Independence and impartiality are two core ethical standards found in all arbitration laws and rules. Other standards are diligence, disclosure, and confidentiality. An arbitrator shall be always independent and impartial from parties during the course of arbitration proceedings from the initial contact until the issuance of the arbitral award or termination of the proceedings. But why do these standards apply strictly to the arbitrator? To answer this question, we need to understand who the arbitrator is, and what independence and impartiality are.

The arbitrator is a third party in a dispute, who is placed in a position of trust by the disputing parties to make decisions on their dispute based on the agreed applicable laws and evidence presented before them. This position is required to be free from conflicts of interest, simply put is to be free from conflicts between private interest and the official duty of the arbitrator. The standard of conflicts of interest for the arbitrator is independence and impartiality. Such conflicts of interest standard for the arbitrator is different from the standard for the counsel, witness, expert, and tribunal secretary.

Independence is an objective criterion referring to the external manifestation of the relationship. Impartiality, on the other hand, is a subjective criterion referring to the internal or subjective state of mind. Lack of independence could be illustrated by the arbitrator’s financial relationship with one of the parties, and lack of impartiality happens when the arbitrator is biased toward one of the parties based on their prejudices such as a political view or race.

The assessment threshold of independence and impartiality varies from jurisdiction to jurisdiction. Among them, the common assessment threshold is based on “justifiable doubts”. This objective standard finds doubts as to the arbitrator’s independence and impartiality to be justified if there is an appearance of bias in the eyes of a reasonable third person.

These obligations of independence and impartiality stem from the party agreement, national laws, arbitration rules, code of conduct, and international treaties, in particular the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Under these applicable laws, independence and impartiality could be used as a ground to challenge the arbitrator to be removed from arbitration proceedings, and recourse against the arbitral award whether to set aside at the seat of arbitration, or against recognition and enforcement of the award in the jurisdiction where such applications were sought.

Due to different interpretations of independence and impartiality, and the difficulties for the arbitrator and parties to have a common understanding on which circumstances the arbitrator to satisfy their disclosure obligation. In an attempt to solve this uncertainty, the International Bar Association (IBA) first introduced the International Code of Ethics in 1956 specifically for lawyers undertaking works outside their jurisdiction. In 1987, IBA issued the IBA Rules of Ethics for International Arbitrators, designed specifically for the arbitrator for the first time. In its latest publication, in 2014, the IBA Guidelines on Conflicts of Interest in International Arbitration was issued with a well-recognized ‘traffic light checklist’ on the circumstances involving conflicts of interest. Although these instruments are not binding in nature, they offer valuable assistance to arbitrators to verify their personal circumstances on potential conflicts of interest. These instruments would become binding upon the agreement by the parties or inclusion into arbitration rules by arbitration institutions.

In conclusion, the arbitrator is required to be independent and impartial because he/she is the person in the position of trust to make decisions for the parties, which need to be free from conflicts of interest as expected by the parties and required by applicable laws. In making the disclosure, the arbitrator may also consider its confidentiality obligation with respect to any engagement they have had as a lawyer with their previous clients.