating his or her declaration of independence, the arbitrator is obliged to remain neutral, and at the same time, to exercise his or her duties diligently, which implies observing total independence throughout the arbitration proceedings, that is to say, objective suitability which can only be achieved if all doubts about his or her integrity are cleared prior to the arbitration proceedings.15 Arbitration action that has fully and unreservedly acquired an ethical commitment of this calibre rises up as an essential element in three different directions: the professional prestige of the arbitrator, that of the administrative centre which intervened in his/her appointment and administers the arbitration and, in short, the future of the arbitration institution itself. Below, we set out some aspects of the scope of a breach of this commitment. To do so, we shall focus on non-compliance with the duty of disclosure (Section 2) and the particular complexity of this postulate when the designated arbitrator belongs to a large law firm with broad international scope (Section 3). 2. NON-COMPLIANCE WITH THE ARBITRATOR’S DUTY OF DISCLOSURE 2.1 Ethical content The arbitrator’s declaration is an essential instrument for the prevention of conflicts of interest which, based on his or her moral integrity and good judgement, has direct repercussions on the very reliability and effectiveness of the arbitration. Its purpose is twofold: to respect the will of those who go to arbitration, and to protect the future award in the event of cancellation. From this latter perspective, two prevalent notes can be pointed out. Breach, on the part of the arbitrator, of a moral duty of professional loyalty16 configured as a rule of conduct that is mandatory in the evolution of the arbitration process,17 the attainment of which is intended to ensure that arbitrators are independent, trustworthy, experienced people with sufficient expertise to participate in the process entrusted to them.18 Violation of the principle of trust arising from the arbitration agreement itself, which distinguishes arbitration from jurisdictional solutions for settling disputes.19 The parties must have confidence in all of the members of the arbitration court, not only in the arbitrator they have appointed or the president of the court. More specifically, the parties must have confidence in the arbitrator-president’s capacity to reach an equitable fair and proper award which takes the legitimate interests of the parties into account”20. Failure to comply or imperfect compliance with the duty of disclosure causes an—often irreparable—breach in the trust that must inevitably govern relations between the parties and the arbitrators throughout the arbitration process. 2.2 Legal and regulatory framework In order to determine whether the appointed arbitrator breached his or her duty of disclosure and assess the consequences of this conduct, we must refer to the legal and regulatory framework,21 which forms a special kind of ethics that is inherent in arbitration, presided over by the obligation to reveal the existence of any conflict of interests.22 This obligation, coupled with that of remaining independent and impartial throughout the evolution of the arbitration process, is fully recognised in different legal cultures23 and in arbitration legislation and regulations.24 National arbitration laws play an important role in defining and observing the ethical obligations of arbitrators, in particular when they regulate the disqualification of arbitrators, the content of the duty of declaration and the control exerted by state courts in terms of a possible cancellation of the arbitration award due to non-compliance with these obligations, which has yielded a wealth of jurisprudence. Even the most modern texts devote attention to the investigation of possible conflicts of interests for those who perform the arbitral function. Although the wording of these texts may not be similar, the general principal is universally accepted. One mandatory reference is Article 12.1 of the 1985 UNCITRAL Model Law25 and Article 11 of the 1976 Regulations emerging from this institution (modified in 2013)26 which expressly include the obligation to declare ‘all’ circumstances which may give rise to justifiable doubts regarding arbitrators’ impartiality or independence. This commitment, which gives the parties the opportunity to confirm the arbitrator’s own version regarding his/her impartiality, is present in all arbitration laws, not only those that faithfully follow the text of the Model Law, but also includes important developments in certain national systems, for example in Germany,27 France,28 or Spain.29 This current, which is favourable to information on the arbitrator, is developed even more precisely, if indeed that is possible, in the regulations of the administrative centres of arbitration and the most recent ethical codes.30 If this were not enough, numerous ethical texts coming from various different arbitration circles insist on the need to clarify the content of arbitrators’ duty of disclosure, shaping a progressively-developing soft law.31 Without a doubt, these instruments are unquestionably accepted, have been debated in countless national and international forums, and are progressively being accepted by state courts when they have to settle matters related to arbitration. As a recent example, it is sufficient to recall that on 12 February 2016, the ICC published the ‘Guidance Note on Conflict Disclosures by Arbitrators’, the content of which shall be explained below. During 2004, the IBA Guidelines on Conflicts of Interest in International Arbitration were approved,32 the most recent version of which is from October 2014 (the ‘Guidelines’),33 with the aim of setting a common standard in international arbitration to resolve conflicts of interests, reflecting international standards in the field. There is certainly a general consensus that arbitrators must be impartial and independent of the parties and that to this end, they must avoid conflicts of interests, among other things. In particular, the Guidelines determine in which cases an arbitrator should disclose, or not disclose, certain situations. As affirmed by the judgement of the Swiss Federal Court (1re Cour civ.) of 2 March 2008, Ces lignes guidelines certes n'ont pas valeur de loi (…); (…), lequel instrument (1), the instrument of the European Parliament and of the Council of the European Union (1), as amended by the Treaty establishing the European Coal and Steel Community, ne devrait pas manquer d'avoir une sur la pratique influence des institutions et des Tribunaux d'arbitrage.34 Along the same lines, within Spanish jurisprudence, on 28 January 2015, the judgement of the High Court of Justice of Madrid (Civil and Penal court) stated that Sobre el alcance y contenido del deber de revelación de los árbitros pueden tenerse en cuenta (…), dada la cláusula abierta del art. 17.3° Ley de Arbitraje, la Sala deja constancia de las Directrices de la International Bar Association (IBA) sobre los Conflictos de Intereses en el Arbitraje Internacional, aprobadas el 22 mayo 2004, por su precisión en la diferenciación de situaciones, y en la determinación de su incidencia sobre el deber de revelación del árbitro y sobre las consecuencias de la infracción de tal deber, aunque ello no presuponga, claro está, la aceptación de tales consecuencias por la Sala, que habrán ser ponderadas en cada caso.35 Continuing with the Tecnimont saga,36 the judgement of la Cour d’appel of Paris of 14 October 201437 annulled an order of the President of the Tribunal de Grande Instance (superior court) of Paris, which had granted the exequatur of an arbitration award pronounced in Barbados due to the fact that the sole arbitrator had not disclosed a possible conflict of interests in his declaration. At the time of his appointment in September of 2009, the arbitrator had declared that a partner of his company in Toronto had represented the sole shareholder of one of the parties in the arbitration ‘for several years’. However, in December of 2010, the firm published a report revealing that it had advised this shareholder in a much later transaction. The existence of public, easily-accessible information could result in the arbitrator’s conflict of interest being widely known in spite of it not having been mentioned in the declaration, and yet, for the cour d’appel, the party could not be reasonably expected to continue with the investigation if the arbitration proceeding has already commenced. For this reason, the arbitrator’s duty of disclosure must be continued and carried out as the conflict arises, regardless of whether the information is easy to access. What is not detailed in the ruling is when the relevant information must be considered as presenting the notes ‘publiques et très aisément accesibles’. The decision of the cour d’appel was confirmed by the judgement of the Cour de Cassation of 16 December 2015 which affirmed, inter alia, that … qu ′à supposer qu′à défaut d'enjeu économique, l'enjeu de communication d'une opération à la parelle interviennent des avocats de la structure à la l'arbitre appartient, puisse affecter l'indépendance d'arbitre And in the absence of an arbitrator, in the interests of parties, in the exercise of impartiality, in the case of the annulment of the annulment of the contract in which an account is susceptible of affecter l'indépendance de l'arbitre, quand The parties to the arbitration are not parties to the arbitration proceedings, they are not parties to the arbitration proceedings, they are not parties to the arbitration, nor are they parties to the arbitration proceedings, litige soumis à l'arbitre…38 We may state conclusively that the application of these Guidelines to a particular arbitration process presupposes the express agreement of the parties. But their dissemination and widespread usage have made them a habitual tool for arbitrators in the preliminary stage and for judges in the event of action for annulment, regardless of whether the arbitration is national or international. 2.3 Difficulties of declaration Confidence in arbitrators derives from a variety of circumstances and, while their professional and technical qualities are not disregarded, the onus is placed on their moral characteristics. Independence requires full transparency in terms of the relationships arbitrators, or the firm where they provide their services, may have with the parties or with the object of the dispute. This forced the designated arbitrator to check whether said transparency was ensured by his or her declaration, avoiding any ambiguity in its wording. The origins of arbitrators’ conflicts of interests generally lie within situations of lack of independence and of impartiality, and the catalogue for their detection is endless, as it ranges from determination of whether a piece of data omitted in the arbitrator’s declaration was intentional or inadvertent, to the scope of the arbitrator’s advice to either party, and includes the involvement of their firm in these matters39. Generally speaking, they usually refer to an arbitrator’s relationship with an institution or company which in turn has links to one of the parties in the case. It goes without saying that the self-examination of independence by the arbitrator, when he or she has to reach a decision on a possible conflict of interests, is not an easy task, due above all to the complexity of individualizing40 in certain cases: It may be complicated by the fact that the obligations of arbitrators in this area are not static, but must be observed at different stages of the arbitration process with regard to their supervision of different subjects with diverse consequences. In other words, a presumably static obligation, such as the state of the arbitrator’s impartiality and consequent absence of conflict of interests, may change over time, manifesting itself at a later stage in the process. Whereas after swift identification of the parties, their lawyers and the disputed issue, it may be deemed feasible that an arbitrator could objectively prove his or her ability to assume an appointment, the fact is that their analysis includes subjective considerations which may detract from the required suitability for the exercise of their mission.41 Unsurprisingly, the omission of notorious circumstances causes an unedifying semblance of partiality in the designated arbitrator, and many ethical codes consider that such a situation alone may serve as a basis for disqualification of the arbitrator, even if the undisclosed facts or circumstances do not justify it. Notwithstanding obviously fraudulent situations or those of manifest corruption, it may so happen that an arbitrator underestimates their degree of connection with either of the parties and feels that, in spite of the existence of an objective—professional or personal—relationship with one of them, their ability to remain impartial is undiminished because they are above any subjective consideration42. But subjective good faith cannot exonerate the arbitrator. It may also so happen that an inexperienced arbitrator decides to accept an appointment thoughtlessly, in spite of having noticed a clear situation of conflict of interest. The reasons for this incorrect course of action may be varied, hindering corrective measures and consequently any sanctions for liability. Even greater complexity arises when arbitrators are compelled to disclose the professional activities of the members of their company, especially when the law firm they are with is comprised of a large number of partners and is structured through several offices distributed in several different countries.43 It is not easy for the appointed arbitrators to reveal information they are personally unaware of in relation to the firm they provide their services for,44 but this difficulty does not automatically exempt them from their duty of disclosure,45 because the firm itself can detect any real or potential conflicts based on the names of the parties that appear in the arbitration, and facilitate nominees’ declaration of independence and impartiality. The consequence of the appointed arbitrator or president’s failure to disclose all the information available leads to presumption of a concealment of information warranting the consequent reproach and corresponding sanction, rather than of a lack of diligence. It should not be forgotten that the non-disclosure of all the available information, without filters or considerations, is liable to determine whether the award is cancelled and consequently, whether the arbitration fails to exploit its competitive advantage of speed. It is not enough to prove the appearance of dependency or bias; it must also be proven that these circumstances are sufficiently clear and obvious, so that they can be ascertained with ease and without special investigations. Arbitrators’ obligations extend to the need to investigate their career, their family, friends and professional relationships and the nature of their contact with the people who will intervene in the future arbitration.46 In particular, they are obliged to disclose to the parties any circumstances which may affect their decision and which cause, ‘in the minds of the parties, a reasonable doubt on their qualities of impartiality and independence that make up the very essence of the arbitration function’.47 Faced with the dilemma between what an arbitrator knows and what he or she must know in order to make a proper disclosure, a positive ethical duty of investigating the disputed situation is imposed. This is the only possibility there is for the parties to be certain of the neutrality of their action in the future arbitration process.48 But this attitude must be complemented by the obligations incumbent on the parties. As a general rule, the scope thereof should be limited to information that is notorious and accessible to the public.49 In this respect, the 2004 IBA Rules stated that the party was obliged to conduct a ‘reasonable investigation’ of the public provisions available, but this obligation disappeared from the 2014 draft of the Rules, after the triumph of tendencies with reservations towards this duty of investigation being imposed on the parties. This was intended to prevent this type of investigations from increasing mistrust of the integrity of the persons involved. As a general rule, designated arbitrators determine, according to their own criteria, whether, in their opinion, a certain circumstance may be seen by the parties as an incident that affects their ability to render an independent judgement. Their declaration thus becomes a protective instrument of the interests of the parties. Obviously, this is a subjective margin of appreciation, but one which affects the interests of third parties. For this reason, arbitrators who fail to properly exercise their duty of disclosure by making their personal interest prevail over the good administration of the court of arbitration consciously depart from the mission they are entrusted with. In addition, such an attitude damages them, too, as a correct declaration is an authentic ‘life insurance’50 policy against subsequent challenges to their actions. Consequently, when there is doubt regarding whether certain circumstances should or should not be disclosed, arbitrators should lean decisively towards declaration, ensuring the fulfilment of the obligations derived directly from the principles of impartiality and independence. To aid this course of action, they will make reasonable use of all means at their disposal in order to ensure they are complying with the aforementioned requirements and if, after this investigation, they continue to have doubts regarding their independence and impartiality, they should decline their appointment. To sum up, a full statement by the arbitrator: (i) provides the parties and the administrative centre with the necessary information to assess the suitability of the arbitrator for a particular dispute, enabling them to review it at their convenience; (ii) safeguards arbitrators against possible subsequent challenges; and, (iii) stimulates transparency and confidence in the arbitration process.51 From this point on, the obligation of disclosure by the appointed president or arbitrator who is a member of a professional firm acting on a global scale which is therefore liable to have numerous conflicts of interest, should be a basic precaution. It was also peremptory, because it could alert the parties to the risks of attacking their independence and impartiality, thus—if true—immunizing the arbitration process against any subsequent action related to said accepted risks. Arbitrators should give a precise answer regarding their personal situation and that of the firm they work in, based on complete information on the parties, and verify, as objectively as possible, the absence of conflict of interests. Certainly, the appointed arbitrator has sufficient elements to determine which aspects should be disclosed to the parties so that they may consider whether they genuinely affect his or her independence and in what cases he or she should abstain; and to do so, he or she must choose an active attitude, carrying out certain inquiries in the company they are with if necessary, following the practice that is customary, as shall be seen below, in this type of legal corporation. More specifically, in relation to conflicts of interest that affect the firm where the arbitrator works as a lawyer or counsellor, with the risk of the award being annulled if these investigations are not carried out diligently.52 What is more, the appointed arbitrator is obliged to make a declaration aimed at putting the situation in objective terms as prescribed by legal systems, that is to say, independence must be assessed objectively: it is sufficient for legitimate uncertainty to be generated for doubt to be cast over its existence, without the parties having to proceed to verify it.53 2.4 Consequences of the breach of the duty of disclosure As indicated, among other sanctioning instruments, breach of the duty of disclosure on the part of the arbitrator may lead to annulment of the award.54 Establishing a specific judicial control system for the arbitral award and the consequences of its application are factors which decisively influence the choice of a particular state as the venue for arbitration. A similar procedure consolidates a doctrine that guarantees legal security, enhancing not only the development of the institution domestically, but also the possibilities of hosting international arbitration.55 Therefore, it is not a matter of removing control of awards, but rather of using it properly as all eyes in arbitration circles attentively observe the evolution of the practice of the courts of justice on this matter.56 Judicial control of judgements responds to a need arising from constitutionally assumed objectives, such as that of ‘promoting justice’ and also the guarantees of legal defence and enforceability equivalent to that of a court ruling which the state dispenses to arbitration awards, after certain requisites have been satisfied. Research into the practice of state courts in favour of cancellation of the award in these situations is truly overwhelming and has been sufficiently studied,57 so it is not appropriate to repeat it here. Suffice it to say that in the USA, Section 10(a)(2) of the Federal Arbitration Act allows an award to be challenged when ‘there was evident partiality or corruption in the arbitrators, or either of them’ and that in England, case law has established that the removal of an arbitrator requires proof of a ‘real danger of bias’. We must also refer to the repercussions in France and Spain, respectively, of the Tecnimont and Delforca 2008, Sociedad de Valores, SA v Banco de Santander, SA affairs.58 And furthermore, it should be stated for the record, from the standpoint of the control exerted by the judge, that the latter’s role in determining the bias of the arbitrator must be minimal and very restricted, as the role of pleading the circumstances which any challenge to the arbitrator is based on corresponds to the parties, as ‘the true architects of their own arbitration processes’. 59 Within the grounds in the UNCITRAL texts included in state arbitration legislation, there is no specific reason which establishes annulment of the arbitration award due to incorrect declaration of conflict of interests by the arbitrator. However, doctrine and jurisprudence have included this situation in no fewer than three of the unanimously accepted grounds.60 It has been indicated, in this regard, that an award affected by bias may be challenged fundamentally61: Because by virtue of the bias of the arbitrator, the affected party was unable to assert his/her rights (Articles 34.2.a.(ii) and 36.1.a.(ii) of the UNCITRAL Model Law; Article V.1.(b) of the 1958 New York Convention). Because by virtue of this defect the award is contrary to the public policy of the state in question (Article 34.2.b. (ii) and 36.1.b. (ii) of the UNCITRAL Model Law; Article V.2.(b) of the 1958 New York Convention)62. As highlighted in the judgement of the Paris cour d’appel of 10 March 2011 (EURL Tecso v SAS Neoelectra Group): ‘The independence of the arbitrator is a key component of arbitration and as such falls within the national and international public policy’. What is more, as highlighted in the arbitration manual by Fouchard, Gaillard and Goldman, ‘The fact that an arbitration award has been ruled by an arbitrator accredited as not independent with regard to a party may constitute a violation of international public policy’63. Because the court has not been properly constituted. This ground is unanimously recognized by jurisprudence64 and doctrine.65 We must emphasize that these grounds tend to be applied strictly, and in serious situations which in some way could not be invoked during processing of the case. For example, in the USA the Supreme Court Ruling of 18 November 1968 (Commonwealth Coatings v Continental Casualty) determined that the ethical standard applicable to an arbitrator is not limited to subjective impartiality, but requires avoidance of any appearance of bias66. In general, American courts have followed this approach in evaluating opposition to the enforcement of arbitral awards on the grounds of lack of impartiality of the arbitrator as a violation of public policy.67 3. CONFLICT OF INTERESTS IN LARGE LAW FIRMS 3.1 Verification of the existence of the conflict: ‘Chinese walls’ From an ethical standpoint conflict of interests is one of the greatest challenges law firms are faced with today.68 It affects the most essential principles of the legal profession—independence, professional freedom, integrity—having a direct impact on client confidence, professional secrecy and loyalty.69 In the specific context of arbitration, conflicts do not arise solely from situations in which an arbitrator has a personal interest, directly or potentially influencing the impartial, objective performance of the mission entrusted to him or her,70but also from the relationships between the firm where the services are being provided and the parties in the arbitration proceedings he or she must settle. This type of conflict emerges from a fact or circumstance in which the person who is in the position to decide on a case, or the law firm where that person provides his or her services, has a material interest stemming from a relationship with one of the parties in the dispute. A circumstance of such substance poses an absolute question as to the independence of the arbitrator and entails a set of punitive consequences which include, as noted, annulment of the award. Law firms have grown to unprecedented size by branching, merging and external expansion, shaping themselves as companies that provide legal services with a permanent staff of lawyers and advisors, who form part of the entity through a contract or an express association agreement, essentially giving advice on Corporate Law in the main economic settings of the global market.71 This growth has inevitably broadened the potential for conflicts of interests because, as the size of a company expands and it increases the number of lawyers and past and present clients it has, there is a greater likelihood that potential clients have interests that oppose those of other clients, both current and former.72 For this reason, firms are increasingly foresighted in order to avoid the incidence of said conflicts, which come in extremely varied forms. They may arise from the mobility of lawyers in offices located in other cities or countries, leading to a situation where a client from the old firm may be an opposing party to a client in the new company; for example, in large firms, one department may represent a client who is an opposing party of another client who is advised by a different department, located in another country. In all of these situations, the lawyers involved and their companies could be disqualified due to a conflict of interests. A difficult balance arises here, between the right of an individual to his or her own freely chosen lawyer, and the need to maintain the highest ethical standards of professional responsibility. Naturally, the possibility of conflicts of interest increases in relation to the size of the law firm, forcing many of them to refuse legal assistance for clients who request it in the event that an incompatibility arises. And not only does this propitiate, as mentioned at the beginning of this paper, the appearance of ‘independent arbitrators’, but it also benefits medium-sized firms or the so-called boutique law firms, correlatively. To this end what is known as ‘Chinese walls’ 73 appear—in this context, isolation or screening systems, that is to say, mechanisms devised with the aim of preventing the negative impact of the principle of imputation in large professional firms.74 In this way, an attempt is made to enable lawyers belonging to the same firm to represent or advise two or more clients with opposing interests, without compromising confidentiality of information.75 The ‘Chinese walls’ system has special prestige in the field of large multidisciplinary firms which try to alleviate the principle of imputation referred to above and which involves the ‘contamination’ of the firm by the conflicts of each of its members. An effect which would obviously generate serious consequences for dealing with large clients or companies. Certainly, we are faced with a highly controversial connection. Some jurisdictions of common law countries have been authorising recourse to this type of mechanism for some decades now, and have established different strategies for their admissibility, ranging from the physical separation of different departments of the law firm to internal control procedures and application of sanctions when lawyers fail to respect the requirements the isolation implies. However, in spite of strict compliance with the above requisites, ensuring absolute separation between professionals who are continuously connected physically, and above all electronically, is a truly difficult task. But if the firm can prove that the arbitrator proposed is kept completely separate from the activity in question, then there is no reason for recusal. Actually, the fact that the activities of the arbitrator’s large law firm involve one of the parties to the arbitration does not inexorably entail the existence of a conflict, but each situation must be studied individually and thoroughly. This specific study must reveal, on the one hand, the scope of the services provided by the firm to the client, and the duration of the assistance and relationship of the arbitrator to the firm in question, and on the other hand, the role played by the candidate arbitrator or, where appropriate, by the appointed arbitrator, and their responsibilities within it. To facilitate this operation, some firms divide possible conflicts of interest into geographical areas and inform the interested party of the relationships they have had with any of the parties over recent years. This provides valuable information allowing for accurate description of any circumstance they may wish to disclose or, if appropriate, refraining from taking part in the arbitration. In the USA, the judgement of the Court of Appeals (Second Circuit) of 9 July 2007 (Applied Indus Materials Corp v Ovalar) confirmed the decision of the district court to cancel an arbitral award due to manifest bias of the arbitrator. The latter, after accepting the post, discovered that a subsidiary of his firm was involved in drawing up a contract representing one of the parties, declaring that he was not involved in said operation and therefore there was no reason whatsoever for his withdrawing from the arbitration. Neither party opposed this, but later clear evidence appeared linking the arbitrator to the aforementioned activity. The court did not recognise the arguments the arbitrator made in his defence, based on the existence of a ‘Chinese wall’, and considered that when the arbitrator is aware of a potential conflict their effort to conceal it is indicative of a clear bias. To this effect, it stated that While we are not prepared to Find That a ‘Chinese Wall’ is an Inadequate substitute for investigation, we note That it is preferable for the arbitrator to consult the parties before putting a Chinese Wall ‘into place, rather than informing the parties after That I've Chosen course of action unilaterally’.76 3.2 Treatment of the issue in the IBA Guidelines (A) Scope The IBA Rules on conflicts of interest from 2004, modified in 2014, naturally deal with this subject. To study them, we must at the outset state that the Rules are structured in two parts. The first part contains a series of general principles related to impartiality, independence and the duty of disclosure of the arbitrator. The second part sets out a non-exhaustive list of cases classified by colours in which the arbitrator can be found, and which shape their duty of disclosure.77 (i) Operational principles. The general rules of the Guidelines can be summarized in the following operational principles78: First and foremost, this is an objective analysis of the relevant facts and circumstances, which must be applied from the perspective of a prudent, informed person. The Guidelines specify this criterion, pointing out that the arbitrator cannot act if ‘facts or circumstances exist, or have arisen since the appointment which, from the point of view of a reasonable third person having knowledge of the relevant facts and circumstances, would give rise to justifiable doubts as to the arbitrator’s impartiality or independence’ (General Standard 2.b). It is also an analysis of reasonability, which is not exhausted in the confirmation of an actual or manifest bias (actual bias) but extends to cases of apparent or probable bias (apparent bias). The Guidelines indicate in this regard that ‘doubts are justifiable if a reasonable third person, having knowledge of the relevant facts and circumstances, would reach the conclusion that there is a likelihood that the arbitrator may be influenced by factors other than the merits of the case as presented by the parties in reaching his or her decision’ (General Standard 2.c). Given the principle that nobody can be the judge of their own case, justifiable doubt will necessarily exist that impedes the action of the arbitrator if there is an identity between the arbitrator and a party, if the arbitrator is the legal representative of one of the parties or if the arbitrator has a significant financial interest in the outcome of the case (General Standard 2.d). The Guidelines add that these types of conflicts, described specifically in the Non-Waivable Red List, cannot be remedied by waiver, even by express agreement of the parties (General Standard 4.b). If there is a conflict that is serious, but not as serious as those referred to in the previous paragraph, the arbitrator may act (i) if all parties, all arbitrators and the arbitration institution, or other appointing authority (if any), have full knowledge of the conflict of interest; and (ii) all parties expressly agree that such a person may serve as arbitrator, despite the conflict of interest. (General Standard 4.c). Examples of these types of conflicts are given in the Guideline’s Waivable Red List. Any other circumstance which may give rise to justifiable doubts as to the independence or impartiality of the arbitrator shall deemed waived if the parties do not reject the arbitrator within 30 days after they effectively learn of the possible conflict (General Standard 4.a). (ii) Lists (A) Red list. In the red category, distinction is made between non-waivable and waivable situations. Non-Waivable Situations: situations in which it is understood that an arbitrator is identified with either party, thus violating the general principle that no one can be judge and party in the same procedure. In these cases, there is not even any need for the arbitrator to disclose a situation of this kind as, according to the Guidelines, the arbitrator cannot act as such in the procedure and must resign without acceptance of the parties to validate the existence of the conflict of interest. Waivable red situations are those for which there may be justifiable doubts on the impartiality or independence of the arbitrator and which said arbitrator must disclose as a consequence. However, unlike non-waivable situations, the parties may anyway agree to the arbitrator performing his/her duties provided they do so expressly. Waivable Situations (in principle, the arbitrator should decline). Waivable Red Situations are those which may present justifiable doubts regarding the impartiality and independence of the arbitrator and which he or she must disclose as a consequence. However, unlike non-waivable situations, the parties may anyway agree to the arbitrator performing his/her duties provided they do so expressly. Silence is not seen as waiver. Given its serious nature, they shall be deemed waivable only in the event that the parties, in awareness of the conflict of interests, explicitly express their desire that the person they have chosen performs or continues to perform the duties of arbitrator. This list includes: the relationship the arbitrator may have had with a party as a lawyer in the firm, or a participant in the contractual situation under debate; past professional connection to an affiliate of the parties. These relationships specifically include 2.3.6. The arbitrator’s law firm currently has a significant commercial relationship with one of the parties, or an affiliate of one of the parties. The Waivable Red List includes the situation in which the arbitrator’s law firm has a significant commercial relationship with one of the parties, or an affiliate of one of the parties. (B) Orange category (the arbitrator may decline). The Orange List covers intermediate situations which, while they should be disclosed, do not necessarily justify a challenge. These are specific situations which, depending on the particular circumstances or facts or the case, may, in the eyes of the parties, create doubts as to the impartiality or independence of the arbitrator. In all of these cases, it is understood that the parties accept the arbitrator if, after the latter has disclosed the corresponding facts or circumstances, they do not make use of their right to challenge the arbitrator within the period established for this purpose. The orange list of grounds includes: ‘3.1.4. The arbitrator’s law firm has, within the past three years, acted for or against one of the parties, or an affiliate of one of the parties, in an unrelated matter without the involvement of the arbitrator. 3.2.1. The arbitrator’s law firm is currently rendering services to one of the parties, or to an affiliate of one of the parties, without creating a significant commercial relationship for the law firm and without the involvement of the arbitrator. 3.2.2. A law firm or other legal organization that shares significant fees or other revenues with the arbitrator’s law firm renders services to one of the parties, or an affiliate of one of the parties, before the Arbitral Tribunal. 3.2.3. The arbitrator or his or her firm represents a party, or an affiliate of one of the parties to the arbitration, on a regular basis, but such representation does not concern the current dispute’. (C) Green category: Finally, the Green List contains a non-exhaustive enumeration of specific situations which, from an objective viewpoint, are not likely to create and indeed do not create a conflict of interests. Therefore, the arbitrator has no duty to disclose the situations included in the Green List. As is set forth in the Explanation to General Standard 3(a), a limit must be set to the duty of disclosure based on reasonability; in some cases, the objective test must prevail over the merely subjective test based on ‘the perspective of the parties’. The IBA Guidelines’ treatment of this problem seems adequate, although in principle, they decree that the arbitrator must be considered as a subject identified with the firm he or she belongs to; the growing size of law firms is a fact which, in the opinion of those who drew up the guidelines, must be also taken into account when finding a balance between the importance of maintaining confidence in the impartiality and independence of arbitrators in international arbitration and the right of the parties to appoint an arbitrator of their choice. Hence the fact that the guidelines establish that the existence of activities of the law firm to which the arbitrator belongs, involving either party, does not automatically constitute a conflict of interests or a grounds for disclosure, and the arbitrator should make a reasonable assessment of the circumstances in each specific case, in view of the relevance of said activities (eg, their nature or scope, the time they occur at or their economic significance). With regard to the time when these activities may have been carried out, the IBA Guidelines’ Orange initially sets a limit of the three years prior to the time of analysis of the possible conflict of interests, although the same guidelines also very sensibly note that said period of time may be either excessive or insufficient, depending on the circumstances of the case. (B) Application The practice employed by administrative centres of arbitration and the courts of justice to resolve actions for annulment shows that the Guidelines have attained significant prestige, making them something more than a simple guide79. This was highlighted by the judgement of the High Court (Commercial Court) of England and Wales of 16 December 2015 (W Ltd v M SDN BHD),80 above all when the contested arbitration is international.81 If a conflict of interests falls within its scope of application, above all the red list or the orange list, few sensible arbitrators will accept an appointment, even though deep down they feel that the situation is not in line with reality. And correlatively, few litigants will propose a candidate with these characteristics. The projection of the Guidelines onto conflicts of interest linked to the arbitrator’s membership of a law firm has given rise to varied practice, which is not always contrary to rejecting the disclosure, as is revealed by the judgement of the Cour d’appel of Brussels of 29 October 2007 (Eureko v Republique de Pologne), in which the challenge to the declaration made by the arbitrator SM Schweber was rejected for having been formulated late and failure to accredit the existence of a conflict between the firm he belonged to and one of the parties. Among the decisions that apply the IBA Guidelines in Spain, the High Court of Justice of Madrid (1st Civil and Penal court) ruling of 2 June 2016 (Iberpistas SA CE v Sacyr, SA) is not an example of diligence of the annulment resolution body when resolving the ‘jumble’ prompted by the connections between the arbitrator, who belonged to a large law firm, and the subsidiaries of one of the parties Here, the independence of the arbitrator is questioned due to a relationship with the parent company (CLM) of a subsidiary (C) with which business transactions were maintained by a subsidiary (D) of another parent company (A) of which in turn one of the parties to the arbitration (CDV) is a subsidiary. That is to say, the arbitrator’s connection is claimed because the award could benefit one of the parties in the arbitration proceedings, the subsidiary of a company which had common business links, through another subsidiary, with the subsidiary (pardon the repetition) of the parent company which the arbitrator advised on matters of good corporate government. The above jumble is indicative of the absence of reasons to doubt the impartiality or independence of the arbitrator questioned. Whatever the precautions or cautionary measures adopted by the parties for selecting the arbitrator in this case, the latter could hardly be required to be aware of the business transactions carried out between one of the subsidiaries of the corporation he was advising on good corporate governance and one of the subsidiaries that depended on one of the parties to the arbitration procedure.82 Quite apart from the important judgement of the Supreme Court of Sweden of 9 June 2010 (Case No T 156-09), on the repeated appointment of an arbitrator and a law firm by the same party83 restricting the applications of the IBA Guidelines, the practice of the Arbitration Institute of the Stockholm Chamber of Commerce is meticulous in the application of this instrument to conflicts of interest that must be resolved in the arbitration cases entrusted to it, reflecting a fairly strict view of them. In this way, if an arbitrator or arbitrator’s law firm had had previous contact with one of the parties over the past three years and the arbitrator were challenged, the SCC tends to sustain the challenge and dismiss the arbitrator, even if a real relationship has not been proven.84 In the SCC/V 081/2012 arbitration governed by SCC rules, the defendant challenged the arbitrator appointed by the complainant, claiming that the arbitrator’s law firm had prior commitments to the complainant within the three years set out in paragraph 3.1.4 of the IBA Guide Orange List; it also accused the arbitrator of not having disclosed all of the circumstances that gave rise to justifiable doubt on his independence and impartiality. The Stockholm Chamber of Commerce Committee admitted the challenge.85 In the SCC/V 124/2011 arbitration, which was also governed by the SCC Rules, the defendant challenged the arbitrator appointed by the complainant alleging that in its confirmation of acceptance, the arbitrator declared that his law firm had dealt with issues in favour of and against the defendant and one of its subsidiary companies and although the candidate explained that these matters had been dealt with by other people in the law firm, the defendant insisted that this implied a significant diminishment of trust in the impartiality of an arbitrator. The Stockholm Chamber of Commerce Committee admitted the challenge.86 One very revealing case is the controversy that arose in France around the Tecnimont affair after the cancellation of a partial award due to the fact that the president of the arbitral tribunal—a highly prestigious international arbitrator—who was counsellor of one of the largest law firms in the world, had not disclosed certain circumstances that existed at the time of his appointment, specifically that he was a member of the law firm that advised one of the parties. The so-called ‘Tecnimont saga’ set in motion different French legal actions that extended over nearly ten years and although the final ruling pronounced was against annulment of the award,87 it gave rise to broad-reaching debate in French doctrine and that of other countries, which laid a solid foundation for the treatment of this matter. In addition, the teachings contained in the ruling do not diminish the theses favourable to disclosure, as what it ultimately questioned was that the complaint regarding the circumstances disclosed had not been raised at the correct time. These reservations of the French Cour de cassation are coupled with those expressed by the same court in the Tecso v Neolectra Group affair, considering that the cour d’appel had not precisely proven the reasons that might cause reasonable doubt regarding the arbitrator’s impartiality and independence in the mind of the parties.88 3.3 Treatment of the issue by the ICC Regardless of the ‘ICC Guidance Note on conflict disclosures by arbitrators’, of 12 February 2016, the ICC published, on 26 September 2016, a ‘Note to parties and arbitral tribunals on the conduct of the arbitration under the ICC rules of arbitration’ 89 in paragraph 20 of which arbitrators’ duty of disclosure is linked to the firm where they provide their services. To accomplish this, it stipulates that every arbitrator or prospective arbitrator must assess what circumstances—if indeed any exist—may cast doubt on their independence or generate reasonable doubt as to their impartiality. And by way of a non-exhaustive illustration, when the arbitrator or prospective arbitrator or his or her law firm represents or advises, or has represented or advised or acted against, one of the parties or one of its affiliates has a business relationship with one of the parties or one of its affiliates, or a personal interest of any nature in the outcome of the dispute. The arbitrator has a professional or close personal relationship with counsel to one of the parties or the counsel’s law firm. Finally, when the arbitrator acts or has acted as arbitrator in a case involving one of the parties or has in the past been appointed as arbitrator by one of the parties or one of its affiliates. 4. CONCLUSIONS The existence in arbitration of a conflict of interests is not in itself injurious, and constitutes a kind of ‘benign pathology’90; what is harmful is poor management thereof, implying the risk of involving injury. Conflict of interest does not call for a situation in which the damage will inevitably occur or even one in which it has already occurred: it consists of a state of risk for the integrity and independence of professional performance. In their investigation, professionals must assess the circumstances that give rise to it and not the results of its existence. The probability that a potential specific situation presents the risk of having a negative impact on the professional’s performance is sufficient. Therefore, it is independent of any damage that may arise for third parties, or of the potential damage caused to the prestige of the professional group, and the consequent mistrust generated by this action in society.91 The need to resolve conflicts of interest in arbitration inexorably leads to a complex accumulation of interventions which add substantial costs and delays to the resolution of the dispute. It is true that complaints can be used abusively, as a simple delaying tactic for the sole purpose of delaying the arbitration, but the optimal solution for this question in the realms of the arbitration court, the administrative centre or ultimately, the ordinary courts, deciding issues of disqualification of arbitrators due to conflict of interests, is a guarantee for the parties to the dispute, for the arbitration process itself and for the state where the latter is based. It is precisely by avoiding challenges exclusively for the purpose of delaying and the unjustified withdrawal of proposed arbitrators, that the system of lists to be included in the IBA Guidelines plays an important role. Regardless of the above, to avoid the situations described, large law firms are called upon to improve their conflict verification systems, to prevent arbitrators passing inadvertently from a situation of independence to one of dependence of their own free will. Moreover, the information they must provide has to be exhaustive.92 If this is not the case, grave consequences may occur, above all when the verification of the new situation takes place at a late stage of the arbitration procedure, revealing serious doubts as to the arbitrator’s ability to act independently and impartially. Arbitrators should never forget the responsibility of the duty they are performing93 and that said duty is largely upheld by the trust the parties have placed in them. For this reason, they must present sufficient guarantees of independence and impartiality based on reasoning that involves the defence of due process and the pursuit of the truth.94 Breaking this rule leads to the irregular composition of the court. Since arbitrators are obliged to disclose to the parties any circumstance which may affect their decision, and which gives rise to reasonable doubt in the minds of said parties regarding their qualities of impartiality and independence, which make up the very essence of the arbitral function, appointed arbitrators or presidents must send the parties specific information about a potential conflict of interests in the case with their firm, even if it is only a subsidiary thereof. Non-disclosure by appointed arbitrators of the interests of their firm with one of the parties prevents the other party from properly exercising its right to defence, since it cannot challenge the arbitrator at the appropriate time in the procedure. The facts and circumstances should not be assessed by the arbitrator, but from the perspective of the parties or that of a reasonable third party. It matters little that the arbitrator is considered to be independent or impartial. What does matter is that in the eyes of the parties, the reasonable doubts regarding his or her independence are cleared. Silence, however, may be interpreted as a deliberate concealment of a situation in the eyes of the parties, with negative consequences when it comes to initiating a possible challenge. When called upon to reveal any conflict of interest upon being appointed, arbitrators must, among other considerations, check all their own professional relationships and those of the firm where they provide their services, so as to be able to identify those which could be understood by the parties as potential polluting situations of their independent and impartial nature. They must also disclose all those they have, or may have had, knowledge of, in order to allow the parties to make a proper verification and thereby prevent the work of the arbitration proceedings going to waste through cancellation of the award. Footnotes 1 R.H Aronson, “Conflict of Interest” (1977) 52 Washington L. Rev. 807. 2 Conflicts of interest affect such complex notions as morality, ethics and deontology. Vid., in general, P. Mayer, “La règle morale dans l'arbitrage international” in Etudes offertes Pierre Bellet (Litec 1991), 379. From studies of J. Paulsson, operators in international arbitration have greatly increased interest in ethics in arbitration: J. Paulsson, “Standards of Conduct for Counsel in International Arbitration” (1992) 3 Am Rev. Int “l Arb. 214; id., “Ethics, Elitism, Eligibility” (1997) 14.4 J. Int “l Arb. 13; CA Rogers, “Function Fit and in Legal Ethics: Developing a Code of Conduct for International Arbitration” (2002) 23.2 Michigan Int'l J. L. 341; C. Benson, “Professional Ethics Can Wait? The Need for Transparency in International Arbitration” (2009) 3 Disp. Resol. Int´l 78; Ch. Jarrosson, “Ethique, déontologie normes juridiques et dans l'arbitrage” in G. Keutgen (dir), L'éthique dans l'arbitrage. (Actes du Colloque Francarbi, 9 décembre 2011); in these studies CA Rogers, Ethics in International Arbitration (Oxford University Press 2014). 3 B.A. Green, “Attorneys’ Conflicts of Interest in International Arbitration”, in Contemporary Issues in Arbitration and Mediation. The Fordham Papers 2014, (Leiden, Koninklijke Brill, 2015) 73. 4 WW Park, “Arbitrator Integrity: The Transient and the Permanent” (2009) 46 San Diego L Rev 629. 5 RM Mosk, ‘Attorney Ethics in International Arbitration’ (2010) 5 Berkeley J Int’l L 32. 6 SD Orsi, ‘Ethics in International Arbitration: New Considerations for Arbitrators and Counsel’ (2013) 3 Arbitration Brief 92. 7 P Lalive, ‘Inquiétantes Dérives de L’Arbitrage CCI’ (1995) 13 Bull ASA 634 id, ‘Dérives Arbitrales’ (2005) 23 Bull ASA 587 and (2006) 24 Bull ASA 2. 8 C Castres Saint Martin, Les Conflits D’intérêts dans L’arbitrage Commercial International, Thèse de doctorat (Université Panthéon–Assas, 2015) 19. 9 JC Fernández Rozas, ‘Contenido Ético del Deber de Revelación del Árbitro y Consecuencias de su Trasgresión’ (2013) 6 Arbitraje Revista de Arbitraje Comercial y de Inversiones 799. 10 The notion of independent arbitrator is more than just a badge on a card. It has a spiritual content that is an expression of a state of mind and is manifested in a constant attitude of seeking rigor and perfection in the development of the arbitral function. Vid, inter alia, AS El-Kosheri y KY Youssef, ‘L’indépendance des Arbitres Internationaux: le Point de vue d’un Arbitre’ (2007) Supplément spécial (L’indépendance de l’arbitre) Bull CCI 45. 11 This phenomenon that it has been occurring for several years as evidenced by the considerations of A Berlinguer, ‘Impartiality and Independence od Arbitration in Practice’ (1995) 6 Am Rev Int’l Arb 339. 12 NG. Ziadé, ‘How Should Arbitral Institutions Address Issues of Conflicts of Interest?’ In MA Raouf, Ph Leboulanger and NG Ziadé (eds) Festschrift Ahmed Sadek El-Kosheri: From the Arab World to the Globalization of International Law and Arbitration (Alphen aan den Rijn, Wolters Kluwer, Law & Business, 2015) 211-223. 13 http://www.iccwbo.org/News/Articles/2016/ICC-Court-adopts-Guidance-Note-on-conflict-dis closures-by-arbitrators/. Vid in (2016) 9.2 Arbitraje. Revista de Arbitraje Comercial y de Inversiones 613. The Guidance Note is based on the principle of information according to which the parties have the right to know everything about any fact or circumstance that they deem relevant to ensure the impartiality and independence of the arbitrators. It is understood that not all disclosure by an arbitrator implies the existence of a conflict, so that if it were to occur, the Court will decide on the challenge or confirmation of the arbitrator. In general, the Note emphasizes the importance of assuming potential conflicts of interest not only on an individual basis but also on the law firms to which the arbitrators belong. 14 P Tercier, ‘L’éthique des Arbitres’ in G Keutgen (dir.) L’éthique dans l’arbitrage. Actes du Colloque Francarbi, 9 Décembre 2011 (Bruselas, Bruylant, 2011) 23. 15 P Lalive, ‘On the Neutrality of the Arbitrator and of the Place of Arbitration’, C Reymond and E Bucher (dir) Recueil de travaux suisses. sur l'arbitrage international, Schulthess Polygraphischer Verlag (International Council for Commercial Arbitration, 1984) 23–33. 16 D Cohen, ‘Indépendance des Arbitres et Conflits d’intérêts” (2011) 3 Rev Arb 611. This principle refers, for example, art 1464.3 of the French Code of Civil Procedure reformed in 2011: “[l]es parties et les arbitres agissent avec célérité et loyauté dans la conduite de la procédure”. Vid M–E Ancel, ‘Le nouveau droit français de l’arbitrage: le meilleur de soi–même’ (2011) 4 Arbitraje: Revista de Arbitraje Comercial y de Inversiones 822. 17 X de Mello, ‘Réflexions sur les Règles Déontologiques Elaborées par l’International Bar Association pour les Arbitres Internationaux’ (1988) 2 Rev arb 333. 18 WW Park, ‘Arbitration’s Protean Nature: The Value of Rules and the Risks of Discretion’ (2004) 19 Mealey’s International Arbitration Report 1 accessed 10 September 2017. 19 Jarrosson (n 3). It is understood that the parties are not obliged to trust the arbitrator and have every right to lose the trust given to it. In accordance with the Judgment of cour d’appel of Paris of 12 February 2009 (SA J & P Avax v société Tecnimont SPA): ‘le lien de confiance entre l’arbitre et les parties devant être préservé continûment, celles–ci doivent être informées pendant toute la durée de l’arbitrage des relations qui pourraient avoir à leurs yeux une incidence sur le jugement de l’arbitre et qui seraient de nature à affecter son indépendance’ (Th Clay (2009) Rev arb 1986 ; JC Fernández Rozas (2010) 3 Arbitraje. Revista de Arbitraje Comercial y de Inversiones 597). 20 AC Foustoucos, ‘Débats’ (1990) 2 Rev Arb 376. 21 J–D Bredin, ‘La révélation. Remarques sur l’indépendance de l’arbitre en Droit Interne Français’. In Etudes de procédure et d’arbitrage en l’honneur de Jean–François Poudret (Berna, Stampfli 1999) 349. 22 L Shore, ‘Disclosure and Impartiality: An Arbitrator’s Responsibility vis–a–vis Legal Standards’ (2002) Disp Res J accessed 10 September 2017. 23 JE Figueroa, ‘Éthics in International Arbitration’ (2003) 18 Mealey’s Int’l Arb Rep 41. 24 AK Hoffmann, ‘Duty of Disclosure and Challenge of Arbitrators: the Standard Applicable under the New IBA Guidelines on Conflicts of Interests and the German Approach’ (2005) 21 Arb Int’l 427. 25 ‘When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him’. 26 ‘When a person is approached in connection with his or her possible appointment as an arbitrator, he or she shall disclose any circumstances likely to give rise to justifiable doubts as to his or her impartiality or independence. An arbitrator, from the time of his or her appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties and the other arbitrators unless they have already been informed by him or her of these circumstances’. 27 The German Arbitration Act, from 1 January 1998 amending the tenth book of the Code of Civil Procedure (ZPO), points out in his art 1036, para 1, ‘A person asked to serve as an arbitral judge is to disclose any and all circumstances that might give rise to doubts as to his impartiality. An arbitral judge is under obligation to disclose such circumstances to the parties without undue delay, also after his appointment and until the close of the arbitration proceedings, if he has failed to so inform them previously’. 28 According to art 1456.2º the Code of Civil Procedure (introduced by the Decree of 13 January 2011): ‘il à l'arbitre appartient, avant d'accepter sa mission, de toute révéler circonstance susceptible d'affecter are indépendance ou are impartialité. Il lui est également fait sans obligation de révéler délai de même toute nature circonstance naître après qui pourrait l'acceptation de sa mission’. 29 In the ap IV of the Preamble of Spanish Act 60/2003 of 23 December on Arbitration says ‘all arbitrators, regardless of how they are appointed, are bound to honour due impartiality toward and independence from the parties to the arbitration. By way of a guarantee of compliance, they are bound to notify the parties of any fact or circumstance that might detract from such impartiality or independence’. At the same time, the art 17.2º says ‘2. Persons proposed to act as arbitrators must disclose any circumstances likely to give rise to justifiable doubts as to their impartiality or independence. From the time of their appointment, arbitrators will without delay disclose any such circumstances to the parties’. The jurisprudence emanating from the Superior Courts of Justice has incorporated the duty of revelation inserted in the Rules of the IBA: SSTSJ Madrid CP 1ª September 24 2014, JUR\2014\298785; January 28 2015, Roj: STSJ M 1286/2015—ECLI:ES:TSJM:2015:1286; May 26 2015, Roj: STSJ M 6571/ 2015—ECLI:ES:TSJM:2015:6571; September 17 2015, Roj: STSJ M 10504/2015—ECLI:ES:TSJM: 2015:10504; April 14 2016, AC 2016\1278; June 2 2016, JUR 2016\182484; July 19 2016, JUR 2016\ 209874. 30 Vgr, art 18.2º CIMA Arbitration Rules 2014, ‘Within ten (10) days of being informed by the Court of their appointment, an Arbitrator shall disclose any circumstances likely to create justifiable doubts as to their impartiality, independence or availability, by means of a signed statement. From the time of appointment and throughout the entire procedure, all Arbitrators shall disclose promptly to the parties, to the Court and to the other Arbitrators –in the case of collegiate tribunals– any new circumstances’ (vid F Ruiz Risueño, Comments Regulation of the Civil and Commercial Court of Arbitration (Madrid, Iprolex, 2015) 213–216). Art 9.8º Arbitration rules of the European Court of Arbitration: ‘The arbitrators shall be completely independent of the parties prior to and during the arbitration proceedings and shall act impartially in their role as arbitrators and will enclose at the time of their acceptance, a signed statement of full independence, impartiality and neutrality vis a vis the parties, their officers and their counsel. Within the ambit of the arbitral proceedings, the arbitrators shall have contacts with the parties and their counsel only as provided by the arbitral proceedings. In the event of exchange of correspondence between a party and the Arbitral Tribunal the Tribunal shall ensure that each party's rights to have full knowledge of the statements made by the other party or parties are observed in all circumstances’. Vid Also vgr, art 11, 2nd to 4th CCI Arbitration rules; art 5, 2nd and 3rd LCIA Arbitration Rules; art 6.2° ISCID Arbitration rules; art 4.1st and 2nd Arbitration rules of Association française d'arbitrage. Without limitation sufficient reference to the ‘Charte éthique de l'arbitrage’ published in October 2011 by the Conseil national des Barreaux of France, which it insists on the disclosure of personal relationships or business and ‘l'esprit d'indépendance’ of the arbitrators. 31 WW Park, ‘Chapter 7: The Procedural Soft Law of International Arbitration: Non-Governmental Instruments’ in L Mistelis & J Lew (eds) Pervasive Problems in International Arbitration (Kluwer Law International, 2006) 142; G Kaufmann-Kohler, ‘Soft Law in International Arbitration: Codification and Normativity’ (2010) J Int”l Disp Settlement 1–17, esp 5. 32 DH Freyer and J Bédard, ‘The Concept of Ethical Rules or the New IBA Guidelines on Conflicts of Interest in International Arbitration’, ADR & the Law, 23ª ed, Developments in the Law: 2004, AAA, Juris, 225–245 [ accessed 10 September 2017]; Ph Landolt, ‘The IBA Guidelines on Conflicts of Interest in International Arbitration: an Overview’ (2005) 22 J Int’ Arb 409. 33 Vid [ accessed 10 September 2017]. Vid D Arias, ‘The Revised IBA Guidelines on Conflicts of Interest in International Arbitration’ (2015) 9 World Arbitration and Mediation Review 129; MR Joelson, ‘A Critique of the 2014 International Bar Association Guidelines on Conflicts of Interest in International Arbitration’ (2015) 26 Am Rev Int”l Arb 483; N Voser, ‘The Revised IBA Guidelines on Conflicts of Interest in International Arbitration’ (2015) 33 ASA Bull 636; A Mourre, ‘Conflicts Disclosures: The IBA Guidelines and Beyond’. In S Brekoulakis, JDM Lew and L Mistelis (eds) The Evolution and Future of International Arbitration (Alphen aan den Rijn, Wolters Kluwer 2016) 357–364. 34 Case 4A_506/2007, para 3.3.2.2 a [ accessed 10 September 2017]. 35 Free translation:’“On the scope and content of the arbitrators' duty to disclose, they may be taken into account (…), given the open clause of art. 17.3º Arbitration Act, the Board places on record the guidelines of the International Bar Association (IBA) on Conflicts of Interest in International Arbitration, adopted on May 22, 2004, for its precision in differentiating situations, and determining their impact on the duty of disclosure of the arbitrator and the consequences of the breach of that duty, even if it does not presuppose, of course, the acceptance of such consequences by the Chamber, which will be weighed in each case’ Roj: STSJ M 1286/2015 – ECLI:ES:TSJM:2015:1286. 36 Vid (n 41). 37 Judgment of Cour d’appel (Pôle 1 - Chambre 1) 14 October 2014 (SA Auto Guadalupe Investissements (AGI) v Columbus Acquisitions Inc): ‘contrairement à ce que laissait entendre la déclaration d’indépendance de M. Alvarez, alors que l’instance arbitrale était en cours, trois avocats du cabinet Fasken Martineau prêtaient leur concours à Leucadia dans une opération que le cabinet regardait comme un enjeu de communication; que de telles circonstances, qui étaient ignorées d’AGI lors de la désignation de M. Alvarez, étaient de nature à faire naître dans l’esprit de cette partie un doute raisonnable quant à l’indépendance et l’impartialité de l’arbitre; qu’il convient dès lors d’annuler la sentence en raison de l’irrégularité de la composition du tribunal arbitral’ accessed 10 September 2017. 38 The Judgment of Cour de Cassation of France (Civ 1) of 16 December 2015 accessed 10 September 2017. 39 Park (n 5) 635. 40 F De Trazegnies Granda, ‘Conflictuando el Conflicto. Los Conflictos de Interés en el Arbitraje’ (2006) 1 Lima Arbitration 162. 41 United States Case Commonwealth Coatings v Continental Casualty November 18th 1968: ‘He cannot be expected to provide the parties with his complete and unexpurgated business biography. But it is enough for present purposes to hold, as the Court does, that where the arbitrator has a substantial interest in a firm which has done more than trivial business with a party, that fact must be disclosed’ [393 US 145 (US S Ct 1968); (1969) 44 St John’s L Rev 93; accessed 10 September 2017]. Vid RC Hartley, ‘Appearance of Bias as Grounds for Vacating an Arbitrator’s Award – Implications of Commonwealth Coatings Corp. v. Continental Casualty Co. for Labor Arbitration’ (1969) 30 Univ Pittsburgh L Rev 566–571 [ accessed 10 September 2017]. 42 Perhaps this was the attitude of the arbitrator that motivated the annulment of the award in which he intervened in Spain SAP Madrid 12ª June 30 2011 (Delforca 2008, Sociedad de Valores, SA/Banco de Santander, SA), JUR\2011\347818. Vid J Sánchez Calero Guilarte, ‘La abstención y recusación del árbitro’ (2012) 5 Arbitraje Revista de arbitraje Comercial y de Inversiones 335. 43 A Crivellaro, ‘Does the Arbitrators’ Failure to Disclose Conflicts of Interest Fatally Lead to Annulment of the Award? The Approach of the European State Courts’, 4.12-14 Arbitration Brief 121. 44 This was highlighted in the case Tecnimont, object of the Judgment of the Cour d’appel of Paris of 12 February 2009 (n 41). 45 The Judgment of the Stockholm Court of Appeal of September 27 2009 (ProfilGruppen v KPMG) (cf K Daele, Challenge and Disqualification of Arbitrators in International Arbitration (Alphen aan den Rijn, Kluwer Law International 2012) 339) annulled the award, regardless of whether the arbitrator knew whether or not his involvement in the matter had been accepted by the arbitrator was decisive, all the more so because he was appointed the head of his Stockholm office. 46 Th Clay, ‘La disparition de l’obligation d’indépendance de l’arbitre au profit de l’obligation de révélation (note sous Paris, 12 février 2009)’ (2009) Rev Arb 186 [AQ3]. Illustrative is the Judgment of the Supreme Court of Sweden of November 19 2007 (Anders Jilikén v Ericsson) (Stockholm Int’l Arb Rev, 19, 2007, 167 ss) which annulled an arbitral award on the grounds that it was established that the defendant was a client of the law firm with which the President of the court shared offices and that he provided part-time legal advice as an external consultant, a matter which the President had not disclosed. 47 Judgment of the Court of Appeal of Paris of April 2 2003 (Frémarc v ITM Entreprise) (E Gaillard (2003) Rev Arb 1231). 48 KA Windsor, ‘Defining Arbitrator Evident Partiality: The Catch-22 of Commercial Litigation Disputes’ (2009) 6 Seton Hall Circuit Rev 191 accessed 10 September 2017]. 49 The Judgment of the Court of Appeal of Paris of December 17 2013 (MD Oursel v SARL Sermaplus) (2014) Rev Arb 219. 50 Th Clay, ‘L’obligation de révélation de l’arbitre au prisme de l’indiscipline de la Cour d’appel de Paris’ (2010) 4 Cah Arb 1147. 51 CA Rogers, ‘Regulating International Arbitrators: A Functional Approach to Developing Standards of Conduct’ (2005) 41 Stanford J Int’l L 53. 52 Vid. The Judgment of the Supreme Court of Sweden, November 19 2007, Case No T 2448 –06/NJA 2007 (Lind) []. 53 M Henry, ‘Les obligations d’indépendance et d’information de l’arbitre à la lumière de la jurisprudence récente’ (1999) 2 Rev Arb 193; ibid, Le devoir d’indépendance de l’arbitre (LGLJ 2001). 54 Ch Seraglini, ‘Droit du Commerce international’ in J Béguin and M Menjuncq (dirs) (Litec 2005) 980–988; Ph Fouchard, ‘Le statut de l’arbitre dans la jurisprudence française’ (1996) 3 Rev Arb 364. 55 Y Derains, ‘France as a Place for International Arbitration’ in The Art of Arbitration. Liber Amicorum Pieter Sanders (Deventer 1982) 112–114; S Jarvin, ‘London as a Place for International Arbitration: Some Observations in Light of the Arbitration Act 1979 and the Bank Mellat v. Helleniki Techniki Case’ (1984) 1 J Int’l Arb 59; REE Goodman, ‘Choosing a Place for International Arbitration: the New York Option’ (1985) 2 J Int’l Arb 39; M Storme, ‘Belgium: A Paradise for International Commercial Arbitration’ (1986) 8 Int’l Bus Lawyer 294 ; L Anglade, ‘Ireland as a Place for International Arbitration’ (2001) 12 Am Rev Int’l Arb 263; A Chan and A Woodward, ‘Singapore as a Place for Arbitration: Recent Developments’ (2002) 69 Arbitration 10; JH Carter, ‘Choosing the Place of Arbitration: New York, Practising Law Institute’ (2009) 1 Int’l Arb 133; S Morgan, ‘Choosing the Place of Arbitration: London Practising Law Institute’, ibid, 107–130; U Draetta, ‘Italy as a Place for International Arbitrations: the Myths of the “Italian Torpedo”, the “Irritual” Arbitration et alia’ (2013) 2 Rev Dr Aff Intern 159. 56 CM Schmitthoff, ‘Finality of Arbitral Awards and Judicial Review’. In JDM Lew (ed), Contemporary Problems in International Arbitration (Martinus Nijhoff Publishers 1987) 230–241. 57 Fernández Rozas (n 10) 830–835. 58 In Spain SAP 12ª 30 junio 2011, JUR\2011\347818; (2012) 4.2 Arbitraje. Revista de arbitraje comercial y de inversiones 528. 59 The Judgment of the Supreme Court of the United States of November 18 1968 (Commonwealth Coatings v Continental Casualty) (n 41). 60 Castres Saint Martín (n 9) 284 ss. 61 LJE Timmer, ‘The Quality, Independence and Impartiality of the Arbitrator in International Commercial Arbitration’ (2012) 78 Arbitration 355. 62 M Henry, ‘Le devoir de révélation dans les rapports entre arbitres et conseils : de la suggestion aux électrochocs’ (2011) 3 Cah Arb 787. 63 Ph Fouchard, E Gaillard and B Goldman, Traité de l’arbitrage commercial international (Litec, 1996, esp. n° 1073) 603–604. 64 The Judgments of the Cour d'appel de Paris of April 6 1990 (Philipp Brothers v Icco) M de Boisséson (1990) Rev Arb 880; 2 July 1992 (Société Raoul Duval v société Merkoria Sucden) (1996) Rev Arb 411: ‘irrégulièrement composé, au sens de l’article 1502 2° du nouveau Code de procédure civile, du fait de la nomination d’un arbitre ne présentant pas à l’égard de toutes les parties les garanties d’indépendance que tout justiciable est en droit d’exiger’; 16 May 2002 (STPIF v Ballestrero) (2003) Rev Arb 1231; The Judgments of the Cour de Cassation of France (1re civ.) October 20 2010, n° 09–6811 y n° 09–68997 accessed 10 September 2017; y 1 febrero 2011, n° 11–11084 accessed 10 September 2017. 65 D Mouralis, ‘Les exigences d’indépendance et d’impartialité de l’arbitre’ (2013) 31 Petites Affiches 18. 66 Above (n 41). 67 GB Born, International Arbitration. Cases and Materials (Alphen aan den Rijn, Wolters Kluwer 2011) 1185; T Webster, ‘Annulment of Awards for Arbitral Bias’ (2015) 9 Dispute Resolution International 5. 68 In France, the question was asked to the Minister of Justice in 2013 by H Mariton according to which ‘les arbitres désignés sont souvent des avocats associés dans de grands cabinets spécialisés, et l’on ne peut nier que certains puissent être liés à des conflits d’intérêts pouvant remettre en cause leur impartialité”, la Garde des Sceaux answered that “il appartient à l’arbitre, avant d’accepter sa mission de révéler toute circonstance susceptible d’affecter son indépendance ou son impartialité’ (Rép Min 31033–JO 01/10/2013. Castres Saint Martin (n 9) 228). 69 A Aparisi Miralles, ‘El principio de lealtad profesional en la praxis de la abogacía: el conflicto de intereses’ in El principio de lealtad profesional en la cuadernos de extensión jurídica (Universidad de los Andes) (24, 2013) 59. 70 Cohen (n 17) 611–652. 71 A Hernández-Gil Álvarez-Cienfuegos, ‘Retos de la Abogacía ante la Sociedad Global’. In F de Montalvo Jääskeläinen (dir) Retos de la abogacía ante la Sociedad Global (Cizur Menor, Civitas 2012) 93–98. 72 (1980) 128 Univ Pennsylvania L Rev 677. 73 L Aitken, ‘“Chinese Walls” and Conflicts of Interest’ (1992) 18 Monash University L Rev 91 [ accessed 10 September 2017]; Ch Hollander, Conflicts of Interest & Chinese Walls (Sweet & Maxwell 2000). 74 According PD Finn, ‘A Wall is an organisational contrivance within an enterprise designed to prevent the flow of confidential information to or from a part or parts of that enterprise. Its alleged purpose is to prevent it being able to be said that an ‘insulated’ area of a firm or company has in fact used or will be in a position to use confidential information possessed by another part of the same firm or Company’ (cf ‘Conflicts of Interest and Professionals’ in Professional Responsibility (Legal Research Foundation Inc Seminar conducted at the University of Auckland, 28 and 29 May 1987), 33. Vid R Tomasic, ‘Chinese Walls, Legal Principle and Commercial Reality in Multi–Service Professional Firms’ (1991) 14 University of New South Wales L J 46. 75 Ch Hollander and S Salzedo, Conflicts of Interest and Chinese Walls (3ª edn, Sweet & Maxwell 2008). 76 [492 F3d 132 (2d Cir 2007); accessed 10 September 2017]. Windsor (n 49) 194–195. 77 G Bertrou and Q De Margerie, ‘Obligation de révélation de l’arbitre: tentative de synthèse après la publication des nouvelles règles de l’IBA’ (2015) 1 Cah Arb 29. 78 Freyer and Bédard (n 33) 235 ss. 79 Vid a documented study of the practice in ‘The IBA Guidelines on Conflicts of Interest in International Arbitration: The First Five Years 2004–200’ (2010) 4 Disp Res Int’l 5. 80 E Rushton, ‘England and Wales: Hidden conflicts in arbitration – W Limited v M SDN BHD’ (2016) April 22 Insurance Bulletin, 4–5 81 According to this decision: ‘It would be possible simply to say that the 2014 IBA Guidelines are not a statement of English law and then not enter into any examination of them. However the present arbitration is international, and parties often choose English Law in an international context. Thus the role of this Court has an international dimension. I therefore prefer to consider the 2014 IBA Guidelines, as I have done, and explain why I do not, with respect, think they can yet be correct’ [2016 EWHC 422 (Comm) accessed 10 September 2017]. 82 Previously, the Judgment of the Court of First Instance of Brussels of 22 December 2006 had stated that the challenge claim was not sufficiently founded accessed 11 September 2017. Vid F Lefèvre and N Résimont, ‘Impartiality and Independence of the Arbitrator. A View from Brussels (A Comment on Republic of Poland v. Eureko BV et al.)’. In The Practice of Arbitration. Essays in Honour of Hans van Houtte (Hart Publications 2012) 29–26. 83 (2010–2011) The Baker & McKenzie Int’l Arb Yearbook 382. 84 H Jung, ‘SCC Practice: Challenges to Arbitrators. SCC Board decisions 2005-2007’ (2008) 1 Stockholm Int’l Arb Rev 1–18 accessed 10 September 2017: N Lindström, ‘Challenges to Arbitrators – Decisions by the SCC Board during 2008–2010’ accessed 7 September 2017. 85 F Mutis Tellez, ‘Arbitrators’ Independence and Impartiality: a Review of SCC Board Decisions on Challenges to arbitrators (2010–2012)’ accessed 8 September 2017]; Fernández Rozas (n 10) 828, note 87. 86 This attitude of the Committee was also reflected in CSS/V 170/2011 y CSS/V 174/2011. 87 The Judgment of the Cour d’appel of París (1ère Ch Sec C) 13 February 2009 accessed 10 September 2017 it was annulled, but this judgment was reversed by judgment of the Cour de Cassation of 4 November 2010 on the ground that the Cour d'appel had ruled on certain facts which had not been relied on by the appellant and that, had changed the subject of the controversy accessed 10 September 2017. Thus, the case was referred to a new trial before the Cour d'appel de Reims, that of 2 November 2011, issued a new one in which confirmed the annulment of the award. Clay (n 51)1147 ss. A Crivellaro, ‘The Arbitrator’s Failure to Disclose Conflicts of Interest: is it per se a Ground for Annulling the Award?’ in Liber Amicorum Bernardo Cremades (Madrid, La Ley 2010) 309: G Pluyette, ‘Actualités du droit de l’arbitrage; l’obligation de révélation des arbitres et le contrôle de l’ordre public de fond par la Cour de Cassation’ in Mélanges en l’honneur du professeur Bernard Audit: les relations privées internationales (LGDJ/ Lextenso éditions 2014), 623–633. However, the judgment of the Cour de cassation of 25 June 2014, reversed the previous judgment on the grounds that it corresponded to cour d’appel ‘de rechercher si, relativement à chacun des faits et des circonstances qu’elle retenait comme constitutif d’un manquement à l’obligation d’indépendance et d’impartialité de l’arbitre, le délai de 30 jours imparti par le règlement d’arbitrage pour exercer le droit de récusation avait, ou non, été respecté’ accessed 10 September 2017. Finally, as a result of this ruling, the Cour d'appel de Paris had to rule again by rejecting, by Judgment of April 122916, the appeal made by Avax in 2007 accessed 10 September 2017. Clay, ‘Tecnimont, saison 5: La dissolution de l’obligation de révélation dans le devoir de réaction’ (2016) 2 Cah Arb 447. 88 Judgment of the Cour de cassation (Ch civ 1) October 10 2012 (Tecso v Neolectra Group) accessed 9 September 2017; Fernández Rozas (n 10) 834-835. 89 accessed 10 September 2017 90 Castres Saint Martin (n 9) 24. 91 Aparisi Miralles (n 70) 60 and 65. 92 Cf Crivellaro (n 44) 139. 93 As stated E Kleiman, ‘l’arbitre ne doit donc jamais oublier qu’il doit aux parties, aux institutions d’arbitrage et surtout à l’arbitrage, le meilleur de lui–même’ (cf, ‘Arbitre, Intuitu personae’ in Liber Amicorum en l’honneur de Serge Lazareff (Pedone 2011) 381. 94 Park (n 5) 695. © The Author(s) 2018. Published by Oxford University Press on behalf of the London Court of International Arbitration. All rights reserved. For Permissions, please email: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/about_us/legal/notices) TI - Conflicts of interests of arbitrators in international law firms JF - Arbitration International DO - 10.1093/arbint/aiy007 DA - 2018-03-01 UR - https://www.deepdyve.com/lp/oxford-university-press/conflicts-of-interests-of-arbitrators-in-international-law-firms-EYMUociPUx SP - 105 EP - 128 VL - 34 IS - 1 DP - DeepDyve ER -