Originally from American Review of International Arbitration - ARIA

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The party-appointed arbitrator is a necessary but somewhat uncomfortable participant in international commercial arbitration. Is he or she to be wholly neutral, perhaps even bending over backwards to avoid showing any preference for the appointing party? Or, is such an arbitrator instead allowed or even expected to be inclined at least presumptively toward the position of that appointing party? American courts generally are uncomfortable with this question, and the resulting confusion has led to efforts to regulate the party-appointed arbitrator with ethical codes. The result is not yet entirely satisfactory, tending more toward theoretical than practical guidance.

It sometimes is suggested that the ambiguities could be minimized if arbitration tribunals were selected, either by the parties directly or on their behalf by arbitral institutions, from predesignated groups of disinterested neutrals comprising an arbitrator "court," panel or roster. Nevertheless, the prevailing pattern (particularly in international arbitration) still calls for each of the parties to make its own choice of one arbitrator, from whatever source the party wishes, and for some form of joint selection of a third arbitrator.

The reasons for this continuing preference for a system that includes two hand-picked, party-appointed arbitrators are not difficult to identify. In arbitration, parties accept virtually non-appealable finality of the arbitrators' decision largely in exchange for the ability to participate in the selection of their tribunal rather than accept an anonymous, governmentally chosen decision maker — a judge — whose rulings may be less predictable but generally are subject to appellate review. In such a setting, a party seeks maximum advantage from its right to control the identity of the decision makers and seeks to have as one of the members of the tribunal a person whose ability and general inclination of views can be assessed in advance. This is particularly important in an international arbitration, where arbitrators of three different nationalities may be chosen and each party may desire that one member of the tribunal be familiar with its own law and customs. Party-appointed arbitrators also may be expected to play a role in selecting the third arbitrator, bringing their judgment and experience to bear on this important task.