The IBA recently issued a revised version of its Guidelines on Conflicts of Interest in Arbitration. This Homburger Bulletin summarizes the most important changes.

A. Introduction

In February 2024, the International Bar Association (IBA) published its updated Guidelines on Conflicts of Interest in International Arbitration (the Guidelines). The IBA has described the Guidelines, which were first issued in 2004 and revised in 2014, as «the most comprehensive work to date defining the framework by which the impartiality of arbitration in the international arena can be most effectively assured»[1]. Although the Guidelines are non-binding and must be applied in accordance with applicable laws, rules and standards, they play an important role in providing guidance to the arbitral community. The role of the Guidelines has also been recognized by the Swiss Federal Tribunal, which has qualified them as a useful resource that should influence the practice of arbitral institutions and courts[2].

The purpose of the recent revision (the 2024 Revision) was to modernize and clarify the Guidelines. As summarized in the Foreword of the 2024 Revision, the following areas were identified as requiring some updating: (i) arbitrator disclosure; (ii) third-party funding; (iii) issue conflicts; (iv) organisational models for legal professionals in different jurisdictions; (v) expert witnesses; (vi) sovereigns or their agencies and instrumentalities; (vii) non-lawyer arbitrators; and (viii) social media[3].

The IBA has also published a helpful comparison between the 2014 and 2024 versions (link).

B. The Structure of the Guidelines

The Guidelines consist of two parts.

• Part I sets out the general standards and principles (the General Standards)
• Part II contains lists of practical situations based on the so-called «traffic light system», which are categorized as green, orange, waivable red and non-waivable red on an increasing scale of seriousness (the Application Lists).
  • The green list contains situations that are generally considered not to create any conflict of interest (the Green List).
  • The orange list contains situations that require disclosure but allow the arbitrators to continue to serve unless the parties object (the Orange List).
  • The waivable red list contains situations that create a serious conflict of interest, but not as serious as those on the non-waivable list. Accordingly, parties may expressly waive them (the Waivable Red List).
  • The non-waivable red list includes situations that create a severe conflict of interest, such as an arbitrator having a personal interest in the outcome of the dispute. Because they are based on the overriding principle that no person can be his or her own judge, they cannot be waived by the parties (the Non-Waivable Red List).

The 2024 Revision emphasized the importance of the General Standards, which «contains the principles that must always be considered»[4] over and above the Application Lists, which «cover many of the varied situations that commonly arise in practice,» but which «do not purport to be exhaustive, nor could they be»[5].

C. Main Changes of the 2024 Revision

The General Standards have been amended to address some of the areas where experience over the past few years has shown that some adjustment is needed, such as the impact of secrecy rules on disclosure, the role of non-disclosure in determining the existence of conflicts of interest and the due diligence obligations of the parties.

• Impact of secrecy on arbitrators’ disclosure: New General Standard 3(e) provides that an arbitrator should not accept an appointment or should recuse himself or herself if he or she is required to disclose information that may affect his or her impartiality or independence but is prevented from doing so by rules of confidentiality or secrecy. The purpose of this provision is to balance the arbitrators’ duty of disclosure with their duty of confidentiality.
• Consequences of failure to disclose: General Standard 3(g) clarifies that failure to disclose does not necessarily indicate a conflict of interest, and that the parties and the arbitrators should consider the relevant facts and circumstances, as well as the applicable legal standards, in determining whether a conflict of interest exists. This provision recognizes that disclosure is not an end in itself, but a means to ensure the integrity and fairness of the arbitration proceedings.
• Reasonable enquiries and timely objections:
  • General Standard 4(a) now includes an additional paragraph stating that a party shall be presumed to be aware of any fact or circumstance that may constitute a potential arbitrator conflict of interest «that a reasonable enquiry would have yielded if conducted at the outset or during the proceedings». This presumption, together with the requirement to raise an objection within 30 days of either the receipt of an arbitrator’s disclosure or the discovery of the aforementioned facts or circumstances, encourages parties to conduct a reasonable inquiry at an early stage and discourages opportunistic tactics such as delaying or withholding objections until a later stage in the proceedings.
  • However, it remains important to consider how recent case law has set the boundaries for what constitutes a reasonable enquiry and what information parties are expected to review. In Tidewater Inc & Ors v. Venezuela, the arbitral tribunal ruled that past appointments listed on the ICSID website constituted readily identifiable public information, and an arbitrator’s decision not to disclose it was «an honest exercise of judgment on [the arbitrator’s] part in the belief that publicly available information did not require specific disclosure»[6]. Information available on the website of Global Arbitration Review, which charges a fee for access but is widely used by the arbitral community, may also be considered public and readily available[7]. A «reasonable enquiry» does not require parties to conduct a full-scale investigation that catches all publicly-available information. Arguably, publicly-available information that can only be found through extensive review, such as attendance at conferences[8] or – as ruled by the Swiss Federal Tribunal – biased tweets[9], is outside the scope of what a reasonable enquiry requires.
• Expanded notion of law firm/business structures: General Standard 6 has been updated to reflect the diversity and complexity of the international legal practice structures. The «law firm’s or employer’s organisational structure and mode of practice» are expressly listed among the circumstances that should be considered in determining whether a potential conflict exists and whether disclosure should be made. The explanation to General Standard 6 now provides that «[a]s a general proposition, a law firm for these purposes is any firm in which the arbitrator is a partner or with which the arbitrator is formally associated, including in the capacity of an employee of any designation, as counsel, or of counsel». Overall, the revised General Standard 6 is better suited to account for various forms of cooperation, collaboration, or profit-sharing among lawyers or law firms, as well as the use of alternative business structures.
• Third-party funders and insurers: General Standard 6 has also been revised to give due consideration to whether third-party funders and insurers may have a direct economic interest in the dispute, a controlling influence over a party, or influence over the conduct of the proceedings.

The main changes to the Application Lists are:

• Additional scenario in the Green List: An arbitrator hearing testimony from an expert who is appearing in another matter in which the arbitrator acts as counsel, cf. Green List 4.5.1.
• Several amendments to the Orange List: The additional scenarios include an arbitrator and counsel for one of the parties serving together as arbitrators in another arbitration (Orange List 3.2.12) and another in which an arbitrator, within the past three years, has been appointed as an expert on more than three occasions by the same counsel/law firm (Orange List 3.2.9). Orange List 3.4.2, which concerns an arbitrator publicly advocating a position on the case, has also been revised to include the use of «social media or on-line professional networking platforms».
• Limited changes to both the Waivable and Non-Waivable Red List: 2.3.1, which referred to the scenario in which the arbitrator currently represents one of the parties, has been revised to incorporate what was previously part of 2.3.7, which related to the arbitrator regularly advising one of the parties, provided that no significant income is derived from such advice. Revised 2.3.1 now treats as waivable the situation in which an arbitrator currently or regularly represents or advises a party or party affiliate, but only if the arbitrator «does not derive significant financial income therefrom».

D. Conclusive Remarks

Although the Guidelines are not binding, they are often the first source to which parties and arbitrators turn regarding potential conflicts of interest. They have a significant impact on the conduct of arbitrators, counsel and parties. Accordingly, all users of arbitration should take note of the Guidelines and the changes in the 2024 Revision.

[1] IBA website, https://www.ibanet.org/resources.

[2] Swiss Federal Tribunal, judgment of 22 December 2020 (4A_318/2020), cons. 7.4.; Swiss Federal Tribunal, judgment of 7 September 2016 (4A_386/2015), cons. 3.1.2.

[3] Guidelines, Foreword, p. 2.

[4] Guidelines, Introduction, para. 7.

[5] Guidelines, Introduction, para. 7.

[6] Tidewater Inc & Ors v Venezuela, Decision on Claimants’ Proposal to Disqualify Professor Brigitte Stern, Arbitrator dated December 23, 2010, para. 55.

[7] Paris Court of Appeal, PT Ventures v. Vidatel and others, judgment of January 26, 2021.

[8] Paris Court of Appeal, j Dommo Energia v. Enauta Energia and Barra Energia, judgment of February 25, 2020 in Dommo Energia.

[9] Swiss Federal Tribunal, judgment of 22 December 2020 (4A_318/2020)