Trends in International Arbitration Challenges

A critical feature of arbitration that distinguishes it from the judicial process is the ability of parties to select the decision-makers. For this reason, any developments in the challenges to the selection of arbitrators can be significant since they directly affect this key right. Fortunately, most arbitrators and arbitration counsel are sensitive to the importance of arbitrator independence and impartiality and the issues that might call these requirements into question, and, as a result, challenges are not that frequent. In recent years, however, there appears to be an increase in the overall number of challenges in international investment arbitrations, as well as an increase in the number of such challenges being granted. There also appears to be an increase in international arbitration challenges based on certain grounds, including challenges based on so-called “issue conflicts” and challenges based on repeat appointments. In addition, commentators report that more challenges are brought for purposes of delaying the arbitration and to obtain a tactical advantage. This article considers these developments and looks at how specific arbitral institutions have dealt with challenges.

Are Challenges on the Rise?

In recent years, commentators have reported that challenges to arbitrators in international arbitration have become more common overall.¹ This appears to be particularly true with respect to investment arbitrations filed before the International Center for Settlement of Investment Disputes (ICSID), one of the leading investment arbitration institutions in the world. More than 50 percent of ICSID challenges, since the institution’s inception in 1966, have been filed between 2010 and Sept. 1, 2014.² Moreover, three of the only four challenges granted in ICSID’s history occurred during that time. This upsurge, however, does not appear to be true of challenges in international commercial arbitration. Three leading institutions in this area—the ICC International Court of Arbitration (ICC), the American Arbitration Association (AAA), and the London Court of International Arbitration (LCIA)—report that the percentage of challenges brought before them has remained steady over the last 10 to 20 years. In fact, in the last three years, the number of LCIA challenges appears to have decreased from nine in 2013 to six in 2015. We consider two procedural mechanisms that may have contributed to the ability of these commercial arbitral institutions to limit the number of challenges: (1) a confirmation or review of conflicts process and (2) time limits on challenge filings.