International Commercial Arbitration

Running head: INTERNATIONAL COMMERCIAL ARBITRATION
INTERNATIONAL COMMERCIAL ARBITRATION
Name of the Student
Name of the University
Author Note

INTERNATIONAL COMMERCIAL ARBITRATION1
Introduction
Arbitration is grounded upon on a consentient agreement in relation to the parties that are
involved in any kind of dispute. The process of arbitration apparently delivers a private, neutral,
unbiased, proficient and an efficient forum for the resolution of the disputes of the parties. The
process in relation to arbitration is essentially arranged in the agreement that is given effect to by
the involved parties. In this particular process, the concluding and obligatory award that arises
shall be enforceable in all the nations that are members in relation to the ‘Convention on the
Recognition and Enforcement of Foreign Arbitral Awards’ of the year 1958. The aforementioned
Convention is also called the ‘New York Convention’. Approximately, a quantum of 159 nations
are members to the Convention. Dispute resolution in relation to the business and commercial
background remains to be a foremost challenge or problem that the businesses all over the world
have been facing. The capability to pursue different methods in order to resolve disputes instead
of litigation, shall considered to be a great relief for the businesses. The litigation processes in
relation to the commercial and financial disputes are usually very expensive and very lengthy1.
The parties involved in such financial disputes always have second thoughts before going to the
courts for litigation purposes in order to seek legal redress. Hence, the parties involved in such
commercial or financial disputes have consistently preferred to select the private and secluded
manner regarding the resolution of their disputes. Moreover, the processes of the court have been
considered to be wearisome, monotonous as well as time consuming. It has also been claimed by
several parties involved in dispute cases that the decisions that are forwarded by the court in such
commercial matters are, on many occasions, biased. The issue of biasness and partiality is
particularly true in relation to transnational commercial or financial disputes. In case of such
1 Moses, Margaret L. The principles and practice of international commercial arbitration. Cambridge University
Press, 2017.

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international financial disputes, the decisions that are given effect to by the court are mostly
alleged to be unfair and prejudiced towards the party, which belongs to the nation where the
designated court is situated. Commercial and financial disputes happens on a regular basis in the
present world. In the modern world the notion of globalization has pushed the commercial and
financial activities to go beyond the borders of each nation in a manner that has never occurred
earlier. The aptitude and the capability to resolve such financial disputes agreeably and
harmoniously and to the fulfillment or contentment of both the involved parties is considered to
be a huge breakthrough in case of resolution of commercial disputes. The process of arbitration
has gained so much reputation and importance in relation to the transnational framework that it is
presently considered as the principal choice regarding the binding of dispute resolution. Due to
the increase in the importance relating to the process of arbitration, the significance of the
arbitrators and their functionality has also increased. The forum of arbitration is regarded as a
neutral forum. It is considered to be a place where no parties are unfairly or unethically
benefitted, and the neutrality regarding the process of decision making makes the method of
arbitration more appealing to the national court2. This paper forwards a critical discussion and a
critical analysis in relation to the standards regarding impartiality and independence in
connection to the framework of international or transnational commercial or financial arbitration.
Discussion
Independence and Impartiality
According to Lawson, several terms have been utilized in order to provide a description
or an explanation in relation to the neutrality or the impartiality regarding an international
arbitrator. In case of the transnational arbitrators, the Universal Declaration of the United
2 Myburgh, Andrew, and Jordi Paniagua. "Does international commercial arbitration promote foreign direct
investment?." The Journal of Law and Economics 59.3 (2016): 597-627.

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Nations is quoted. It forwards the notion that an international or transnational arbitrator should
be impartial, unbiased and independent. Independence is conventionally explained and
demarcated as freedom and liberty from the authorities. However, it may be said that in case of
international or transnational arbitration, the term ‘independence’ is more often utilized to
provide a description or an explanation in relation to the lack of ties of the arbitrator in
connection to the counsels, parties and the co-arbitrators3.
According to Lawson, in case of both common law jurisdiction and civil law jurisdiction,
an accepted necessity exists. This necessity relates to the fact that an arbitrator should be
independent and autonomous in relation to the parties that are involved as well as the relevant
authorities. The involved parties and the relevant authorities should perceive the arbitrator as
independent and autonomous. It is very important and obvious that in case of a particular process
of arbitration, the prospective clients should trust and have faith in the arbitrator. It is also
essential that the business community should trust and have faith in the arbitrator. Hence, it may
be said that it is rational and sensible that an arbitrator should not only be independent and
autonomous in actuality, rather the arbitrator should be perceived as independent and
autonomous by the third parties that are neutral. However, it may also be mentioned that the term
‘impartial’ generally provides an explanation in relation to the state of mind of the arbitrator. In
order to be impartial and unprejudiced, there should not exist any kind of biasness in relation to
the arbitrator regarding the involved parties or the counsel of the involved parties. It may be said
that it might be difficult and problematic to determine regarding the facts that whether a
particular arbitrator is unbiased and impartial. It is generally acknowledged and deliberated that
3 Jemielniak, Joanna. Legal interpretation in international commercial arbitration. Routledge, 2016.

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if an act of impartiality is demonstrated, then the arbitrator shall be considered to be
independent4.
According to Christopher R. Drahozal & Richard W. Naimark, it may be said that
commercial and financial arbitration on the international level has enjoyed and relished
increasing fame, reputation and popularity. The fame and popularity of the method of arbitration
has provided the status of the alternative in relation to the process or method of litigation. The
method regarding arbitration is grounded on the notions relating to justice and fairness. Central
to such notions are the concepts regarding impartiality, independence and neutrality. Such
concepts are closely and intricately connected to the arbitral proceedings. As per the
aforementioned writers, it may be said that the parties that are involved in the process or method
of arbitration, expect high standards, morals and values in relation to the arbitrator who is
appointed. It may be said that the whether the parties, who are involved in the arbitration
process, will follow and adhere to the notions and concepts mentioned above, shall depend upon
the arbitrators that are appointed. However, it may be said that even though the concepts relating
to independence, neutrality and impartiality may be comprehended to be similar notions by
certain critics or observers, the neutrality in relation to an arbitrator is considered to be way
beyond the concepts regarding impartiality or independence. The concepts relating to
independence and impartiality are frequently utilized synonymously in order to replicate the
unbiased and unprejudiced quality, which should be possessed by the arbitrators. The
aforementioned terms are frequently and repeatedly utilized interchangeably. The
aforementioned terms, although connected to each other, are conceptually dissimilar. Impartiality
is measured and evaluated in a subjective manner while the independence assumes and
4 Rodríguez, José Antonio Moreno. "Effectiveness of International Commercial Arbitration as a Dispute Settlement
Mechanism." Enforcement and Effectiveness of the Law-La mise en oeuvre et l’effectivité du droit. Springer, Cham,
2018. 87-106.

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implements a test for objectiveness. Neutrality, in a similar manner as to the independence,
replicates an objective status. Neutrality necessitates that an arbitrator should be equidistant,
intermediate and transitional in action and thought all through the process of arbitration.
Contrariwise, the concept of impartiality is considered to be subjective. It has been stated that the
concept of neutrality is considered to of abstract nature. Neutrality mandates an investigation or
an examination in order to conclude the evidence relating to bias or prejudice, which may
actually be problematic and challenging to institute in the practical world. Hence, there should be
a necessity to be fully aware regarding the exterior conduct and comportment by which the state
of mind of the arbitrator may be determined. An absence of neutrality does not always lead to
partiality, nonetheless, if an arbitrator behaves and comports in a partial manner, then that
particular arbitrator cannot be considered to be neutral5.
According to Susan D. Franck, the notion of neutrality in relation to the framework of
international and transnational arbitration is considered to have two traits or facets. The first one
is that the involved parties opts for the method of arbitration because it forwards a neutral
platform. In this case, the parties that are involved shall not have the ability to gain the benefit
regarding a domestic court. The second one is in relation to the nationality regarding the
arbitrator. In case of circumstances where a sole arbitrator is appointed by the involved parties, it
is always proposed and recommended that the nationality regarding the individual who is
appointed, must be independent and autonomous in relation to the nationalities regarding the
parties that have appointed the arbitrator. This methodology must be adhered to when the
arbitrators appointed by the parties hire another governing arbitrator. In relation to the neutrality
regarding arbitrators appointed by the parties, it has been acclaimed and recommended that any
5 Walker, Janet. "Privatizing Dispute Resolution and Its Limits: International Commercial Arbitration and National
Courts." Privatizing Dispute Resolution. Nomos Verlagsgesellschaft mbH & Co. KG, 2019.