Mocg erat L. Mises The Principles oul Prectice coe CHAPTER SIX Tatermetionn( Connercie] Arbitrator] Combridge 20/2 _ The Tribunal Because arbitration is a private dispute resolution the safeguards of a national legal syste a significant impact on maintaining part system that works. This chapter focuses on issues ofthe t ‘ment, qualifications, and duties ~ all of which bear on the integrity of the process and on the efficiency and effectiveness of the dispute’s resolution. ‘A. APPOINTMENT OF ARBITRATORS Choosing arbitrators who will preside over the proceedings and issue an award is perhaps the most important thing a lawyer does with respect to resolving the client’ dispute. c, and knowledge of the ave a significant impact on the quality of the process and of the award, In addition, arbitrators are fundamentally more powerful than judges, because unlike judges, their decision usually cannot be overturned ‘on the bass of fact or aw. An arbitrator can misinterpret the law or make an egregious mistake based on the facts of the case, and counsel will generally be tunable to vacate the award resulting from the mistakes." Thus, it behooves lawyers to plan carefully how they are going to select their decision makers. 1. How Many Arbitrators? In a commercial arbitration, usually either one or three arbitrators are appointed.” A number of considerations should affect the decision whether to choose one arbitrator or three. With one arbitrator, the main advantages be less and 10 schedule hearings. are that the costs "There are a few exceptions. For example, an award circumstances on a g * Ina few situations, including in some trade associations, an even numberof arbitrator may be chonen. See Alan Redfern & Martin Hunter etal, ReprERN axb Huxtex ox INTERNATIONAL ARBITRATION, § 4.24 at 249 (2009) |A. APPOINTMENT OF ARBITRATORS. 423 Moreover, the process should move more quickly, because a sole arbitrator leagues at ms, however, cere is ularly if the amount of hough its more expensive to have three being more o the table in terms oftheir experience and arbitrator alone. Ina ly believed that stage of the arbitration. In international arbitra money at stake j arbiteators, th knowledge thai likely to occur. Ifthe trators may be more likely to arrive at a better, more comprehensive under- standing than one arbitrator. In addition, when parties are from different countries and cultures, a comfort level is provided when each party is select one arbitrator who comes from a similar cultural or legal background. Although ic is generally a good idea to specify in the arbitration clause whether the parties want one or three arbitrators, a party may not know at the beginning of the dispute whether the dispute will be complex and ‘whether the amount in dispute will be large. One option is to state in the arbitration agreement that ifthe amount in dispute is over a certain amount, there will be three arbitrators; otherwise, chere will only be one. ‘The various arbiteal rules have different resolutions as to che number arbitrators ifthe parties have not agreed as to the number. Some rules default t0 a sole less the matter seems particularly complex.> Others default to three arbitrators, regardless ofthe circumstances.# 2. Qualifications a. Knowledge and Experience One of the advantages of arbitration is that parties can choose decision the subject of the dispute. This eliminates the time and effort that would be necessary, if parties were litigating before a randomly selected judge, to educate the judge about the particular industry or the matter a issue. . Lawyers or Nonlawyers Although it is not necessary to have a law degree to be an arbitrator, patties ‘generally choose an arbitrator who is also a lawyer. A of contract interp parties might want424 ‘THE TRIBUNAL arbitration, for example, parties might want alawyer, Cone arbitrator who is a contractor, and one who is Nonlawyers who serve as arbitrators are understandably enthusi about nonlawyer participation. They assert che importance of unders the practical, and sometimes complicated, industry-based side ofthe dispute. ‘Many arbitrators acknowl technical questions. specific industry knowledge is not crucial, however, parties tend to pre fer arbitrators with a legal background, The parties’ preference for lawyers, is based in part on a number of concerns they may have about nonlawyer stors, For example, there i a fear that the nonlawyer may use his or her lecked a judicial temperament, made editorial comments on the openly ridiculed participants. Despite these concerns, many arbitr parties appreciate the significant con ' of experienced nonlawyer arbitrators who are also reasonably well-versed in the relevant law, . Professors as Arbitrators Experienced counsel have differing views on whether professors make good arbitrators, Some counsel with a civil law background seem to think that the best arbitrators are professors. Lawyers with a common law background, and some civil law lawyers, tend to be more skeptical. The biggest concern is that professors are too focused on doctrine, and fi practical experience to make wise decisions. Sylwester Piecke arbitrator and counsel, fold of a tribunal in which all three arbitrators were professors: ‘The dispure concerned an agreement 10 di None of the professors had experien ‘vodka business, They grossly misapplied the law, and rendered a very bad award, which was ultimately vacated.? Sylwester Pieckowski Poland wiew with Sylwester Pieckowski, April 2007. Notes of interview on file with |A. APPOINTMENT OF ARGITRATORS. 125 and may not have the skillset to deal with complex facta other hand, professors can be very effective if they are knowledgeable about arbitration, abo a, and about the pertinent can make‘them valuable members of a tribunal. Chris Seppala, counsel in international arbitration and an arbiteator in Paris, observes, “Professors can wey have had a lot of practical experience, e, s. Otherwise they can be dangerous as they may ity with the business world as well as experience d, Language Fluency ‘The ability to be fluent in a particular language, or sometimes in two lane ‘guages, may be important to the parties. An arbitrator lacking in fluency in the language of the acbitration may not understand some of the critical jgoues necessary to the resol . Availability Another important qualifica Panties often want to engage very wel-known arbitrators, but these arbitrators may be so busy with other arbitrations that scheduling hearings becomes extremely diffic It is important to have a clear idea of the arbitrator's availability, and a commitment of time from the arbitrator. f. Reputation isa great asset mn process to work confidence in the the selection of a chair, ora sole arbitrator, partes are particularly interested ability to manage the arbitration and to move it along so t drag on for years. This skill may be hard to detecmine from a resume but knowing what experience the individual has had, and if possi speaking with others who have had arbi helpful. In general, because parties know that they any decision on the they want to choose the best ar to make that decision. ator they can ew on le with author Interview with Cheis Seppal 9 See Yves Dezalaw & Revaor ©126 ‘THE TRIBUNAL &. Specifications and Requirements Qualifications agreed on by the parties can be spelled out in the arbie clause. The parties could assert, for example, that all arbitrators must speak French, they all must have experience in the construction industry, and the language of the arbi rench, There is risk in being, 100 jon agreement contains a laundry “Arbiteators are expected to be indep expected to be neutral, which could include the requirements of inde dence and imp: an expectation that the presiding arbitrator, or a so have the same nationality as either of the patties. Institutional rules may specifically provide for national neutrality.” ‘8. Method of Selection jepending on the parties’ agree ties do not state in their a govern the process, che selection will take place ac tional rules. However, even if parties did not agree on a method of ime of the ar If parties cannot seach agreement, however, the instieution arbiteators, Some of the differences parties should be aware of, when they have not chosen a selection process, are whether nal rules parties freedom to choose the arbitrators toa list of names provided by the ar choose the arbitrators, or (d) some vari i, The Rules, When chere are three arbitrators, the most frequent method of selection is for each party to select one arbitrator and for the two party- selected arbitrators to pick a third arbitrator, who will be the chair of the tribunal. If che parties want to ensure that this method will be used, they 20 ina Section B. See, 2 ICSID Arbitration may have same INCITRAL inSecion A [A APPOINTMENT OF ARBITRATORS 127 can state the method of selection in their arbitration clause. On the other the rules of certain arbitral institutions may provide this method of selection, sometimes with variations. The ICC Rules provide that parties may each select one ar but unless the parties have agreed otherwise, the thicd arbitrator, who will be the presiding arbitrator, will be selected by the ICC Coure of Arbitration.™* In the Court of International Arbitration attached ty the Chamber of Commerce and Industry of Romania, if the 2012 arbitration rules, effective March 1, 2012, CIBTAC, the major itral institution in China, provides that parties can nominate arbitrators ‘outside the list of arbitrators maintained by CIETAG, as long as the parties agree and the Chaitman of CIETAC confirms the appointment." If parties are unable to agree on a presiding arbitrator, they can each propose to IETAC a list of one to three candidates." If no name is common to both appoint a person who was not nominated by either i. party with frame agreed to by the parties or set forth in the ar les, the insticution selected by the parties in their arbitration clause has the authority to choose the arbitrators. If party-selected arbitrators cannot agree on the ppetson to serve as chair, the institution ‘When an arbitrator is selected by only one party, he or she is nonetheless obliged to be independent and impartial."* I cules eequire that once chosen, arbitrators cannot favor in any way the party that selected ners agree that the appointment of process. As Sylwester Pieckowski has noted, “The quality of the tribunal is decisive, and the consequences are tragic if you choose wrong.””” Jingzhou Tao, an arbit in Beijing, says, “The arbitrator is one-half of your case.”