The LCIA publishes a new batch of decisions on challenges to arbitrators

The LCIA has recently announced the publication of a new set of the LCIA Court’s decisions on challenges made by parties to arbitrators. Parties to arbitration may sometimes resort to challenges to individual arbitrators or to a panel collectively when they are dissatisfied with a procedural decision or consider the Tribunal to have been biased or demonstrate a lack of independence or impartiality. In LCIA arbitration, decisions on such challenges are taken by the LCIA Court. 

Read the LCIA’s announcement of 16 December 2024 of the publication of 24 decisions made in arbitrations between 2017 and 2022.

The decisions themselves are accessible on the LCIA’s Challenge Decision Database.

We consider below how this publication demonstrates an increase in the trend towards greater transparency (i), the difficulties of succeeding in such a challenge (ii), the impact of the publication in terms of deterrent (iii), and finally a brief comparison against other major arbitral institutions (iv).

    (i) Move towards greater transparency

The publication of these decisions represents the next step in the LCIA’s move towards greater transparency in the matter of challenges to arbitrators. The LCIA had, in 2011, published a summary of 28 challenge decisions covering the period 1996 to 2010. Then, in 2018, the LCIA issued excerpts of 32 decisions covering the period 2010 to 2017.

What distinguishes this latest release of 24 decisions is that, rather than being summaries or excerpts, the decisions as a whole are published with necessary redactions being made for confidentiality. This gives an unparalleled insight into the arguments made my parties in challenge proceedings and the decision-making of the LCIA Court. The total number of LCIA Court decisions that has now been brought into the public domain for review in some form or another is 84.

    (ii) The challenge of challenging

The grounds for making a challenge to an arbitrator are limited. Article 10.1 of the LCIA Rules (2014 and 2020 versions) provides that the LCIA Court may revoke an arbitrator’s appointment in situations including where circumstances exist which give rise to justifiable doubts as to that arbitrator’s impartiality or independence. By Article 10.2, the LCIA Court may determine that an arbitrator is unfit to act under Article 10.1 if that arbitrator (i) acts in deliberate violation of the arbitration agreement, (ii) does not act fairly or impartially between the parties, or (iii) does not conduct or participate in the arbitration with reasonable efficiency, diligence and industry. Article 10.3 (and following) sets out the procedure in the event a party wishes to make a challenge.

These provisions are intended to act as a procedural safeguard against relatively rare occasions such as where an arbitrator acts in an unfair or biased manner. These occasions will be rare in part because of the appointment process and disclosure requirements, designed to ensure neutrality, and in any case because tribunals have wide procedural discretions; so proving that the process has been compromised in a way which offends due process would be a difficult task. Nevertheless, this does not stop some parties from trying. It may well be the case that some challenges are made for strategic purposes and with little real hope of success.

    (iii) A deterrent affect?

The LCIA has published Commentary to accompany the publication of the decisions. This Commentary helpfully explains some of the trends and noteworthy features of challenge proceedings.

The majority of the challenges considered by the LCIA Court concerned arbitrations under the LCIA Rules, with a smaller number arising from UNCITRAL arbitrations where the LCIA was administering or appointing authority. In the LCIA cases, out of a total number of 1,864 cases initiated between 2017 and 2022, there were only 32 challenges (1.7%). Of these 32 challenges, only one was successful and the remainder were either rejected or did not go as far as a decision by the LCIA Court.

In the one successful challenge, two of the arbitrators had ties with a law firm which drafted contracts that were at issue in the arbitration and which the respondent said was party to a conspiracy. Even though the arbitrators had no knowledge of the law firm’s involvement at the time of their appointment, the fact that the law firm’s conduct was likely to be an issue in the arbitration and the mere fact of their relationship with the firm meant that there were justifiable doubts as to the arbitrators’ independence and impartiality.   

The figures given above illustrate vividly the small numbers of challenges that are actually made and the even smaller chances of a challenge being successful. The publication of decisions by the LCIA may well play a part in this. If parties can see the way in which Article 10 challenges are determined and the limited chances of success, then they will be less likely to make speculative applications. Moreover, the LCIA Court is encouraged to make costs determinations as part of its decision, which will also likely have a deterrent effect.

    (iv) How does this compare?

The LCIA has been a leader amongst arbitral institutions in the move towards publication of decisions on challenges to arbitrators. Other major institutions such as the ICC, SCC, DIAC and SIAC do publish statistics on challenges, and in general they also reflect low proportions of successful challenges, although it should be noted that, the proportions of successful challenges do appear somewhat higher than the extremely low level seen in the decisions released by the LCIA. However, the approach taken by the LCIA of publishing decisions in full is a strong statement of transparency. Other institutions may follow suit, with the SIAC in its new 2025 Rules including a provision for deemed party agreement to publication (with redaction) of a decision of the SIAC Court on a challenge (Article 28.7).

In the field of investment treaty arbitration, especially in ICSID arbitration, there is a more established practice of publication with respect not only to challenge decisions but awards and procedural orders generally. It is a relative novelty, however, in international commercial arbitration, where confidentiality remains the general principle.

The LCIA’s initiative may be seen as part of a more global trend towards transparency and objective standards in arbitration on matters including (but not limited to) arbitrator conduct. The IBA Guidelines on Conflicts of Interest in International Arbitration are a widely used reference point for assessing arbitrator relationships with other participants in the arbitral process. In the UK, the draft bill for the reform of the Arbitration Act 1996 includes a provision for the inclusion of a non-derogable statutory duty on an arbitrator to disclose circumstances that might reasonably give rise to justifiable doubts as to their impartiality (in addition to the current duty of impartiality). There is widespread recognition that, for the sake of the integrity of arbitration, it is important that there be clear and express standards for arbitrators, parties and institutions to refer to.

Conclusions

The latest release of LCIA Court decisions creates an even larger body of arbitral practice on the matter of challenges to arbitrators. This helps with transparency, so that the users of arbitration can see how a leading institution deals with issues such as alleged bias and misconduct. It also helps in creating certainty, in that parties can get an informed view of the hurdles for making a challenge and avoid the time and cost of tactical or speculative applications.