Impartiality and Independence of Arbitrators in Russia: The Incriminating Effect of Speaking Engagements

Russian law, just like virtually all modern arbitration statutes, stipulates that arbitrators have to disclose any circumstances that may give rise to justifiable doubts as to their impartiality. Failure to do so can constitute grounds for setting aside an award.

One of the most discussed cases in this regard was OAO NK Rosneft v. Yukos Capital S.a.r.l.. In this case under the rules of the International Commercial Arbitration Court in Moscow (“ICAC”), an award was rendered in favor of the Respondent, which was later set aside by a state court (and the setting aside upheld by the Supreme Arbitrazh Court; decision of 10 December 2007, No. 14955/07).

The reason for the annulment was that one of the arbitrators had failed to disclose that he had acted as a speaker at a conference that had been co-organized by the law firm representing the respondent. The court ruled that such a relationship by itself does not necessarily call into question the arbitrator’s impartiality and independence but may raise concerns and should therefore at least be disclosed in order to give the parties the opportunity to decide whether they wish to challenge the arbitrator. However, the court did not set forth any criteria to decide whether participation of an arbitrator in academic events sponsored by a party’s counsel would indeed provide grounds for challenge.

In Erick van Egeraat Associated Architects B.V. v. Capital Croup LLC the Court of Cassation of the Moscow Federal Circuit had to deal with a similar, although not identical situation. In this case, one of the law firms involved as counsel had acted as a promoting sponsor of a conference at which one of the arbitrators had given a speech. Here however, according to the court’s ruling, the mere sponsorship was not sufficient to create the appearance of any commercial interest or dependence on the arbitrator’s side (decision of 27 August 2009 No. KG-А40/8155-09). According to the court’s ruling, the decisive criteria in establishing potential doubts as to impartiality and independence would be the existence of a commercial interest or dependence due to the conference sponsorship. However, the court reaffirmed that arbitrators generally are under a broad duty to disclose any circumstances that might give the appearance of a special relationship between an arbitrator and a party’s legal counsel, which might also include ”academic connections”.

While the more recent decision of the Court of Cassation of the Moscow Federal Circuit may appear to soothe the concerns of regular conference speakers, the overall situation may still pose a considerable problem. International arbitration practitioners (acting as both counsel and arbitrators) quite regularly convene at major academic events, which in turn are often sponsored or co-organized by known law firms or individual lawyers of such firms. It is also unclear whether this disclosure of academic connections must be taken even further, extending, by way of example, to joint publications of individual practitioners, contributions to edited books, or other regular activities. While it is fathomable that individual circumstances might indeed create a situation in which an “academic connection” could call into question an individual arbitrator’s independence or impartiality, a general duty to disclose such relationships would probably lead to an excess of disclosure which would be unlikely to actually serve the purpose of disclosure itself.