“So far as the payment of the expenses of the arbitration is concerned, I know of none for me to fix.” It has been almost a century since William H. Taft, the former President of the United States, declined to award himself any fees as the sole arbitrator in an arbitration between Costa Rica and the United Kingdom. Much has changed in the international arbitration community since then. Now, it is not only customary for arbitrators to be compensated for their services, but an increasing number of people sustain a career as professional arbitrators. Moreover, investor-state dispute settlement (ISDS), a field of arbitration unknown to lawyers from 1923, emerged as a prevailing practice among the high-end forms of international dispute resolution. Despite the rise of full-time professionals, most ISDS arbitrators still maintain other roles, the most common of which is the role of legal counsel. This practice, dubbed double-hatting, where a person acts as an arbitrator in one ISDS case while representing a party in another one is worrying for many stakeholders. It attributes an appearance of bias to decision-makers who should remain impartial and appear as such to reasonable observers. This paper will explore the current practice and regulation of double-hatting and the ways to respond to its dangers.
Oppositions to double-hatting are not a recent phenomenon. As early as 2006, Thomas Buergenthal, the former judge of the International Court of Justice (ICJ) and a frequent ISDS arbitrator, advocated for an end to the practice so that “an arbitrator will not be tempted, consciously or unconsciously, to seek to obtain a result in an arbitral decision that might advance the interests of a client in a case he or she is handling as counsel.”