Chicago International Dispute Resolution Association

Ramon Mullerat OBE

5. Incompatibility

In order to protect the principles of independence and impartiality, many laws prohibit some persons to act as arbitrators. In this regard, for instance, the Spanish Arbitration Act 1988 (art 12.4) provides that judges, magistrates, prosecutors, notaries and registrars in active service cannot act as arbitrators. The ABA Code of Judicial Conduct (Canon 5) also prohibits active judges to become arbitrators. The Rules of the German Arbitration Institution (art. 8.1) contain the same prohibition. The main reason of the prohibition for judges to act as arbitrators is the appearing conflict of interests since precisely judges may have to decide on whether to set aside the award, how it is executed, the registration of interim orders, etc.

With regard to judges, personal or professional affiliations outside the judiciary inevitably raise the potential for conflicts of interests that can make it difficult for judges to remain impartial. Where those affiliations are with another branch, it may also be difficult for judges to remain truly independent without jeopardising their careers outside the judiciary. In Europe most standards therefore explicitly recommend limitations on judges' outside activities, although the jurisprudence of the European Court of Human Rights and the practice of member slates do not support an absolute prohibition against judges working in the political branches 14.

Also, nationality may be in some eases a cause of incompatibility. Arts. 6 and 9.5 of the Arbitration Rules of the London Court of International Arbitration state that where the parlies are of different nationalities, a sole arbitrator or the chairman of the arbitral tribunal shall not have the same nationality as any party, unless the parties agree.

6. Independence and impartiality in the laws, regulations and codes

A. The laws.
Just to give some examples, art. 13.6 of the Brazilian Arbitration Act 1996 states that an arbitrator must cany out his activities with impartiality, independence, competence, diligence and discretion; art. 4.2 of the Scottish Arbitration Code 1999 states that each arbitrator shall be and remain at all times independent and impartial; section 8 the Swedish Arbitration Code 1999 states that the arbitrator must be impartial; art. 180 of the Swiss Federal Law on Private International law refers only to independence; art. 1640 of the Belgium Judiciary Code states that the judge and the arbitrator must bo independent and impartial; art. 24 a of the English Arbitration Act 1996 states that the lack of impartiality leads to a lack of independence; etc.

Other laws only indirectly demand that the arbitrator be independent or impartial, since they require that the arbitrator disclose all the grounds that may give rise to justifiable doubts over his impartiality or independence with the same purpose. This is the case, for example, of section 1036 of the Zivil Prozess Ordung of Germany 1984, following the example of art. 12 of the Uncitral Model Law 1985.

B. The institutions' regulations.
Existing regulations also demand the independence and impartiality of arbitrators. This is the case, for instance, of art. 7 of the American Arbitration Association (AAA) Regulations, International Arbitration Rules 1997; art. 2. 1 of the Arbitration Rules of the London Court of International Arbitration (LCIA); art. 22 of the Arbitration Rules of the World Intellectual Property Organization (WIPO); art. 4 of the Arbitration Rules of UNCITRAL; art. 5 of the Arbitration Rules of CPR, Institute for Dispute Resolutions; art. 29 of the Rules of China International Economic and Trade Arbitration Commission (CIETAC); art. 12.2 of the Uncitral Model Law 1985; art. 3.2 of the Arbitration Rules of the Chartered Institute of Arbitrators; art. 8. 1 of the Arbitration Rules of the German Institute of Arbitration; art. 9 of the Permanent Court of Arbitration of the Hague; art. 6 of the Arbitration Institute of the Stockholm Chamber of Commerce; art. 5.5 of the Rules of the international Arbitral Centre of the Federal Economic Chamber of Vicna; art. 6.4 of the Statute of the Court of Arbitration of the Bulgarian Chamber of Commerce and Industry; etc.

Some arbitration centres only refer to independence being impartiality subsumed in the independence concept, like art. 7.1 of the Arbitration Regulations of the International Court of Arbitration of the International Chamber of Commerce (ICC); art. 30 of the Arbitration Rules of the Geneva Chamber of Commerce; art. 2 of the Rules of Procedure of Arbitration of the International Centre forme Settlement of Investment Disputes; section 12 of the Uniform Arbitration Act of National Conference of Commissioners on Uniform State Laws US 2000; etc.

C. The codes of ethics.
Although practically all regulations demand that the arbitrator be independent and impartial, it is the codes of conduct or ethics where this requisite is generally defined and amplified. For example:

The Guidelines of Good Practice for Arbitration of the Chartered Institute of Arbitrators.
Art. 2 demands that, before the arbitrator becomes an arbitrator, he accepts the position without bias or the appearance of bias; art. 3 defines the criteria to determine whether impartiality and independence exist.
The Guide to the Conduct of Arbitration Proceeding of the German Institute of Arbitration.
Art. 3 states that it is a condition for accepting the position of member of the arbitration tribunal to be impartial and independent of the parties.
The Rules of Ethics for International Arbitrators of the International Bar Association (IBA).
The Introductory Note states that "international arbitrators should be impartial, independent, competent, diligent and discreet"; point 1 provides also that arbitrators shall be and shall remain free from bias.

The.Code of Ethics for Arbitrators of the Chamber of Rational and International Arbitration of Milan.
Art. 4 states that the arbitrator shall guarantee his impartiality by being and remaining independent of any external influence either direct or indirect, during the entire arbitral proceedings.
The Code of Ethics for Arbitrators in Commercial Disputes sponsored by the American Arbitration Association and the American Bar Association (ABA).
(Canon II) reflects the principle that arbitrators should disclose the existence of interests or relationship that are likely to affect their impartiality or that might reasonably create an appearance that they are biased against one party or favourable to another.
The Japan Commercial Arbitration Association Rules.
Rule 20 states that no person having a beneficial interest in the case under arbitration shall be an arbitrator. An arbitrator shall be a person with a beneficial interest in the ease under arbitration.
The Rules of the London Court of International Arbitration (LCIA).
Art. 3 states that all arbitrators conducting an arbitration under its rules shall be and remain at all times wholly independent and impartial and shall not act as advocates for any party.
The International Arbitral Centre of the Federal Economic Chamber of Vienna Rules.
Art. 5.5 states that the arbitrator must perform their duties in complete independence and impartiality, and are not subject to any directives in that respect.
The National Arbitration Forum Code of Conduct for Arbitrators.
Canon two provides as follows:

"An Arbitrator should avoid entering into any financial, business, professional, family or social relationship, or acquiring any financial or personal interest, which adversely affects impartiality or which might reasonably create the unfavourable appearance of partiality or bias. For a reasonable period of time after a case, Arbitrators should avoid entering into any such relationship, or acquiring any such interest, in circumstances "which might reasonably create the unfavourable appearance that they Juid been influenced by the anticipation or expectation of the relationship or interest".

14 In Europe, most candidate states to join the EU place restrictions on judges holding offices in the executive, parliament, or the civil service. Not all crossover is prohibited, however; several countries allow judges to work within the Ministry of Justice (Czech Republic, Poland, Slovakia). In the Czech Republic and Slovakia, judges routinely work in the Ministry of Justice while retaining their status as judges; Estonia and Latvia arc planning to introduce the practice. In Poland, judges may work for the ministry and continue to adjudicate cases; such a practice seriously undermines judges' independence. Rules on incompatibility also limit the ability of judges to hold elective office - the practice in most, but not all member states, in general, judges who wish to hold elective office must resign from bench. However, in some candidate stales a judge may merely suspend service (Slovakia, Slovenia) and then return to the judiciary later. This encourages an unduly close relationship with the other branches. The rules on incompatibility notwithstanding, in several states judges may be appointed to different commissions or committees for elections (Bulgaria, l^atvia, Poland, Romania) or human rights (Latvia, where a member of the Supreme Court is a consultant). Obviously, the opportunity to select particular judges to serve on committees affords other branches an opportunity to reward or punish judges for inappropriate reasons. In Bulgaria, commission work can provide significant remuneration, which increases the potential for inappropriate incentives and influence. It is common among candidate states -as among member states - that judges are not allowed to be members of political parlies or to be engaged in political activities. Although the ban on party membership was introduced as a reaction to the communist past, the prohibition is still perceived as a genuine guarantee of independence. In the member States, too, limitations on judges' political affiliations are common. There arc no such prohibitions in the Czech Republic and Slovenia. All candidate states place restrictions on judges' outside commercial or professional activities; all allow judges to engage in academic, scientific or artistic work. These provisions are consistent with international standards, and generally contribute to ensuring that judges arc impartial, and arc seen to be. back

Peter V. Baugher, President
One South Wacker Drive, Suite 2800, Chicago, IL 60606 USA
312-409-1373 (Telephone), 312-701-9335 (Facsimile),

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