Thursday, October 02, 2014

For the first time in the history of the International Centre for Settlement of Investment Disputes (ICSID), on March 20, 2014, a proposal to disqualify an arbitrator was accepted by the two unchallenged arbitrators. The tribunal in Caratube v. Kazakhstan upheld a proposal for disqualification of fellow arbitrator Mr. Bruno Boesch. Together with two similar decisions by the Chairman of the ICSID Administrative Council, also reviewed in this Insight, this case suggests a notable change in the assessment of proposals challenging arbitrators under the ICSID Convention.
The grounds to challenge arbitrators are generally similar among different arbitration rules, and they pertain to an alleged lack of independence or impartiality. However, ICSID rules for challenging arbitrators are unusual for two main reasons. First, procedurally, the decision on a challenge is first taken by the unchallenged members of the arbitral tribunal. The more common procedure of requesting a third party to take a decision is adopted only when a sole arbitrator or a majority of the arbitral tribunal is challenged. In that case, challenges to ICSID arbitrators are decided by the Chairman of the ICSID Administrative Tribunal, who is also the President of the World Bank. Second, Article 57 of the ICSID Convention provides that a party may propose the disqualification of an arbitrator "on account of any fact indicating a manifest lack of the qualities" of impartiality or independence. This threshold to evaluate the grounds for a challenge has been criticized as too strict and difficult to meet. More common, lower thresholds allow for a challenge to arbitrators in circumstances that give rise to "justifiable doubts" as to the impartiality or independence of an arbitrator.

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