Originally from Dispute Resolution Journal

The globalization of the economy ensures that the number of transnational disputes will continue to rise and find their way to an international arbitral tribunal. International arbitration avoids the risk of litigating in foreign jurisdictions that have unfamiliar foreign legal systems and may present difficulties when it comes to enforcing foreign judgments. International arbitration also satisfies the desire to have a neutral forum and impartial decision makers selected by the parties themselves.

The pool of experienced international arbitrators has remained small and many of these arbitrators work at large law firms, which tend to represent the largest multinational clients. This situation has created actual and imputed conflicts of interest that could undermine the impartiality of many international arbitrators. This situation can put an arbitration and an ensuing award at risk. Nominating an arbitrator who has such a conflict creates an opportunity for the adversary to challenge the arbitrator’s appointment for failure to make a required disclosure. At the end of the arbitration, a losing adversary could decide to challenge enforcement of the award on the same ground, thus jeopardizing the integrity of the award.1

International arbitral institutions as well as the International Bar Association (IBA) have developed standards aimed at helping arbitrators determine what they must disclose to the parties (and other participants) when asked to serve as an arbitrator. The standards for disclosure, however, are not identical. This creates uncertainty about the standards arbitrators and parties should apply, for example, when arbitrators need to decide what should be disclosed and when parties need to decide whether to challenge the appointment of an arbitrator, or to seek to vacate an adverse award based on an arbitrator’s failure to disclose.