Maxim Osadchiy, Lord Goldsmith Qc, Natalie L. Reid
The exact phrasing and application of arbitrator bias standards often vary across jurisdictions. This lack of uniformity is not conducive to predictability and finality of arbitrations, and does not build confidence in the integrity of a process still largely defined by party selection of the decision-makers. The article examines key aspects of the legal framework governing arbitrator challenge applications in four leading arbitral jurisdictions: the United States, England and Wales, France, and Singapore. It questions whether the textual differences in the formulation of arbitrator bias standard(s) in these jurisdictions are in fact significant, or could actually lead to conflicting outcomes.The article concludes that while the lack of consistency is less acute than is commonly perceived, there would be benefit in greater uniformity.To that end, the authors call for wider reception of soft law instruments in this area where appropriate, consistent with both the longstanding view of arbitration as the preferred method for resolving cross-border business disputes in these and other leading jurisdictions, and increasing interest and acceptance of commercial arbitration in emerging jurisdictions.
{"title":"State Courts’ Attitude to Arbitrator Challenge Applications: Rich Tapestry of Arbitrator Bias Standards","authors":"Maxim Osadchiy, Lord Goldsmith Qc, Natalie L. Reid","doi":"10.54648/bcdr2021008","DOIUrl":"https://doi.org/10.54648/bcdr2021008","url":null,"abstract":"The exact phrasing and application of arbitrator bias standards often vary across jurisdictions. This lack of uniformity is not conducive to predictability and finality of arbitrations, and does not build confidence in the integrity of a process still largely defined by party selection of the decision-makers. The article examines key aspects of the legal framework governing arbitrator challenge applications in four leading arbitral jurisdictions: the United States, England and Wales, France, and Singapore. It questions whether the textual differences in the formulation of arbitrator bias standard(s) in these jurisdictions are in fact significant, or could actually lead to conflicting outcomes.The article concludes that while the lack of consistency is less acute than is commonly perceived, there would be benefit in greater uniformity.To that end, the authors call for wider reception of soft law instruments in this area where appropriate, consistent with both the longstanding view of arbitration as the preferred method for resolving cross-border business disputes in these and other leading jurisdictions, and increasing interest and acceptance of commercial arbitration in emerging jurisdictions.","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124829423","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Third-party funding is becoming increasingly commonplace in international arbitration proceedings today. Although traditionally used to fund impecunious parties, modern third-party funding has shifted to financing parties who may have the necessary capital to pursue a dispute but wish to minimize cash flow disruptions.This prevalence of third-party funding in international arbitration is creating unique conflict of interest scenarios regarding an arbitrator’s independence and impartiality. However, many arbitral institutions and rules are not adapted to appropriately regulate the use of third-party funding to preserve the integrity of proceedings. For the most part, arbitral rules do not require a party to disclose the existence of a third-party funding agreement or the identity of the funder.This creates the risk of undisclosed or unknown conflicts arising after an arbitrator is appointed and severely disrupting the proceedings.This article examines how to best mitigate such risks by incorporating a disclosure regime within the current arbitral framework. This article contends that the mandatory disclosure of the existence of a funding arrangement and the identity of the funder would safeguard the requirements of independence and impartiality while allowing modern third-party funding to coexist with international arbitration.
{"title":"Adapting Disclosure Obligations to the Realities of Modern Third-Party Funding","authors":"B. M. C. Sanz-Pastor","doi":"10.54648/bcdr2021002","DOIUrl":"https://doi.org/10.54648/bcdr2021002","url":null,"abstract":"Third-party funding is becoming increasingly commonplace in international arbitration proceedings today. Although traditionally used to fund impecunious parties, modern third-party funding has shifted to financing parties who may have the necessary capital to pursue a dispute but wish to minimize cash flow disruptions.This prevalence of third-party funding in international arbitration is creating unique conflict of interest scenarios regarding an arbitrator’s independence and impartiality. However, many arbitral institutions and rules are not adapted to appropriately regulate the use of third-party funding to preserve the integrity of proceedings. For the most part, arbitral rules do not require a party to disclose the existence of a third-party funding agreement or the identity of the funder.This creates the risk of undisclosed or unknown conflicts arising after an arbitrator is appointed and severely disrupting the proceedings.This article examines how to best mitigate such risks by incorporating a disclosure regime within the current arbitral framework. This article contends that the mandatory disclosure of the existence of a funding arrangement and the identity of the funder would safeguard the requirements of independence and impartiality while allowing modern third-party funding to coexist with international arbitration.","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129459776","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Article 14(1) of the ICSID Convention sets forth certain qualities that all ICSID arbitrators must possess. They must, in the words of Article 14(1), be “persons of high moral quality and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment.” In accordance with Article 57 of the ICSID Convention, a party may propose the disqualification of an arbitrator—or in briefer terms, challenge him or her— “on account of any fact indicating a manifest lack of the qualities required” by Article 14(1). Pursuant to Article 58 of the Convention, the decision on a proposal to disqualify an arbitrator will be taken by the other members of the tribunal, unless they are equally divided or the proposal relates to a sole arbitrator or the majority of the arbitrators, in which cases the decision will be taken by the Chairman of the Administrative Council of ICSID (the President of the World Bank). Parties to ICSID Convention arbitration cases have frequently set in motion the challenge procedures of Articles 57 and 58. Proposals to disqualify arbitrators have been made in over 100 such cases. About a quarter of the disqualification proposals have been met by resignations of the challenged arbitrators. Almost all the other proposals have been rejected by decision of the unchallenged arbitrators or of the Chairman of the Administrative Council.The decided proposals all apparently sought disqualification owing to a supposed manifest lack of reliability for independent judgment. The decisions themselves, however, have taken different approaches to the standard to be applied for disqualification, that there be a fact indicating a manifest lack of the required quality.Three main approaches can be discerned from the cases.They are examined in this article through the lenses of the individual decisions that inaugurated or prominently reinforced the respective approaches.Albeit in varying degrees, the approaches identified with these decisions have each highlighted a weakness of the disqualification procedures of the ICSID Convention, that they may less adequately guarantee arbitral independence than the corresponding procedures of leading international commercial arbitration systems. A concluding part of the article considers the scope for addressing the problem through amendments of the ICSID Arbitration Rules.
{"title":"Three Approaches to Challenges of ICSID Arbitrators for Manifest Lack of Reliability for Independent Judgment","authors":"A. R. Parra","doi":"10.54648/bcdr2021003","DOIUrl":"https://doi.org/10.54648/bcdr2021003","url":null,"abstract":"Article 14(1) of the ICSID Convention sets forth certain qualities that all ICSID arbitrators must possess. They must, in the words of Article 14(1), be “persons of high moral quality and recognized competence in the fields of law, commerce, industry or finance, who may be relied upon to exercise independent judgment.” In accordance with Article 57 of the ICSID Convention, a party may propose the disqualification of an arbitrator—or in briefer terms, challenge him or her— “on account of any fact indicating a manifest lack of the qualities required” by Article 14(1). Pursuant to Article 58 of the Convention, the decision on a proposal to disqualify an arbitrator will be taken by the other members of the tribunal, unless they are equally divided or the proposal relates to a sole arbitrator or the majority of the arbitrators, in which cases the decision will be taken by the Chairman of the Administrative Council of ICSID (the President of the World Bank).\u0000Parties to ICSID Convention arbitration cases have frequently set in motion the challenge procedures of Articles 57 and 58. Proposals to disqualify arbitrators have been made in over 100 such cases. About a quarter of the disqualification proposals have been met by resignations of the challenged arbitrators. Almost all the other proposals have been rejected by decision of the unchallenged arbitrators or of the Chairman of the Administrative Council.The decided proposals all apparently sought disqualification owing to a supposed manifest lack of reliability for independent judgment.\u0000The decisions themselves, however, have taken different approaches to the standard to be applied for disqualification, that there be a fact indicating a manifest lack of the required quality.Three main approaches can be discerned from the cases.They are examined in this article through the lenses of the individual decisions that inaugurated or prominently reinforced the respective approaches.Albeit in varying degrees, the approaches identified with these decisions have each highlighted a weakness of the disqualification procedures of the ICSID Convention, that they may less adequately guarantee arbitral independence than the corresponding procedures of leading international commercial arbitration systems. A concluding part of the article considers the scope for addressing the problem through amendments of the ICSID Arbitration Rules.","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129953268","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Francisco Orrego Vicuña (1942–2018):A Life of Service to International Law and Diplomacy","authors":"Nassib G. Ziadé","doi":"10.54648/bcdr2021013","DOIUrl":"https://doi.org/10.54648/bcdr2021013","url":null,"abstract":"","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"36 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130573781","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article aims to provide an overview of the issues associated with a litigation funding agreement (LFA) governing the non-recourse financing of an arbitration case. It covers the key items relevant when structuring a litigation funding transaction, from understanding what drives the financial terms to performing due diligence on the merits of the case and designing the sophisticated contractual framework required to deal with the interests of the various stakeholders.
{"title":"Mechanics of Third-Party Funding Agreements:A Funder’s Perspective","authors":"Mick Smith, Antonio Wesolowski","doi":"10.54648/bcdr2018005","DOIUrl":"https://doi.org/10.54648/bcdr2018005","url":null,"abstract":"This article aims to provide an overview of the issues associated with a litigation funding agreement (LFA) governing the non-recourse financing of an arbitration case. It covers the key items relevant when structuring a litigation funding transaction, from understanding what drives the financial terms to performing due diligence on the merits of the case and designing the sophisticated contractual framework required to deal with the interests of the various stakeholders.","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124482901","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article provides an update on key recent developments in investor-state arbitration concerning various aspects of third-party funding. These include the obligation to disclose third-party funding and the scope of such disclosure obligations; the implications of third-party funding for the allocation of costs and security for costs applications; the funder’s influence on the funded party; and confidentiality and privilege issues.The article begins with a brief overview of related developments in national legislation and case law, which have been influential in driving trends in investor-state arbitration, but which also are important to keep in mind when it comes to enforcing an arbitral award.
{"title":"Recent Developments in Third-Party Funding in Investor-State Arbitration","authors":"C. Lamm, Eckhard R. Hellbeck","doi":"10.54648/bcdr2018002","DOIUrl":"https://doi.org/10.54648/bcdr2018002","url":null,"abstract":"This article provides an update on key recent developments in investor-state arbitration concerning various aspects of third-party funding. These include the obligation to disclose third-party funding and the scope of such disclosure obligations; the implications of third-party funding for the allocation of costs and security for costs applications; the funder’s influence on the funded party; and confidentiality and privilege issues.The article begins with a brief overview of related developments in national legislation and case law, which have been influential in driving trends in investor-state arbitration, but which also are important to keep in mind when it comes to enforcing an arbitral award.","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130164556","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Third-party funding does not raise issues of legality: it is generally admitted by tribunals without their disputing its inherent legitimacy. Rather, what causes concern is the lack of transparency vis-à-vis the non-funded parties and tribunals. The threshold issue is, thus, disclosure of third-party funding and the timing and extent of such disclosure. At the outset, the non-funded party has the right to know whether its opponent is in receipt of third-party funding, who the funder is, what the funder’s role and interest in the case are, and whether the funder has purchased the claim, reducing the nominal claimant to a mere front man. The arbitrators, in turn, need to know whether the involvement of the funder raises any conflicts of interest for them. This is not to say that third-party funding should be banned, but there needs to be some rebalancing through the implementation of a procedure allowing for appropriate disclosure.This article addresses the way in which parties, tribunals, arbitral institutions, investment treaties, and international soft law rules have been and still are refining rules of conduct so as to fairly protect the parties’ divergent interests, while safeguarding the transparency and integrity of the process.
{"title":"Disclosure and Conflicts of Interest in Relation to Third-Party Funding","authors":"A. Crivellaro, L. Melchionda","doi":"10.54648/bcdr2018008","DOIUrl":"https://doi.org/10.54648/bcdr2018008","url":null,"abstract":"Third-party funding does not raise issues of legality: it is generally admitted by tribunals without their disputing its inherent legitimacy. Rather, what causes concern is the lack of transparency vis-à-vis the non-funded parties and tribunals. The threshold issue is, thus, disclosure of third-party funding and the timing and extent of such disclosure. At the outset, the non-funded party has the right to know whether its opponent is in receipt of third-party funding, who the funder is, what the funder’s role and interest in the case are, and whether the funder has purchased the claim, reducing the nominal claimant to a mere front man. The arbitrators, in turn, need to know whether the involvement of the funder raises any conflicts of interest for them. This is not to say that third-party funding should be banned, but there needs to be some rebalancing through the implementation of a procedure allowing for appropriate disclosure.This article addresses the way in which parties, tribunals, arbitral institutions, investment treaties, and international soft law rules have been and still are refining rules of conduct so as to fairly protect the parties’ divergent interests, while safeguarding the transparency and integrity of the process.","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"30 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115859093","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Not many studies have been devoted to the issue of cost allocation in general, let alone in the context of third-party funding. The fact that arbitral tribunals enjoy broad discretion in assessing and allocating costs probably explains this relative lack of interest.Yet, third-party funding, be it in the classical sense with a professional funder or when there is a contingency fee arrangement, entails some specificities. One specificity is that there is an element of profit for the funder.This element of profit is the cost of funding itself with a professional funder (quite often a multiple of the initial amount) or, in the case of contingency fee arrangements, the portion of the fees in excess of those based on regular hourly rates. Whether this element of profit is recoverable by way of cost allocation is debated.We would submit that it shifts an abnormal risk onto the losing party and should not, therefore, be recoverable
{"title":"Cost Allocation and Third-Party Funding in International Arbitration","authors":"P. Pinsolle","doi":"10.54648/bcdr2018009","DOIUrl":"https://doi.org/10.54648/bcdr2018009","url":null,"abstract":"Not many studies have been devoted to the issue of cost allocation in general, let alone in the context of third-party funding. The fact that arbitral tribunals enjoy broad discretion in assessing and allocating costs probably explains this relative lack of interest.Yet, third-party funding, be it in the classical sense with a professional funder or when there is a contingency fee arrangement, entails some specificities. One specificity is that there is an element of profit for the funder.This element of profit is the cost of funding itself with a professional funder (quite often a multiple of the initial amount) or, in the case of contingency fee arrangements, the portion of the fees in excess of those based on regular hourly rates. Whether this element of profit is recoverable by way of cost allocation is debated.We would submit that it shifts an abnormal risk onto the losing party and should not, therefore, be recoverable","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131885837","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The third-party funding industry is growing globally and third-party funders have been displaying increasing interest in the MENA region. Although not regulated in most MENA jurisdictions, the use of third-party funding is not specifically prohibited and is usually deemed permissible. However, the extent and success of its use in MENA will depend on local legal systems providing streamlined enforcement mechanisms and giving litigants and third-party funders confidence in their ability to enforce and collect on favorable decisions. On this front, most MENA jurisdictions are clearly on the right path.
{"title":"Does Third-Party Funding Have a Future in the MENA Region?","authors":"Alain Farhad","doi":"10.54648/bcdr2018014","DOIUrl":"https://doi.org/10.54648/bcdr2018014","url":null,"abstract":"The third-party funding industry is growing globally and third-party funders have been displaying increasing interest in the MENA region. Although not regulated in most MENA jurisdictions, the use of third-party funding is not specifically prohibited and is usually deemed permissible. However, the extent and success of its use in MENA will depend on local legal systems providing streamlined enforcement mechanisms and giving litigants and third-party funders confidence in their ability to enforce and collect on favorable decisions. On this front, most MENA jurisdictions are clearly on the right path.","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"11 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126601944","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Portfolio finance has, in a relatively short period of time, emerged as the leading form of funding in international commercial and investment arbitrations around the world. That said, owing to the confidentiality of international arbitration generally – and third-party funding and portfolio financing arrangements specifically – there are no publicly available statistics evidencing this meteoric rise. Equally, until now there has been little, if any, scholarship on the use of portfolio finance in practice by claimants, counsel, and funders. In this article, an attempt is made to remedy that paucity of scholarship, in three ways: (i) assessing the current state of the market on portfolio finance in international arbitration; (ii) describing portfolio financing in practice and explaining why it has become increasingly attractive to claimants and counsel; and (iii) examining the impact, if any, of proposed arbitration rule amendments and developments in treaty practice on the use of portfolio finance.
{"title":"The Rise of Portfolio Financing in International Arbitration","authors":"Jeffery P. Commission","doi":"10.54648/bcdr2018007","DOIUrl":"https://doi.org/10.54648/bcdr2018007","url":null,"abstract":"Portfolio finance has, in a relatively short period of time, emerged as the leading form of funding in international commercial and investment arbitrations around the world. That said, owing to the confidentiality of international arbitration generally – and third-party funding and portfolio financing arrangements specifically – there are no publicly available statistics evidencing this meteoric rise. Equally, until now there has been little, if any, scholarship on the use of portfolio finance in practice by claimants, counsel, and funders. In this article, an attempt is made to remedy that paucity of scholarship, in three ways: (i) assessing the current state of the market on portfolio finance in international arbitration; (ii) describing portfolio financing in practice and explaining why it has become increasingly attractive to claimants and counsel; and (iii) examining the impact, if any, of proposed arbitration rule amendments and developments in treaty practice on the use of portfolio finance.","PeriodicalId":166341,"journal":{"name":"BCDR International Arbitration Review","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123188849","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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