Disqualification of Arbitrators - ICSID Convention Arbitration (2006 Rules)

Either party may propose the disqualification of a Tribunal member once the Tribunal has been constituted (Article 57 of the ICSID Convention).

A proposal to disqualify an arbitrator must be made promptly and, in any event, before the proceeding is declared closed (ICSID Arbitration Rule 9). Failure to object promptly will result in the rejection of the proposal. 

Grounds for Disqualification

An arbitrator may be disqualified on the ground of incapacity, manifest lack of the qualities required by Article 14(1) of the ICSID Convention or ineligibility for appointment under Articles 37 to 40 of the ICSID Convention (Articles 56 and 57 of the ICSID Convention, Arbitration Rule 8 and 9).

Article 14(1) of the ICSID Convention specifies the qualities required of Panel members.  They must possess high moral character, recognized competence in the fields of law, commerce, industry or finance, and reliability to exercise independent judgment. These qualities must also be met by candidates appointed from outside the Panel.

The most frequently alleged ground for disqualification of a member of a Tribunal is manifest lack of the qualities required by Article 14(1) of the ICSID Convention, in particular, lack of reliability to exercise independent judgment.

The applicable legal standard for disqualification is an objective one, based on how a reasonable third party would evaluate the evidence. The subjective belief of the party proposing the disqualification does not satisfy the legal standard under the ICSID Convention.  While the IBA Guidelines on Conflicts of Interest are not binding, they may serve as useful references in a challenge under the ICSID Convention.  

Procedure

Proposal to Disqualify

The challenge procedure starts with the submission by a party of a proposal to disqualify one or more members of the Tribunal.  The proposal is filed with the ICSID Secretary-General. A proposal to disqualify suspends the proceeding.  Once received, the proposal is transmitted to the Tribunal or to the Chairman of the ICSID Administrative Council if the challenge is to a sole arbitrator or the majority of the Tribunal. The proposal is also transmitted to the other party, and a schedule for submissions is established.  The schedule will provide an opportunity for the challenged arbitrator to furnish explanations and for the other party to make observations on the proposal.

Decision

The decision on the proposal is usually made by the other members of the Tribunal (Article 58 of the ICSID Convention, Arbitration Rule 9(4).  However, the decision will be made by the Chairman of the ICSID Administrative Council when the other members are equally divided or where the proposal refers to a sole arbitrator or to a majority of the Tribunal.

Resumption of the Proceeding

The decision will either reject or uphold the proposal for disqualification.  If the proposal is rejected, the proceeding will resume immediately with the same Tribunal.

A proposal that is upheld results in the disqualification of the challenged arbitrator and, consequently, a vacancy on the Tribunal.  A vacancy resulting from the disqualification of an arbitrator is filled using the same method by which the disqualified arbitrator had been appointed (Arbitration Rule 11(1)).  If no new appointment is made and accepted within 45 days of the notification of the vacancy, the appointment will be made by the Chairman of the ICSID Administrative Council at the request of a party (Arbitration Rule 11(3)). As soon as the vacancy has been filled, the proceeding will resume from the point when the proposal was submitted (Arbitration Rule 12).

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