Liability of Arbitrators - Judicial Immunity versus Contractual Liability - Czech and Central European Yearbook of Arbitration - 2012: Party Autonomy versus Autonomy of Arbitrators
Karl Pörnbacher is a partner at Hogan Lovells' Munich office and head of the firm's German arbitration practice. The focus of his work is on national and international arbitration and litigation and alternative dispute resolution. His practice comprises disputes resulting from projects, energy, M&A, insurance and reinsurance and general commercial relationships. Mr. Pörnbacher is president of the arbitration court of the German-Polish Chamber of Commerce. Due to his specific experience he is frequently involved in cross-border disputes involving Poland and other Central and Eastern European Countries, both as arbitrator and counsel.
Dr. Inken Knief is a senior associate within the arbitration group of Hogan Lovells in Munich. Her practise comprises the area of international arbitration, under various institutional rules and national arbitration regimes.
Originally from Czech and Central European Yearbook of Arbitration - 2012: Party Autonomy versus Autonomy of Arbitrators
The issue of the liability of arbitrators plays out between the conflicting priorities of contractual liability and judicial privilege. Arbitrators take on the double role of service providers hired and paid for by the parties to the dispute and of the authority dispensing justice. Accordingly, some argue in favor of the immunity of arbitrators in the sense of being relieved of liability, due to the arbitrator's "status" as a "quasi-court"; others reject such immunity, based on the concept of contractual liability. This article first provides an overview of the status quo of arbitrator liability under the rules of various arbitral institutions and under the laws of various countries, hailing both from the sphere of common law and from the sphere of civil law.
The present paper then develops its own position regarding the liability of arbitrators, which takes into account both the contractual approach and the approach that takes its bearings from the "judicial function" of arbitrators. In the view of the authors, ruling out the liability of arbitrators for ordinary negligence in reaching their verdict is called for because of the need to protect the arbitrator's independence. However, outside of the decision-making process, as such (and in cases of willful intent), the service character of an arbitrator's work requires principally unlimited liability on the arbitrator's part for any kind of culpable conduct.