Independence and Impartiality of arbitrators in international ...

Justifiable Doubts
As said earlier arbitration is a private justice and adjudicated through the arbitration
contract 46-a , therefore, the enforcement of independence and impartiality should not be left on
the parties as well as on limited legislation on the subject, the superior courts decisions must
be taken into account for the standard and test of independence and impartiality as word
justifiable-doubts is not enough. In case of A T & T Corp v Saudi Cable Co 46-b court of appeal
rejected the AT&T stance on the grounds that there was no ‘real danger of bias’ and in fact
the initiated legal proceedings was to delay the arbitral process. As arbitrator was fair in the
arbitral process and was a renowned honest lawyer as remarked by Lord Wolf 47 in this case.
In the same case the England court also set the disqualification test for arbitrator on grounds
of bias that is the ‘real danger of bias’ 48 . The phrase ‘real danger of bias’ is more convincing
than the ‘justifiable doubts’, as an arbitrator may be previously associated with the a party but
still can be fair and honest in the arbitral process, but when we use the word real danger of
bias as to arbitrator conduct, it gives a more convincing meaning. Under the following lines
this concept is elaborated;
‘Real Danger of Bias’ 49-a
In order to clearly understand that what factors practically makes an arbitrator independent
and impartial, we have to understand that what factors justifies the real danger of bias. In case
of Toyota of Berkley v. Automobile Salesman’s Union Local 49 , the court termed the arbitrator
as bias if he has; financial interest in the outcome of the arbitration, family relationship with
involved parties, arbitrator’s former employment by any party and the arbitrator’s
employment by a firm represented by one of the parties law firms. The above stated factors
can also be termed as real danger of bias and is further analysed by the following case study;
Financial Interest in the Outcome of Arbitration;
If arbitrator has some financial interest in the outcome of arbitration or he is financially
associated with any of the parties involved, then indeed it will be real danger of bias, as in
case of Rand v. Readington 50 the court vacated the award because the winning party was
indebted to the arbitrator and amounts received were pledged to repay the arbitrators’
claims. Further in case of Middlesex Mutual Ins. Co. V. Levine 51 and in Re Friedman 52 ,
award was vacated because arbitrators borrowed money from parties during arbitration. In
another case the court did not vacate the award because the arbitrator’s ownership of share
in one of the parties company 53 , which is not a real danger and also not actual financial
interest in the outcome of the arbitration. Therefore the arbitrator cannot act independent
and impartial if he has some financial interest in the outcome of the arbitration
Direct, Substantial Business or Personal Relationship;
The court held in case of Olson v. Merril Lynch, Pierce, Fenner & Smith Inc 54 , that if an
arbitrator has substantial business dealings and close personal relationship with a party
which he has not disclosed it, than indeed it will be bias on part of arbitrator, here the word
46-a Rau. A. S , 'On Integrity in Private Judging', 14 Arbitration International (1998) 157
46-b AT&T Corp v. Saudi Cable Co, supra note 13
47 Supra note 13
48 Ibid.
49-a Kendall. J, 'Barristers, Independence and Disclosure Revisited' 16 Arbitration International (2000)
343, at p348-9
49 Berkley v. Automobile Salesman’s Union Local 1905, 843 F.2d 751, 756 (9 th Cir. 1987), cert.
Denied, 486 U.S. 1043 (1988)
50 Rand v. Readington, 13 N.H. 72 (1842)
51 Middlesex Mutual Ins. Co. V. Levine 675 F.2d 1197 (11 th Cir. 1982)
52 In re Friedman, 213 N.Y.S 369 (App. Div. 1925)
53 Standrad Tankers (Bahamas) Co. v. Motor Tank Vessel, AKTI, 438 F.Supp. 153, 160 (E.D.N.Y.
1977)
54 Olson v. Merril Lynch, Pierce, Fenner & Smith Inc. 51 F.3d 157 (8 th Cir. 1995)