Updated: Jan 26, 2022
One of the greatest benefits of arbitration is parties’ ability to consider who will serve as the decisionmaker. However, when an arbitration clause specifies that a panel of three arbitrators will hear disputes, the process often requires that each party select their own panelist (party-appointed arbitrator or wing arbitrator). Subsequently, it is the two party-appointed arbitrators who must agree on appointment of the third arbitrator to chair the proceedings (chair or president).
Recently, the New York State Bar Association posed a question on its blog: How should the chairperson of a tribunal be selected? Of the recorded responses, answers ranged from “leaving the choice to the parties in the first instance,” suggesting that party-appointed arbitrators make the selection based on “expertise,” or a three-tier system in which the parties are given first choice, followed by the panel, followed by the institution.[i]
The role of the tribunal chair in facilitating a fair and efficient process is significant:
Arbitrator selection is a core element of the practice of arbitration. It is a crucial step that may determine, for better or for worse, the quality of the arbitral proceedings and of the decisions the tribunal will make, including the award on the merits… The risk, however, is that, by adhering too much to the ‘tried and true’ and excluding innovation and alternatives, arbitrator selection turns into repeated appointments of ‘usual suspects’, leading to some arbitrators being overbooked while others who are equally competent are rarely appointed. This perpetuates endogamous appointments that undermine the legitimacy of arbitration, not only from the diversity standpoint, but also from the equally important aspect of independence and impartiality of the arbitrators.[ii]
The following article provides a brief survey of leading arbitral institution approaches to chair / president selection. I will also share factors for party-appointed arbitrators to consider in selecting a chairperson with fairness, efficiency, and neutrality.
If a three-person panel is required, it is important to take note of the nuance in the chair / president selection processes that exist amongst the institutions. Here are some examples of the diversity of options available when it comes to chair selection:
American Arbitration Association (AAA): Under AAA’s Commercial Arbitration Rules, parties must agree in advance to their arbitrator selection process. The institution will appoint a chair if the time period for appointment specified by the parties for the party-appointed arbitrators to appoint a chairperson has expired, or if no time period is specified by the parties and a chairperson is not appointed within 14 days of appointment of the last-appointed arbitrator.[iii] “In accordance with the AAA rules, unless the parties have agreed otherwise, the case manager will appoint the Chairperson. Prior Chair experience or significant large, complex case experience is a primary determinate as to who chairs the panel, but other considerations include the party rankings on the strike-and-rank list and past performance as judged by AAA case managers and clients.” [iv]
International Centre for Dispute Resolution (ICDR): Generally, the chair selection process is addressed in the parties’ underlying agreement.[v] Nonetheless, the ICDR International Dispute Resolution Procedures provide that “If the parties have not selected an arbitrator and have not agreed upon any other method of appointment, the Administrator, at its discretion, may appoint the arbitrator(s) in the following manner using the ICDR list method. The Administrator shall send simultaneously to each party an identical list of names of persons for consideration as arbitrator(s). The parties are encouraged to agree to an arbitrator(s) from the submitted list and shall advise the Administrator of their agreement. If, after receipt of the list, the parties are unable to agree upon an arbitrator(s), each party shall have 15 days from the transmittal date in which to strike names objected to, number the remaining names in order of preference, and return the list to the Administrator. The parties are not required to exchange selection lists. If a party does not return the list within the time specified, all persons named therein shall be deemed acceptable. From among the persons who have been approved on the parties’ lists, and in accordance with the designated order of mutual preference, the Administrator shall invite an arbitrator(s) to serve. If the parties fail to agree on any of the persons listed, or if acceptable arbitrators are unable or unavailable to act, or if for any other reason the appointment cannot be made from the submitted lists, the Administrator shall have the power to make the appointment without the submission of additional lists. The Administrator shall, if necessary, designate the presiding arbitrator in consultation with the tribunal.”[vi] To the extent parties or party-appointed arbitrators are charged with selecting the tribunal chair, it is important to note that while “the ICDR Rules generally prohibit any party from having ex parte communications with any arbitrator, they do permit the parties to discuss with their party-appointed arbitrator the suitability of candidates to serve as the presiding arbitrator where the arbitration agreement contemplates the participation of the parties or the party-appointed arbitrators in the selection of the presiding arbitrator. However, the ICDR Rules prohibit any party from having any ex parte communications with any candidate for presiding arbitrator.”[vii]
International Chamber of Commerce (ICC): Article 13 of the ICC Rules stipulates that the ICC Secretary General may confirm arbitrators, including presidents of the tribunal, who were nominated by the parties or named in their agreements, “provided that the statement they have submitted contains no qualification regarding impartiality or independence or that [the statement] has not given rise to objections.”[viii] However, if there have been objections, or if the parties have failed to agree, the ICC retains the power to “make the appointment[s] upon proposal of an ICC National Committee or Group that it considers to be appropriate.”[ix] If the Court does not accept the proposal or a proposal is not made “the Court may repeat its request, request a proposal from another National Committee or Group that it considers to be appropriate, or appoint directly any person whom it regards as suitable.”[x] Article 13 also specifies nationality requirements for arbitrators and chairs.
International Center for Conflict Prevention and Resolution (CPR): Under CPR’s Administered Arbitration Rules, Rule 5, “Arbitrators may be selected (i) by the parties through direct designation (Rule 5.2), (ii) by the parties through CPR’s screened selection procedure (Rule 5.4), or (iii) by the parties through CPR’s list procedure (Rule 6).” [xi] Although parties may proactively choose to participate in this process, the screened selection process is CPR’s default mechanism (under Rule 5.1(c)) for three-member panels when parties have not made a direct designation. This award-winning[xii] method of arbitrator selection works as follows:(1) CPR convenes the parties to discuss the qualifications they seek in an arbitrator; (2) CPR then selects candidates fitting those qualifications from their roster of neutrals and allows parties to put forth their own candidates for consideration; (3) CPR assembles a list of most qualified candidates and sends their names (and relevant attributes) o the parties; (4) each of the parties ranks their top three choices, objecting to any number of candidates on the list; and (5) CPR then appoints the arbitrators based on the order of preference indicated by the parties. [xiii]
Factors to Consider in Tribunal Chair / President Selection
The importance of an arbitral tribunal’s chair role in the proceedings cannot be overstated. The chair’s role is not solely to assist in the adjudication of substantive law. Their role is also to interpret procedural rules and set the tone for the proceedings, both for the parties and for their co-panelists. Indeed, in some respects, the chair almost assumes the role of quasi-mediator, listening to the concerns and opinions of the panel on the structure of the process and the manner in which party requests are granted or denied.
Here are some factors that party-appointed arbitrators should consider in setting a clear selection process for the chair from the outset, which helps to ensure balance and fairness.[xiv]
Review the clause and arbitral rules. Are there any requirements that must be adhered to, in terms of the process for selection or the qualifications / characteristics required (eg, language, experience, cultural background, etc.)?
Meet and confer. If the decision-making process lies with the party-appointed arbitrators, determine whether the arbitrators are permitted to consult the parties who made their appointments.
Assess gaps. Are there any gaps in knowledge, technical skill, or process expertise that exist between the two party-appointed panelists?
Consider available resources. To the extent party-appointed arbitrators are not provided a list of candidates to consider for chair, they should study their arbitral institution’s rosters and consider as many candidates as possible. Valuable resources here include:
Diversity. OChasing familiarity can come at the expense of essential expertise and fairness. Moreover, working with someone highly-qualified, but new to the party-appointed arbitrators, may be a way to counteract any potential biases in the dispute resolution process. One strategy that party-appointed arbitrators might employ to meet this moment is to set diversity targets for themselves when compiling their list of qualified chair candidates, similar to the practices of most arbitral institutions.
The Three T’s
In addition to the foregoing, there are certain practical considerations that are important to highlight in selecting a tribunal chair / president:
Time. If the candidates under consideration are in high demand, there is a danger in becoming overbooked. Prior to appointment, it is critical to ensure that the person selected as chair can clear their schedule sufficiently to properly attend to their obligations.
Technology. Many arbitrations now take place virtually or rely heavily on technology to manage submissions, documents, etc. The chair should be well-versed in navigating these tools.
Temperament. Different chairs will have different management styles and approaches to arbitration. Consider what will be most appropriate for the case and given the composite of the tribunal.
Once this due diligence is complete, party-appointed arbitrators should meet again and review the qualifications and attributes they agreed upon at their initial meeting, before narrowing down their final list of names, and certainly before making any decisions. At this stage, the importance of characteristics such as process expertise, subject matter knowledge, availability, cultural background, diverse characteristics, and level of experience should be weighed and prioritized together. In addition, party-appointed arbitrators should attempt to anticipate any potential conflicts of interest, to the extent possible.
In the end, arbitration is the party’s process – guided by clause they agreed to and the arbitral rules they have selected. As such, it is important to understand the array of options and considerations for selecting the tribunal chair, where three-person arbitrator panels are required.
Special thanks to Gloria J. Medina for her assistance in researching the writing this piece.
[i] Resolution Roundtable: Selecting the Chair of the Tribunal - What are your thoughts? (July 31, 2020 9:03PM), http://nysbar.com/blogs/ResolutionRoundtable/2020/07/selecting-the-chair-of-the-tri.html.
[ii] Checklist of Best Practices for the Selection of Arbitrators and Survey (November 14, 2020), https://www.arbitralwomen.org/checklist-of-best-practices-for-the-selection-of-arbitrators-and-survey/
[iii] Arbitrator Appointment Procedures of Arbitral Institutions in Commercial Arbitration, New York City Bar Association Committee on Arbitration, https://s3.amazonaws.com/documents.nycbar.org/files/2017366-Appointment_Procedures_Commercial.pdf (last visited November 15, 2021).
[v] Arbitrator Appointment Procedures of Arbitral Institutions in Commercial Arbitration, New York City Bar Association Committee on Arbitration, https://s3.amazonaws.com/documents.nycbar.org/files/2017366-Appointment_Procedures_Commercial.pdf (last visited November 15, 2021).
[vi] ICDR International Dispute Resolution Procedure, Article 13(6), https://www.adr.org/sites/default/files/ICDR_Rules_0.pdf (last visited November 15, 2021).
[vii] Arbitrator Appointment Procedures of Arbitral Institutions in Commercial Arbitration, New York City Bar Association Committee on Arbitration, https://s3.amazonaws.com/documents.nycbar.org/files/2017366-Appointment_Procedures_Commercial.pdf (last visited November 15, 2021).
[viii] ICC Rules of Arbitration, https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/#article_13 (last visited Nov. 8, 2021).
[xi] CPR Administered Arbitration Rules, https://www.cpradr.org/resource-center/rules/arbitration/administered-arbitration-rules-2019/_res/id=Attachments/index=0/2019%20Administered%20Arbitration%20Rules%20Domestic.pdf#:~:text=Arbitrators%20may%20be%20selected%20%28i%29%20by%20the%20parties,the%20parties%20through%20CPR%E2%80%99s%20list%20procedure%20%28Rule%206%29
[xii] CPR Captures 2016 GAR Innovation Award, CPR (Mar. 2, 2016), https://www.cpradr.org/news-publications/press-releases/2016-03-02-cpr-captures-2016-gar-innovation-award-press-release.
[xiii] Selecting Party-Appointed Arbitrators Through a Screened Selection Process: The Best of Both Worlds, CPR (July 2015), https://www.cpradr.org/news-publications/articles/2015-07-30-law360-publishes-selecting-party-appointed-arbitrators-through-a-screened-selection-process-the-best-of-both-worlds-by-cpr-s-olivier-andr-and-white-case-s-charles-b-rosenberg/_res/id=Attachments/index=0/Law360OAndre.pdf (last visited November 15, 2021).
[xiv] Constitution of the Arbitral Tribunal, Checklist of Best Practices for the Selection of Arbitrators, The ERA Pledge, https://assets.website-files.com/58a4313f62641fda6d995826/5fa3cfad308ce4cda9ba39ba_08424_PG_DR_ERA%20France%20guidelines%20pdf_V4.pdf (last visited November 15, 2021).