The international arbitration tribunal: how is it set up and what are its responsibilities?

At the heart of the arbitration procedure is the arbitral tribunal, made up of one or more persons responsible for settling the dispute. Often referred to as "private judges", these arbitrators do not derive their power from the State, but from the agreement signed by the parties. Who can play this crucial role in an international context? How is the tribunal formed? And above all, what guarantees ensure its neutrality and what are its responsibilities? Addressing these questions is essential to understanding the reliability and functioning of international arbitration. This article looks at the constitution of the arbitral tribunal, the fundamental requirement of independence and impartiality, and the nature of the contractual relationship between the arbitrator and the parties and the duties that flow from it.

Who can be an international referee?

Contrary to popular belief, it is not necessary to be a judge or even a lawyer to become an international arbitrator. French law, like most modern legislation, lays down a simple condition: the arbitrator must be a natural person enjoying the full exercise of his or her civil rights (a requirement set out for domestic arbitration in article 1450 of the Code of Civil Procedure, and relevant by analogy for international arbitration).

Beyond this basic legal capacity, international arbitration is characterised by a great deal of freedom. There are no legal restrictions on the nationality, residence or profession of arbitrators. The parties are free to choose the person they feel is best placed to understand and resolve their dispute. They may therefore appoint technical experts, financiers or former company directors, alongside or instead of professors of law or lawyers. Of course, in practice, the parties look for arbitrators who not only have expertise in the area in dispute, but also a sound knowledge of the law and arbitration procedure, as well as a command of the required languages. The parties may also set specific criteria (nationality, particular skills) in their arbitration agreement.

How many referees and how are they appointed?

The number of arbitrators is also flexible. The parties may opt for one sole arbitratorThis is often the preferred solution for less complex disputes or disputes involving a limited amount of money, in order to reduce costs and delays. More frequently, particularly for large cases, they choose a collegiate arbitration tribunalgenerally made up of three referees. Contrary to a rule sometimes encountered in domestic arbitration (such as article 1451 of the French Code of Civil Procedure), there is no legal obligation in international arbitration for the number of arbitrators to be odd, even if this is the most common practice to avoid deadlock during deliberations.

Appointment procedures vary:

1. Direct agreement between the parties : They may jointly appoint the sole arbitrator or all the members of the tribunal in their arbitration agreement or after the dispute has arisen.
2. Appointment by each party : In a three-member tribunal, the classic scheme is for each party to appoint an arbitrator, and the two arbitrators thus chosen then appoint the third member, who will chair the tribunal.
3. Intervention of an arbitration institution : If the parties have chosen an institutional arbitration (ICC, LCIA, etc.), the rules of the institution provide for mechanisms for appointment, either by confirming the parties' choices or by directly appointing the arbitrators in the event of disagreement or inertia.
4. Intervention of the supporting judge : In the event of persistent difficulties in setting up the tribunal (disagreement, refusal to appoint, etc.), the competent state judge (in France, the President of the Tribunal Judiciaire de Paris for international arbitration, unless otherwise agreed) may intervene to appoint the missing arbitrator(s).

Whatever the method of appointment chosen, one fundamental principle must be respected: equality of the parties. Each party must have an equal voice in the constitution of the tribunal. A clause or mechanism that would create a manifest imbalance (for example, by allowing one party alone to choose the majority of arbitrators in a multi-party dispute) would be contrary to international public policy and could result in the award being set aside for improper constitution of the tribunal (the famous Dutco before the French courts).

The key requirement: independence and impartiality of the arbitrator

The parties' confidence in the arbitration process is based entirely on the belief that the arbitrator will resolve their dispute neutrally and objectively. That is why the arbitrator's independence and impartiality are the cornerstones of arbitration.

• Independence is an objective concept: it concerns the absence of links (financial, professional, hierarchical) between the arbitrator and one of the parties, his or her counsel, or even another arbitrator, which could influence the arbitrator's judgement.
• Impartiality is a subjective notion: it refers to the state of mind of the arbitrator, who must not have any prejudice or bias in favour of or against one of the parties.

In order to guarantee these essential qualities, French law (article 1456, paragraph 2 of the Code of Civil Procedure, applicable internationally via article 1506) requires any person approached as an arbitrator to meet the following criteria obligation to disclose. Before accepting his assignment, and throughout the arbitration, the arbitrator must spontaneously declare in writing all circumstances that could affect his independence or impartiality in the eyes of the parties. It is not just a question of disclosing proven conflicts of interest, but any fact likely to create a conflict of interest. reasonable doubt in the mind of a party.

The scope of this obligation is broad and may concern past or present, direct or indirect links. In particular, the following must be disclosed

• Significant business relationships with a party or company in its group.
• Having advised or represented a party or its lawyer in other cases.
• Membership of the same professional structure as a party's lawyer (in large international law firms, verification can be complex).
• Financial or family ties with a party, counsel, another arbitrator, or even a third party with a direct interest in the dispute.

The assessment remains delicate. An arbitrator may legitimately consider that a long-standing or tenuous relationship does not affect his neutrality. The key question is: could this circumstance, if known, reasonably cause a party to doubt the arbitrator's independence or impartiality? When in doubt, transparency is required. An exception is sometimes made for facts that are common knowledge in a restricted professional environment (for example, joint and public participation in conferences or professional associations), but caution is still advised.

Faced with a revelation, the parties may accept the arbitrator or refuse to appoint him. If a doubt arises during the proceedings as a result of a disclosure or the discovery of a new fact, a challenge procedure may be initiated. If the prospective arbitrator himself considers that there is a risk, he must refuse the assignment or, if the conflict arises later, defer (withdraw), as provided for in Article 1457 of the Code of Civil Procedure.

Penalising lack of independence

What happens if a party considers that an arbitrator lacks independence or impartiality?

• During the proceedings : The party must act quickly. It can request the challenge of the arbitrator. This request is generally made to the arbitration institution (in the case of institutional arbitration) or to the supporting judge (in the case of ad hoc arbitration or if the rules are silent). French law (article 1456, paragraph 3) sets a time limit of one month from the disclosure or discovery of the disputed fact for bringing the case before the juge d'appui. Failure to act within this time limit (or within the time limit provided for in the arbitration rules) is in principle tantamount to a waiver of the right to invoke this ground at a later date, in accordance with article 1466 of the Code of Civil Procedure.
• After the sentence : If the lack of independence was not discovered until after the award had been made (or if the application for disqualification was wrongly rejected by an institution whose decision does not have the force of res judicata), the injured party may request theannulment of the award for improper constitution of the arbitral tribunal, on the basis of article 1520-2° of the Code of Civil Procedure. The annulment judge will then examine whether the undisclosed link or the circumstance invoked was really of such a nature as to create a legitimate doubt as to the arbitrator's independence or impartiality. In exceptional cases where fraud or a decisive fact is discovered at a very late stage, an application for review may be considered. Finally, the arbitrator could also be held civilly liable for breach of his duty to disclose.

The arbitration contract: a specific legal relationship

In accepting his assignment, the arbitrator enters into a special contractual relationship with the parties (and/or the arbitration institution), often referred to as a "contract of arbitration". arbitration contract or "investiture contract". This is neither a classic mandate, nor an employment contract, nor a simple contract for the provision of services. It is a contract sui generisIt is a hybrid, because while its source is contractual (the agreement of the parties and the arbitrator), its purpose is not. jurisdictional To settle a dispute by rendering a decision that has the force of res judicata.

This contract, formed by the simple exchange of consents (acceptance of the assignment), gives rise to reciprocal obligations:

• Obligations of the referee : The most important have already been mentioned: the duty of independence, impartiality and disclosure. To these must be added the obligation to conduct the proceedings diligently, expeditiously and fairly (article 1464, paragraph 3, applicable via 1506), to respect the fundamental principles of a fair trial (adversarial process, equality of the parties - article 1510), to carry out his task personally until its conclusion (unless there are legitimate grounds for deferring - article 1457), to respect the time limit agreed for rendering the award, to give reasons for his decision (if required by the agreement or the applicable law), and to maintain the secrecy of the deliberations (article 1479).
• Arbitrator's rights : The main counterpart of its mission is its right to remuneration. The fees are generally set according to a scale established by the arbitration institution (often based on the amount in dispute) or agreed directly with the parties in the Terms of Reference. The arbitrator is also entitled to reimbursement of expenses.

The referee's mission

The arbitrator's terms of reference are set out in the arbitration agreement and are delimited by the subject matter of the dispute as set out in the parties' claims and defences. It is often specified and formalised in an Mission Statement (or "Terms of Reference"), a document drawn up at the beginning of the proceedings (particularly in ICC-type institutional arbitration) and signed by the parties and the arbitrators. This document identifies the parties, briefly describes the dispute, lists the points on which the arbitral tribunal will have to rule, and specifies the applicable procedural rules, the place and language of the arbitration, and so on.

The arbitrator must rule within the limits of the mission entrusted to him. If he goes beyond this (ultra petitaby granting more than was requested or by ruling on points not submitted), or if it fails to rule on a head of claim (infra petita), he is in breach of his duty. This breach is a ground for bringing an action for annulment under article 1520-3° of the Code of Civil Procedure.

The referee's responsibility

The arbitrator, although exercising a jurisdictional function, is not a State judge and is not covered by State immunity. They may therefore be held personally liable, but under a dual system that takes account of the specific nature of their function.

1. Responsibility linked to the act of judging : With regard to the actual content of his decision (the "right or wrong judgement"), the arbitrator benefits from a quasi-immunity. His liability can only be sought in very limited cases, similar to those applicable to magistrates: fraud, deceit, gross negligence (extremely serious negligence bordering on fraud) or denial of justice (blatant refusal to judge). A simple error of law, an incorrect assessment of the facts, or a statement of reasons that is deemed insufficient (but does exist) does not give rise to liability. To accept the contrary would be tantamount to allowing a review of the merits of the award through an action for liability, which would render the arbitration meaningless.
2. Liability in connection with the performance of its contractual duties : Arbitrators may be held contractually liable if they fail to fulfil their obligations under the arbitration contract: serious breach of the duty of disclosure, lack of diligence or loyalty causing prejudice, unjustified failure to meet an agreed deadline, breach of confidentiality of deliberations, etc. Here, the rules of traditional civil liability apply: it is necessary to prove fault, prejudice and a causal link. Case law generally considers that this is an obligation of means.

Liability claims are brought before the ordinary courts. The sanction may range from a simple reduction or restitution of fees to the award of damages to compensate for the loss suffered (for example, the cost of an arbitration that has become pointless). Arbitrators may take out civil liability insurance, and some institutions offer cover to arbitrators acting under their auspices.

The constitution of the arbitral tribunal and the definition of its mission are crucial steps that determine the legitimacy and effectiveness of the arbitration. The guarantees of independence and impartiality, as well as the liability of the arbitrators, are designed to ensure that the parties receive reliable, high-quality private justice.

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Choosing the arbitrators and defining their terms of reference are fundamental steps. To ensure that the arbitration tribunal is set up in compliance with the rules and that your rights are protected throughout the proceedings, our firm will work with you.

Sources

• Code of Civil Procedure (in particular articles 1450-1458, 1460, 1463, 1464, 1466, 1467, 1470, 1472, 1473, 1479, 1481, 1482, 1484, 1485, 1506, 1509, 1510, 1511-1513, 1520)
• Key case law (listed by way of illustration: Cass. Civ. 1ère, 7 January 1992, Siemens AG and BKMI Industrienlagen GmbH v Dutco Construction Company)