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Party-Appointed Arbitrators and Selecting the Chair - What are your thoughts?

Do you believe party-appointed arbitrators should consult with the parties who appointed them before proposing names for a chair to the other party-appointed arbitrator?

Please provide your thoughts/comments below.

Comments (13)

It is generally expected and is permissible. See Guideline 8(b) of the IBA Guidelines on Party Representation in International Arbitration:

8. It is not improper for a Party Representative to have Ex Parte Communications in the following circumstances:

(a) A Party Representative may communicate with a prospective Party-Nominated Arbitrator to determine his or her expertise, experience, ability, availability, willingness and the existence of potential conflicts of
interest.

(b) A Party Representative may communicate with a prospective or appointed Party-Nominated Arbitrator for the purpose of the selection of the Presiding Arbitrator.

(c) A Party Representative may, if the Parties are in agreement that such a communication is permissible, communicate with a prospective Presiding Arbitrator to determine his or her expertise, experience, ability, availability, willingness and the existence of potential conflicts of interest.

(d) While communications with a prospective Party Nominated Arbitrator or Presiding Arbitrator may include a general description of the dispute, a Party Representative should not seek the views of the prospective Party-Nominated Arbitrator or Presiding Arbitrator on the substance of the dispute.

Michael Orfield:

I have done this one time, and the two of us got bogged down in intransigent positions of the two parties. We then realized that we were more than errand boys, and while it was appropriate to get input, we were ultimately independent and free to recommend a person we both felt appropriate.

I see no reason for the parties to participate in any part of the arbitrators’ deliberations. Parties should not address the panel’s choice of a chair, which is also a part of the deliberations.

There is case law that says party appointed arbitrators are free to consult the side who selected them during the course of the proceedings while neutral arbitrators may not. Howard Edelman

In insurance related arbitration consultation (and extensive vetting) with the appointing party about the Chair, is routine. I have never been a party-appointed arbitrator where such consultation did not occur, on both sides.

Hon. William G. Bassler:

From my experience as an arbitrator and from my reading on the subject, it is expected and permissible for the party appointed arbitrator to discuss the appointment of a chair with the party appointing him or her. i have done it several times at no time were the merits of the case ever discussed. This process helps to give the parties confidence in the appointment of the Chair.

The case law referenced in another post may have been very fact specific. Being a party appointed arbitrator does not mean one loses one’s neutrality. Whether such an arbitrator is a neutral or an advocate should be resolved at the outset of the arbitration and if the former, the arbitrator should not be communicating ex parte with the party that appointed him/her during the course of the arbitration.

The case law referenced in another post may have been very fact specific. Being a party appointed arbitrator does not mean one loses one’s neutrality. Whether such an arbitrator is a neutral or an advocate should be resolved at the outset of the arbitration and if the former, the arbitrator should not be communicating ex parte with the party that appointed him/her during the course of the arbitration.

The "Code of Ethics for Arbitrators in Commercial Disputes" provides guidance in this situation (although the question is framed as "should consult"). Until neutrality of the party-appointed is determined and communicated to all arbitrators and parties, the party-appointed "should observe all of the obligations of neutral arbitrators set forth in this Code." Canon IX, C (3). Consultation with the appointing party is allowed (for neutrals and non-neutrals) in Canon X, C (1) referring to Canon III, B. Canon III, B (2) permits the party-appointed arbitrator to "consult with the party who appointed the arbitrator concerning the choice of the third arbitrator." But this Canon III, B (2) provision is permissive not mandatory. When I decide to consult about the third arbitrator with the party that appointed me I do the following: (1) Contact the other party-appointed and see if the two of us can agree on what we intend to do about consultation on this subject with our appointing parties; (2) if consultation occurs, I make it clear at the beginning of the conversation that I intend to disclose this contact with my appointing party; (3) I think make the disclosure once the contact has occurred. In this process, if employed, I keep the subject limited to "the choice of the third arbitrator" without any reference to "the merits of the case." All parties have the right to object to the appointment of any arbitrator, regardless of how appointed, under most arbitral institution rules.

If each party, who appointed their respective party-appointed arbitrator, had enough confidence in their appointee to treat that party fairly, then they should leave the choice of an impartial panel chair up to their two aforesaid chosen arbitrators. That procedure is most likely to influence a fair result/decision from the efforts of the panel of three. Leaving the choice of a panel chair up to the litigants will tend to bog down the process as each litigant will likely be tempted to look for an ally to be the Panel Chair instead of someone who will rely on the credible evidence to achieve the correct/fair outcome.
George D. Marlow

Anonymously:

Party appointed arbitrators by their very nature are a problem, because they represent a party rather than an independent voice.
But if the documents require them,there isn’t much you can do about it.

Presumably,if the parties can vote on the chair, as opposed to the AAA, the most neutral of the appointees may be the result.

Party-appointed arbitrators are not considered to be neutrals but advocates for their party within the panel. See the Alex Rodriguez suspension appeal arbitration for a real-life example. So if the less-than-impartial arbitrators want to confer with their appointees to determine a more neutral chair, that is fair game.

Edwin H. Stern:

I have very little practical experience with
selection of the chair or third party neutral, but
on the first of the two occasions the arbitration agreement
required the arbitrators selected by the parties to
select the third, we agreed not to consult with the
parties before selecting the third party each of us
knew or knew of well, and respected as a retired judge.
As a result when I was selected as arbitrator for the
same party in the second arbitration, I made clear
at the outset that I expected no discussion about
selection of the third.

I understand that some believe that if an arbitrator
discusses specific people with the party that
selected him or her, and the reasons for that
selection, there could be a false sense of your role
as advocate as opposed to neutral.


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This page contains a single entry from the blog posted on January 6, 2018 1:22 PM.

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