Arbitrator bias has the potential to rock the very foundation of international arbitration. The principle that arbitrators must be impartial and independent from the parties is fundamental and uncontroversial among arbitration users. The understanding of what constitutes bias in concrete terms, however, is still open to debate.
Two recent decisions by supervisory courts in Switzerland and England and Wales have provided renewed guidance on what might give rise to arbitrator bias. Although these decisions were made in the context of sports arbitration, their potential impact goes beyond the sporting arena and provides valuable lessons for all arbitration users.
There are various ways in which potential bias is discussed and assessed in the context of international arbitration, including with reference to “apparent bias”, “independence”, “impartiality” and “conflicts of interest”.
In Porter v Magill, the English High Court explained the test for apparent bias is:
“[…] whether a fair minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased.”
Similarly, in Mutu and Pechstein v Switzerland, the European Court of Human Rights stated that impartiality is usually defined by the absence of prejudice.
The International Bar Association Guidelines on Conflicts of Interest in International Arbitration (IBA Guidelines) refer to “conflicts of interest”. The guidelines determine that an arbitrator shall decline to accept an appointment or, if the arbitration has already been commenced, shall refuse to continue to act as an arbitrator, if he or she has any doubt as to his or her ability to be impartial or independent. Although not binding on parties and arbitrators, unless expressly agreed by the parties, the IBA Guidelines provide a useful benchmark and offer some practical steps to ensure impartiality, such as through a “non-waivable red list” The red list prescribes circumstances that necessarily raise justifiable doubts as to the arbitrator’s impartiality or independence. It covers clear-cut situations where, for example, the arbitrator is a legal representative or employee of one of the parties or the arbitrator has a personal interest in the outcome of the case. The IBA Guidelines also set out a waivable red list, an orange list, and a green list, which outline a varying scale of circumstances that may also lead to a perception of impartiality.
Recent sports arbitration decisions
Recent case law has considered more nuanced instances of alleged arbitrator bias.
In Sun Yang v Word Anti-Doping Agency (WADA) and International Swimming Federation, the Swiss Federal Tribunal overturned an award made by the Court of Arbitration for Sport (CAS), upholding a decision made by the International Swimming Federation (FINA) Doping Panel.
The case concerned a competitive swimmer from China, Sun Yang, who refused to complete a doping test conducted by an international testing company authorised by FINA. A CAS award had suspended Mr Yang for eight years, effectively ending his professional career. Mr Yang applied to the Federal Tribunal for review of the CAS decision alleging bias on the part of the presiding arbitrator. The Federal Tribunal overturned the CAS award stating that the question was whether the apprehensions of a party concerning the lack of impartiality of an arbitrator can be regarded as objectively justifiable, which was found to be the case here.
In the application, Mr Yang submitted that the presiding arbitrator had repeatedly tweeted negative comments about Chinese nationals in the context of animal rights. Mr Yang became aware of the tweets due to an article published after CAS had issued its award. Mr Yang argued that the tweets raised legitimate doubts as to the impartiality of the arbitrator in a dispute involving a Chinese athlete.
In its decision, the Federal Tribunal made it clear that the issue did not lie in the arbitrator’s opposition to certain Chinese practices via his Twitter account, but rather his use of certain terms. The Federal Tribunal noted that the arbitrator was defending the rights of animals, and his criticisms were not directed against all Chinese nationals. However, the arbitrator’s repeated use of violent terms was inexcusable. In addition, the fact that several tweets were published after the arbitrator’s appointment as president of an arbitral tribunal to rule on an appeal lodged by a Chinese national was particularly concerning. The Federal Tribunal also noted that some of the terms used by the arbitrator had nothing to do with the practices being criticised, but rather suggested a more questionable undertone.
Furthermore, the Federal Tribunal considered the extent of due diligence required into arbitrators and the time frame within which to raise a bias-related objection. The respondent argued that the scope of due diligence carried out by Mr Yang was not sufficient and that he should have discovered the ground for challenge during the arbitral proceedings (that is, before the award was issued). The Federal Tribunal rejected the respondent’s arguments and ruled that:
- A party cannot be required to continue its due diligence throughout the proceedings.
- The respondent had failed to establish that Mr Yang would have been aware of the tweets before the publication of the news article exposing the arbitrator’s tweets.
In Newcastle United Football Company Ltd v The Football Association Premier League Ltd and others, the English Commercial Court dismissed an application under section 24 of the English Arbitration Act 1996 by Newcastle United Football Company Ltd (NUFC) to remove the arbitrator nominated by the Football Association Premier League Ltd (PLL). In doing so, the court provided helpful guidance into how the principles on arbitrator bias set out in Halliburton Co v Chubb Bermuda Insurance Ltd should be applied in practice. In Halliburton, the UK Supreme Court held that there may be circumstances in which the acceptance of appointments in multiple references concerning the same or overlapping subject matter with only one common party might reasonably cause the objective observer to conclude that there is a real possibility of bias. However, this will depend on the facts of the particular case and the custom and practice in the relevant field of arbitration.
The matter concerned a dispute between NUFC and PLL in relation to the rules that regulated a proposed sale of NUFC shares to a sovereign wealth fund. NUFC filed for arbitration against PLL. NUFC and PLL appointed their respective arbitrators who, in turn, appointed the chair of the arbitral tribunal. As part of the appointment process, each arbitrator (including the chair) provided a statement of impartiality.
Shortly after the appointment, NUFC’s lawyers were informed that the chair had not disclosed that:
- In the last three years, the chair had been involved in 12 arbitrations that included PLL’s lawyer and the chair was appointed by PLL’s lawyer in three of them (although two out of the three were after the present dispute).
- The chair advised PLL four times in the past (although the most recent advice was more than two years before the present dispute).
The court reasoned that none of the arbitrator’s past appointments would, of themselves, cause the fair-minded and informed observer, having considered the facts, to conclude that there was a real possibility that the arbitrator was biased. Moreover, such an observer would not infer bias on the part of the arbitrator for failing to disclose the appointments. It was of particular note that only three of the 12 previous appointments, which involved PLL’s lawyers and the arbitrator, were made by PLL’s lawyers, of which two were made after the present dispute. Further, the court took into account the fact that this was a sports arbitration and, thus, the options for experienced and qualified arbitrators were more limited.
In respect of the past advice provided by the arbitrator to PLL, the court stated that the prior advice was sufficiently different to the issue in dispute and there was no suggestion that the arbitral tribunal would need to consider the subject of the earlier advice. The court decided that the provision of the previous advice did not, therefore, create a risk of prejudgment of the issues in the present dispute and did not show an ongoing relationship with PLL.
Gold, silver, and bronze: three lessons from sports arbitration
Gold. A party who intends to challenge an arbitrator for bias is well advised to do so as soon as it becomes aware of a potential ground for challenge. Different arbitral institutions will have varying time limits in which a party can challenge the composition of the arbitral tribunal. Fortunately, for Mr Yang, the Federal Tribunal found that he could not have known of the existence of the grounds for challenge during the time limit imposed by relevant Swiss law. Still, this case is a good reminder that arbitrator bias is a serious issue that should be addressed as early as possible and not be used as a backup argument at a later stage.
Silver. Users of international arbitration will be aware of the traditional due diligence process for arbitrators, which includes the review of the arbitrator’s previous cases (as counsel and arbitrator) as well as academic publications. The case of Mr Yang, however, shows that there are benefits in taking a step further and also looking at the arbitrator beyond his or her previous experience in international arbitration, including his or her social media accounts. The use of social media has been diffused in a way that goes beyond its social and personal use, and, therefore, social media accounts can be a potentially valuable repository of information about an arbitrator.
Bronze. The arbitrator community is still relatively small (and even more so in specialised areas such as sports arbitration). Therefore, it is likely that the same people may play different roles throughout the lifetime of a transaction or a certain issue. Because of that, the mere existence of multiple appointments and the prior provision of legal advice to one of the parties may not necessarily meet the bias threshold.
With thanks to Femi Omisore, trainee solicitor at Morrison Foerster, for her contributions to this post.