Arbitrator impartiality and independence in ICSID arbitration

In Suez and others v Argentina (Case Nos ARB/03/19 and ARB/03/17) Argentina challenged the independence and impartiality of one of the arbitrators, on the basis that she was a non-executive director of a bank, which was a shareholder in two of the claimant companies, and had failed to disclose this information.

The challenge, which followed an earlier failed challenge against the same arbitrator, also failed. In giving their decision, the Tribunal provide a helpful summary of the standard required to succeed in a challenge to impartiality or independence. The Tribunal confirmed that a connection between the arbitrator and the bank in question was not, of itself, sufficient to establish manifest impairment of the arbitrator's independence and impartiality. The alleged connection must be evaluated qualitatively, and the Tribunal set out four criteria they considered necessary to evaluate the effect of an alleged connection on an arbitrator's independence and impartiality.

Whilst challenges to an arbitrator's independence and impartiality are relatively rare, parties should be aware of the possibility of opportunistic challenges by parties trying to delay the proceedings. Given the number of connections a well established arbitrator, operating in an international arena is likely to have, such challenges may be relatively easy to formulate. However, this case contains useful guidance in ICSID arbitration as to how such connections should be evaluated and confirms that the hurdle to overcome is a high one.