ABA Article | Fixing the Way Multi-Arbitrator Tribunals Are Formed

We came across an interesting article at the ABA Section of Litigation entitled Fixing the Way Multi-Arbitrator Tribunals Are Formed. The piece, written by Herman Manuel Duarte, discusses common issues with unilateral appointments of arbitrators. Here is an excerpt:

One of the pressing issues in international arbitration is the practice of unilaterally appointing arbitrators and its effect on the decision-making process. The term “unilateral appointment” refers to a party’s decision to appoint its own arbitrator at will, without an agreement by the counterparty or the arbitral institution. This does not mean that the arbitrator appointment violates the rules of the arbitral institution; rather, the decision rests with the appointing party alone. The common practice in multi-arbitrator tribunals is that two out of the three arbitrators are unilaterally appointed by the parties, one each. The third arbitrator is selected by the arbitrators appointed by the parties. This can create all types of situations, from collaborative arbitrators who fulfill their functions with due diligence to rebellious arbitrators who refuse to participate in proceedings or who issue ugly dissents.

As an example of the latter, there are reports made by experienced practitioners showing that an elevated number of dissents are produced by the arbitrator who was unilaterally appointed by the losing party. At least two independent studies have shown a strong correlation between dissents and the unilateral appointee of the losing party. The problem becomes even more significant when the dissents are used as the basis for a challenge or to raise objections to the enforcement of the award.

The full article is available here.

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