Tribunal Bias in African Arbitrations

If leading arbitral institutions are serious about promoting arbitration in Africa, they must show a commitment to the development of a larger body of quality arbitrators from the continent. Commonly accepted rules and guidelines regarding the selection of arbitral tribunals and tribunal bias must have regard to the cultural norms, values and structures of African societies, as well as the conditions and realities of the legal market in Africa. Courts and arbitral institutions which supervise or examine issues of the conduct of arbitrations and ‘due process’ should be aware of such cultural norms and values if challenges to arbitral appointments and awards are to be determined properly and the arbitration market in Africa is to develop to its full potential. This is not to suggest that they should ignore or dilute the fundamental requirement of tribunal impartiality. This is an overriding requirement, to which the principle of party autonomy and any wider aims of capacity building must always yield. What is required is a properly informed approach to the issue of impartiality in an African context. Tribunal Bias: General Principles Article 12(2) of the UNCITRAL Model Law on International Commercial Arbitration (“the Model Law”) has been incorporated or echoed in several national arbitration codes. It states: “An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties…” What are “justifiable doubts” in this context? Several common-law jurisdictions have developed case-law in this area. I shall focus on the English authorities because (1) this is the body of case-law with which I am most familiar, and (2) even if they do not entirely reflect the way in which the law has developed in other jurisdictions, the discussion in these cases is illuminating. English Authorities The classic exposition of the principle of apparent bias in English law appears in the House of Lords case of Porter v Magill. [2002] 2 AC 357. The test is “whether the fair-minded and informed observer, having considered the relevant facts, would conclude that there was a real possibility that the tribunal was biased.” The test is whether there is a possibility, not a probability, of bias. Furthermore, the issue is not confined to a real possibility or likelihood of conscious bias. The threshold is “a real possibility of unconscious bias” in the mind of the tribunal. In R v Gough, it was observed that “bias is such an insidious thing that, even though a person may in good faith believe that he was acting impartially, his mind may unconsciously be affected by bias.” So a statement or assurance by the tribunal that it has not been, or is unlikely to be, unduly influenced or biased in its determination of a dispute is of little value. “It is no answer for the judge to say that he is in fact impartial and that he will abide by his judicial oath. The purpose of the disqualification is to preserve the administration of justice from any suspicion of partiality.” The English authorities also make it clear that, if there is any real doubt as to whether a tribunal might be biased (whether consciously or unconsciously), that doubt should be resolved in favour of recusal, because “in any case where the impartiality of a judge is in question, the appearance of the matter is just as important as the reality”. On the other hand, the English courts have also emphasised the need for robustness in assessing claims of apparent bias. Judges and arbitrators are appointed and expected to decide disputes, not to be over-eager to succumb to self-interested arguments by one of the parties that they should be removed from a case. As Sedley LJ observed in Bennett v London Borough of Southwark: [2002] EWCA Civ 223 “Courts and tribunals do need to have broad backs, especially in a time when some litigants and their representatives are well aware that to provoke actual or ostensible bias against themselves can achieve what an application for adjournment cannot. Courts and tribunals must be careful to resist such manipulation, not only where it is plainly intentional but equally where the effect of what is said to them, however blind the speaker is to its consequences, will be indistinguishable from the effect of manipulation.” Ward LJ added: “I do not deny that it is thoroughly unpleasant and uncomfortable to be accused of bias. It is, sadly, not an uncommon charge. It is, on the contrary, a worryingly increasing challenge to the court’s authority at all levels. Judges, members of tribunals, magistrates, all have to rise above such a challenge because all must be confident in their ability to judge impartially.” IBA Guidelines on Conflicts of Interest The IBA has recently grappled with the issue of apparent bias. In 2004, it published Guidelines on Conflicts of Interest in International Arbitrations (“the IBA Guidelines”), which have gained wide acceptance within the international arbitration community. The purpose of the IBA Guidelines is to promote greater consistency across the international arbitration community in the assessment of potential conflicts of interests and apparent bias, and to avoid unnecessary challenges and arbitrator withdrawals and removals. The Guidelines set out General Standards and lists of specific situations that might arise (the Red, Orange and Green Lists), indicating whether such situations warrant disclosure or disqualification of an arbitrator on grounds of apparent bias. The General Standards and the Application Lists are said to be based on statutes and case law in a cross-section of jurisdictions, and on the judgment and experience of practitioners involved in international arbitration. It is expressly stated that “[t]he IBA Arbitration Committee trusts that the Guidelines will be applied with robust common sense and without unduly formalistic interpretation”. In a nutshell, the Red List identifies situations which necessarily disqualify an arbitrator from accepting an appointment either in all circumstances (the Non-Waivable Red List) or in the absence of full disclosure and express waiver by the parties (the Waivable Red List). The Red List includes (amongst other things) situations where a prospective arbitrator has a financial connection or a familial or other personal relationship with a party, such that his/her appointment might be considered to infringe the principle that no one may be a judge in his/her own cause. The Orange List identifies situations which may give rise to doubts as to impartiality or independence, depending on the facts of each case. The Green List identifies situations where no apparent conflict of interests exists from an objective point of view, i.e. situations which are considered to be insufficient ever to compel disqualification of an arbitrator. As the IBA Guidelines state, “the borderline between the categories that comprise the Lists can be thin”. The Red List contains a number of very different situations which might give rise to disqualification or challenge for an arbitrator. For example, in the absence of full disclosure to and waiver by the parties, automatic disqualification is considered to be justified where (a) a close family member of the arbitrator (defined as “a spouse, sibling, child, parent or life partner, in addition to any other family member with whom a close relationship exists”) has a significant financial interest in the outcome of the dispute or in one of the parties; or (b) the arbitrator’s law firm currently has a significant commercial relationship with one of the parties, or an affiliate of one of the parties. Similarly, the Orange List (situations which may give rise to doubts as to impartiality or independence, depending on the facts) includes a variety of situations, including circumstances where (c) a law firm or other legal organisation that shares significant fees or other revenues with the arbitrator’s law firm renders services to one of the parties, or (d) a close family member of the arbitrator (as defined) is a partner or employee of the law firm representing one of the parties, but is not assisting with the dispute; or (e) a close personal friendship or enmity exists between an arbitrator and a manager or director of a party or a witness or expert. By contrast, the Green List (situations which would never give rise to a material conflict of interest) includes a case where an arbitrator’s law firm is in association or alliance with a firm which renders services to one of the parties, but does not share significant fees or other revenues with the arbitrator’s law firm. ICC Guidance for the Disclosure of Conflicts by Arbitrators Following the publication of the IBA Guidelines, in February 2016 the ICC published its own guidance for the disclosure of conflicts by arbitrators, which has been incorporated into the ICC’s Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration (“the ICC Note”). The ICC Note directs arbitrators to disclose in their Statement of Acceptance, Availability, Impartiality and Independence “any circumstance that might be of such a nature as to call into question his or her independence in the eyes of any of the parties or give rise to reasonable doubts as to his or her impartiality”, although it also explains that disclosure does not imply the existence of a conflict. Arbitrators are advised to “pay attention” to a number of different circumstances, including situations where an arbitrator or prospective arbitrator has a professional or “close personal relationship” with counsel for one of the parties or its law firm. No definition or explanation is offered of the precise nature of any “close personal relationship” which might trigger a disclosure obligation or give rise to reasonable doubts as to the impartiality of an arbitrator. The ICC Note simply explains that it is for the ICC Court to assess whether the matter disclosed is an impediment to service as an arbitrator. This is no doubt a recognition of the fact that each case must turn on its own facts. But how are these issues to be approached in an African context? Appearance of Bias: The African Context The commonly accepted principles and guidelines governing the appointment and disqualification of arbitrators and the identification of conflicts of interests have been developed principally through the case-law of European, North American and Antipodean jurisdictions, and through consultations with practitioners from those legal traditions and cultures. Thus the illustrations and guidance from case-law and the examples in the IBA Guidelines are readily applicable to international arbitrations conducted in those jurisdictions. However, it does not follow that they are similarly applicable in African arbitrations or arbitrations in any other jurisdictions which have different cultures and traditions. Social Norms, Values and Traditions In Locabail v Bayfield, the English Court of Appeal considered a number of situations which might give rise to a challenge on grounds of apparent bias, and it identified those which, in its view, could and those which could not conceivably succeed. It said: [2000] QB 451 at [25] “Everything will depend on the facts, which may include the nature of the issue to be decided. We cannot, however, conceive of circumstances in which an objection could be soundly based on the religion, ethnic or national origin, gender, age, class, means or sexual orientation of the judge. Nor, at any rate ordinarily, could an objection be soundly based on the judge’s social or educational or service or employment background or history, nor that of any member of the judge’s family … In most cases, we think, the answer, one way or the other, will be obvious. But if in any case there is real ground for doubt, that doubt should be resolved in favour of recusal. We repeat: every application must be decided on the facts and circumstances of the individual case.” (Emphasis added) In that case, the Court was considering situations in the context of English society and judicial experience with which it was familiar, and the references to religious and ethnic differences should be understood on this basis. But if the cultural context is different, it is questionable whether “the answer, one way or the other, will be obvious”. For example, is it obviously right to assert, in the context of an African arbitration, that an objection to an arbitral appointment “could not conceivably be soundly based” on the religious, ethnic or national origin of the prospective arbitrator? In many African jurisdictions, religious and ethnic associations can be powerful forces of both cohesion and conflict in social and business life in a way that they are not in European and North American states. As one international business consultant with management expertise in Nigeria has explained: “The way religious tensions affect an operation is demonstrated by Afro Nigeria Business. Part of an international enterprise, this company has a staff of Western expatriates and Nigerians. Religious identities, intertwined with ethnicity, are very important for the Nigerian staff. More than sharing a national identity they consider themselves Hausa-Islamic, Igbo-Christian etc. During religious conflicts in society the cooperation between Muslim and Christian colleagues is severely affected. They distrust and ignore each other. As a result of the religious tensions the entire company faces during these periods an unproductive situation.” May not similar religious allegiances and differences potentially influence the minds and objectivity of commercial arbitrators? If one party to an African arbitration appoints a co-religionist as arbitrator in a jurisdiction where society is subject to powerful religious ties and differences, a challenge on the grounds of apparent bias cannot be lightly dismissed. And where the relevant test is whether there is “a real possibility of unconscious bias”, it may be unwise to assume that a challenge on grounds of religious affiliation “could not conceivably be soundly based”. The same is true of ethnic or tribal affiliations in many African jurisdictions. Ethnic allegiance is a much more distinct and powerful force in many African societies than it is in Europe and North America. Whilst globalisation and urbanisation may be eroding some of this force in many African countries, and African economies and societies may be becoming increasingly ‘Westernised’, it is a rash court that would dismiss out of hand the possibility that tribal allegiance might have an unconscious pull on the mind of a prospective arbitrator. The nature and power of tribal allegiances will differ from one African jurisdiction to another, but it is a feature of African societies that may merit consideration when examining the issue of arbitral impartiality in a particular case. What of the suggestion that close acquaintance with someone involved in the case would give rise to a real danger or possibility of bias? Might “close acquaintance” have a wider ambit in an African social or business context? The same point may be made in relation to the reference in the IBA Guidelines to “a close family member” and “a dose personal friendship” and the reference to “a dose personal relationship” in the ICC Note. In most African societies, family obligations extend rather wider than they do in European and North American societies. For present purposes (I do ,not pretend to be an anthropologist), they may be conveniently encapsulated by the term, kinship. Kinship covers a widely extended family, and it imposes obligations and expectations on individuals which are often stronger than those which govern individuals in Western countries. For example, the notion of kinship embraces a strong tradition of respect for elders and support for kin in need. Notwithstanding the march of globalisation and urbanisation, kinship allegiance and obligations to the extended family are still powerful forces in African societies. Such obligations could exert as powerful an influence on the conscious or triootscious mind of an arbitrator as a dose family association in the Western sense of the term, or a dose business connection or acquaintance. Might this be a reasonable basis for a challenge on grounds of apparent bias? I only ask these questions; I do not suggest answers, because every case most turn on its own particular facts and circumstances. Of course, one must not lose sight of the point, emphasised by the English courts, that a measure of robustness is required ,ihen considering allegations of ap-parent bias. But the balance between the need for robustness and the need to guard against any possibility of bias can only properly be weighed here by if one has a proper understanding of the relevant cultural context. The African Legal Market An arbitrator’s professional connections may also give rise to challenges en grounds of apparent bias.- For example, the IBA Guidelines state that, where a law firm rendering legal services to one of the parties shares significant fees or other revenues with the arbitrator’s law firm, this may give rise to reasonable doubts as to his/her independence or impartiality. How is this to be approached in an African context? In their 2015 report on the African legal market (“the zulu ,edstone Report”), Redstone Consultants reported that African firms were “highly dependent on referrals from international law firms”, and that the proportion of fees arising from referrals from global turns “typically lies somewhere between one quarter and three quarters of revenue”. The p-oort also reported that A cican firms were not entirely dependent on global firms, and that they were “increasingly focused on building or joining networks of law firms”. It will be interesting to see hether the trends identified in that report have continued or changed. However, the picture of the market that emerges from this report is one of (1) significant dependence by African firms on one or more global firms for referrals of international business, and (2) a countervailing strategy of forming alliances with other African firms in order to grow business and market-share for international work How is the issue of potential tribunal bias in international African arbitrations to be considered against such a market background? Given the apparent extent of reliance by leading African firms on global firms for the introduction of international work and revenue, the IBA Guidelines suggest that challenges to arbitrators from such firms may succeed if their firm shares “significant revenues” with any global firm which provides services to one of the parties. Similarly, the IBA Guidelines suggest that an alliance between African firms to compete for international work may also give rise to a successful challenge if the arbitrator is a partner or employee of a firm which shares “significant revenues” with one or more firms in the alliance which acts for one of the parties. In a given case, it would be necessary to examine the terms of alliance agreement but this is an issue of which the leaders of firms will need to be, aware. It follpws that, if the current IBA Guidelines are applied, the strategies that African firms have adopted in order to compete for international work threaten to disqualify the partners and employees of such firms from appointment to some tribunals in major African arbitrations. This could seriously impede the growth of a body of suitably qualified and experienced African arbitrators and thus the development of the international arbitration market in Africa. Tribunal Bias: The Challenge of African Arbitrations The law and guidelines on apparent bias, which have been established by reference to the structures and norms of Western society and business practice, raise challenges for the development of arbitra-tion in Africa, and in particular a large market of qualified and experienced arbitrators on the continent It is important that these principles and guidelines be carefully reviewed and applied on the basis of a properly informed understanding of the cultural norms and structures of African societies and the African legal market. These issues should concern everyone involved in the arbitral process, including (1) the legal advisors to parties who may wish to mount or resist challenges on grounds of tribunal bias; (2) arbitrators facing challenges, who must consider whether to rise robustly to any challenge or whether to accept that the only safe course is recusal; (3) arbitral institutions such as the ICC, which publish rules under which arbitrations are conducted, oversee the appointment of arbitrators and administer arbitrations under their aegis; (4) courts with supervisory jurisdiction over an arbitration, to whom any challenge may be referred; and (5) professional bodies such as the IBA which seek to develop and promulgate authoritative guid-ance for the benefit of the profession at large. The issues posed must also be recognised and,: carefully considered on any ehalleriges :taxi at4 is from African arbitrations, Whether thOSe die*, . . lenges are made to the supervisory courts of the arbitral seat or to an enforcing court in another -jurisdiction. In addition, leaders of African law firms wishing to compete in the international arbitration market need to consider the dilemma posed for arbitrators in their firms by a business model based on alliances, referrals and fee-sharing with global firms and joining networks of African firms. Arbitral institutions and the IBA should engage with African firms to consider guidelines on conflicts of interests and tribunal bias in thin market context These are challenges for the development of an international arbitration market in Africa, and a more predictable framework for the appointment of African arbitrators and the determination of challenges to tribunals and awards. As has recently been said: “As companies move to do business in Africa, a greater sensitivity to African culture will be required and an understanding of African cultures realities should facilitate business transactions in this region African culture differs from other cultures in the way Africans construct meanings, negotiate social contexts and make sense of their environment (Ahiauzu, 1986)…. We acknowledge the fact that to propose a monolithic African culture … may be inaccurate because of the strong national differences. Nonethe-less, there are some cultural dimensions common to the sub-region (Grzeda and Assogbavi, 1999). These commonalities include: a hierarchical social structure, the importance of kinship, the primacy of the group, the driving norms of human inter-dependence, virtue of symbiosis and reciprocity (Mangaliso, 2001), … and the value attached to the extended family (Mwamwenda, 1999)… In the light of significant market potential for multinational corporations in Africa, resear-.6 is needed to continue the assessment of the ap-plicability of Western business models in Africa iatt-Adu;2001. Kuada and Buatsi 2005).” e is, e of arbitration in Africa. It is time to take this work forward. Many of Bride Court Chambets presented this paper at the 1st International Chamber of Commerce (ICC) Africa Regional Arbitration Conference held in Lagos, Nigeria on 19 – 21 June, 2016. By: Harry Matovu This Day News]]>