The Evolution of IBA Conflict of Interest Rules

Introduction

The International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration are a widely used tool for assessing the impartiality and independence of arbitrators in international arbitration. The Guidelines are not legal provisions and do not override applicable national law or arbitral rules chosen by the parties. They provide a flexible and practical framework for addressing potential conflicts of interest in international arbitration, and for enhancing the legitimacy and credibility of the arbitration process.

They have been revised twice since their original adoption in 2004, reflecting the evolving practice and challenges of arbitration in a global context. This article charts the evolution of the Guidelines, with particular emphasis on their purpose, structure, and scope of application.

2004 Guidelines

Described by the Swiss Federal Supreme Court, as “a valuable working tool to contribute to the uniformization of standards in international arbitration in the area of conflicts of interests,” the 2004 Guidelines were the first comprehensive set of guidelines on conflicts of interest in international arbitration, aiming to provide a common framework for arbitrators, parties, counsel, institutions, and courts. They were based on the principle that arbitrators must be impartial and independent of the parties and must disclose any circumstances that may give justifiably rise to doubts about their impartiality or independence.

The 2004 Guidelines consisted of two parts: Part I contained the General Standards, which set out the basic principles and rules governing conflicts of interest and disclosure; and Part II contained the Application Lists, which provided specific examples of waivable and non-waivable conflicts, matters that required disclosure but which did not necessarily give rise to a conflict and matters that neither gave rise to conflicts nor required disclosure.

The Application Lists were divided into four categories: the Non-Waivable Red List, the Waivable Red List, the Orange List, and the Green List. The Non-Waivable Red List included situations that were so serious that they could not be waived by the parties and would automatically disqualify an arbitrator, such as having a significant financial interest in the outcome of the dispute. The Waivable Red List included situations that were also serious but could be waived by the parties if they agreed, such as having a close family relationship with a party.

The Orange List included situations that should be disclosed by the arbitrator but did not necessarily imply a lack of impartiality or independence, such as having served as an arbitrator in a related case. The Green List included situations that did not create any conflict of interest and did not require any disclosure, such as having a professional or social acquaintance with a party’s counsel.

2014 Guidelines

The 2014 Guidelines were the result of a review and update process initiated by the IBA Arbitration Committee in 2012, in light of the tenth anniversary of the 2004 Guidelines and the accumulated experience and feedback on their use. The review was conducted by an expanded Conflicts of Interest Subcommittee. The Subcommittee identified several areas for clarification or improvement, such as the effects of ‘advance waivers’, concurrent roles as counsel and arbitrator, ‘issue’ conflicts, the role of arbitral secretaries, and third-party funding.

While maintaining the essential approach and structure of the 2004 Guidelines, the 2014 revision introduced some key changes and clarifications. One of the main changes was to affirm that the Guidelines applied to both commercial and investment arbitration, as well as to legal and non-legal professionals serving as arbitrators.

Another change was to require disclosure in certain circumstances that were not contemplated in the 2004 Guidelines, even if they did not imply doubts about an arbitrator’s impartiality or independence, in order to enhance transparency and trust in the arbitration process. For example, disclosure was required if an arbitrator had a significant personal or professional relationship with an expert witness, or if an arbitrator or his or her law firm received significant financial support from a third-party funder involved in the arbitration.

The 2014 Guidelines also revised the Application Lists to provide further concrete guidance and examples, and to reflect the stricter standards for disclosure. For instance, the Waivable Red List was expanded to include situations such as an arbitrator having a direct or indirect interest in a party or the outcome of the dispute, or an arbitrator being a member of the board or an executive of a legal entity that is a party in the arbitration. The Orange List was also modified to include situations such as an arbitrator having a past or present involvement in the dispute, or an arbitrator having a significant involvement in the drafting of a contract or treaty that is relevant to the dispute.

2024 Guidelines

The 2024 Guidelines are the latest revision of the IBA Guidelines on Conflicts of Interest in International Arbitration, adopted by the IBA Council in 2024. They were prepared by a Task Force composed of various teams that addressed specific issues, led by Co-Chairs Samaa Haridi and Valeria Galíndez, and later joined by Erica Stein and Claudia Frutos-Peterson. The revision was prompted by a survey in 2022 among arbitration practitioners that suggested areas for modernization or fine-tuning, considering the changing landscape and diversity of arbitration practice.

The 2024 Guidelines emphasize the importance of the General Standards in Part I, which must always be considered, and which are not subordinate to the Application Lists in Part II. They also updated the Application Lists in Part II to reflect the current degree of disclosure expected from arbitrators, taking into account the developments and challenges in arbitration since 2014. The 2024 Guidelines address new and emerging issues, such as arbitrator disclosures, issue conflicts, organizational models for legal professionals, expert witnesses, sovereigns or their agencies and instrumentalities, non-lawyer arbitrators, and social media. The Task Force aimed to refine the applicable regime without affecting its rationale, considering the wide application of the Guidelines in various arbitration schemes and professional backgrounds.

Conclusion

The IBA Guidelines on Conflicts of Interest in International Arbitration have been a valuable and influential resource for the arbitration community for over two decades and have contributed to the promotion of high ethical standards and best practices in international arbitration.

The evolution of the Guidelines over the last 20 years reflects the dynamic and diverse nature of arbitration, and the need for constant adaptation and improvement to meet the expectations and challenges of the parties, the arbitrators, and the public.

As Essam Al Tamimi observes, “The continuous updates to the IBA Guidelines on Conflicts of Interest, particularly the comprehensive changes seen in the 2024 revision, highlight a forward-thinking approach to the changing dynamics of international arbitration.”

Following this, Hassan Arab comments, “The IBA Guidelines on Conflicts of Interest have undeniably set a benchmark in promoting transparency and integrity within international arbitration. The progression highlighted in the 2024 revision not only adapts to the complexities of contemporary disputes but also fortifies the confidence of parties and practitioners in the arbitration process.”

Adding to these insights, Hend Al Mehairi notes, “These revisions adeptly navigate the evolving terrain of international arbitration, introducing clarity on pressing issues like digital communications and diverse arbitrator backgrounds. They underscore the IBA’s commitment to ensuring arbitration remains at the forefront of dispute resolution, marked by fairness and adaptability.'”