In a judgment of 20 May 2021 (Application no. 5312/11, case of Beg S.p.a. v. Italy), the European Court of Human Rights (the “ECtHR”) found that, in an arbitration case under the scheme provided by the Arbitration Chamber of the Rome Chamber of Commerce (the “ACR”), the close ties between one of the arbitrators composing the arbitral panel and the parent company of one of the parties to arbitration led to the violation of Article 6 of the Convention (right to a fair trial) for lack of objective impartiality.
The applicant (Beg S.p.a.) brought an arbitration against Enelpower. The latter appointed an arbitrator, the impartiality of which has been challenged by the applicant for the reasons described below.
First of all, the Court reiterated that Article 6 § 1 of the Convention secures to everyone the right to have any claim relating to his civil rights and obligations brought before a court or tribunal. The “tribunal” may be a body set up to determine a limited number of specific issues, provided always that it offers the appropriate guarantees. Article 6 does not therefore preclude the establishment of arbitral tribunals in order to settle certain pecuniary disputes between individuals.
The Court also recalled a distinction between voluntary arbitration and compulsory arbitration: “In the case of voluntary arbitration, to which consent has been freely given, no real issue arises under Article 6. The parties to a dispute are free to take certain disagreements arising under a contract to a body other than an ordinary court of law. By signing an arbitration clause the parties voluntarily waive certain rights secured by the Convention. Such a waiver is not incompatible with the Convention provided it is established in a free, lawful and unequivocal manner. In addition, in the case of certain Convention rights, a waiver, in order to be effective for Convention purposes, requires minimum guarantees commensurate to its importance” (§127 of the judgment).
Secondly, as regards the impartiality of the arbitrator, the Court noted that the Rules of the ACR compelled the arbitrators to indicate, in their written declaration, any relationship with the parties or their counsel that might have an impact on their independence and impartiality, and any direct or indirect personal or economic interest in the subject matter of the dispute. However, the Rules did not compel arbitrators to explicitly indicate the absence of such relationships and/or economic interests. In the present case, the concerned arbitrator simply accepted the appointment, so that one could legitimately presume that such relationships and/or economic interests did not exist. The Court pointed out that the fact that the applicant did not challenge the lack of explicit negative disclosure did not demonstrate the waiver of its rights to have the dispute settled by an independent and impartial tribunal.
In the case at hand, the Court concluded to the violation of Article 6§1 of the Convention as the arbitrator’s impartiality was capable of being, or at least appearing, open to doubt. Indeed, the concerned arbitrator had been Vice-Chairman and member of the Board of Directors of Enel (the parent company of Elenpower) in the past. In addition, the concerned arbitrator had been acting as counsel of Enel in some civil proceedings at the time when the parties had already appointed the arbitrators. The Court noted that even if the concerned arbitrator was the counsel of Enel and not of Enelpower, which was created later as a separate entity from Enel, Enelpower was at the time wholly controlled by Enel and was still an internal division within Enel when the civil dispute started. The applicant became aware of those professional links when the deliberation on the award had already taken place, and immediately lodged a request for withdrawal and later challenged the validity of the award before the Italian courts, unsuccessfully.
This judgment thus recognizes that a lack of impartiality of an arbitration or of the arbitral tribunal can be a violation of the right to fair trial pursuant to Article 6 of the Convention.
Interestingly, in §43-§48 of the judgment, the Court referred to relevant international material, such as the standards on conflict of interest disclosure, in particular the IBA Guidelines on Conflict of Interest in International Arbitration which reflect the understanding of the IBA Arbitration Committee as to the best current international practice. The Guidelines contain three colour-coded categories, depending on the scenarios that may occur during arbitration proceedings in which a duty to disclose arises. The Red List is divided into “a Waivable Red List” (situations that give rise to a conflict of interest that prevents a person from accepting or continuing to serve as arbitrator unless the parties otherwise agree or have full knowledge of the conflict of interest) and “a Non-Waivable Red List” (situations of such a gravity that any waiver by a party or any agreement by the parties shall be regarded as invalid). The Court mentioned the following waivable Red List: “2.3.1 The arbitrator currently represents or advises one of the parties, or an affiliate of one of the parties”, and the following Non-Waivable Red List: “1.4 The arbitrator or his or her firm regularly advises the party, or an affiliate of the party, and the arbitrator or his or her firm derives significant financial income therefrom.”
This judgment recalls that, for instance, professional, financial or personal links between an arbitrator and a party to a case may give rise to objectively justified misgivings as to the impartiality of the tribunal. Such connections must however be assessed in each individual case to decide whether those connections are of such a nature and degree as to indicate a lack of impartiality on the part of the tribunal.
The current Belgian law on arbitration provides that when a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his independence or impartiality. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall disclose without delay any such circumstances to the parties. A party may consequently challenge an arbitrator only for the reasons of which it becomes aware after the appointment has been made.
The challenge of an arbitrator and the setting aside of an arbitral award are however two different procedures. While the old Belgian law on arbitration expressly provided that grounds for challenging arbitrators were not grounds for annulment of the award, even if they were known only after the award had been rendered, the current law has abandoned this, and could open discussions as to whether a lack of independence and impartiality can be raised on a later stage as a ground for setting aside the arbitral award.
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