APPOINTING

ARBITRATORS

Corpuz | De Guzman | Estioko | Lacap | Panganiban

QUESTION: Explain what you have to be careful if you appoint
arbitrators in a dispute. What then would you like to specify in the
arbitration agreement?

● In general, the arbitrators who compose a tribunal are not

simply passive figures who at the end of the process
render an award.
● They are people who interact with each other, the parties,
witnesses and any expert witnesses.
● They set the procedure and timetable of proceedings, they
issue decisions on crucial issues such as scope of
disclosure, and they can participate in the examination and
cross-examination of witnesses.
● Therefore, in choosing the party-nominated arbitrator, it is
important to take into account:
○ the candidate's legal and jurisdictional background
(e.g. civil law or common law), relevant industry sector
knowledge, and the language of the arbitration.
○ the candidate's professional standing, reputation and
integrity are also important, as well as his or her
experience of international arbitration practice and
procedure.
○ Availability should not be overlooked, as it is important
to have an arbitrator who is able to focus on the case at
the appropriate times.
WHO IS AN ARBITRATOR?
An arbitrator is an impartial person chosen to decide the issue
between parties engaged in a dispute. Arbitrations can include a
sole arbitrator or an arbitral tribunal (one president and two co-
arbitrators).

WHAT DO THEY DO?

● Aside from the parties and their attorneys, arbitrators play a

key role in arbitration proceedings, including:

○ Hearing the dispute

○ Reviewing the evidence and testimony
○ Applying the relevant law
○ Issuing a final, binding, and enforceable award.
NECESSITY OF SELECTION OF ARBITRATOR

Parties embark on arbitration to resolve a dispute or difference

arising between them. They commence the proceedings to get a
recognizable and enforceable award (baring settlement). Thus
anything that would deprive them of obtaining a valid award at the
end of the procedure is anathema and must be avoided. The
composition (i.e., The selection and appointment) of the tribunal must
therefore be in accordance with the agreement of the parties.
HOW ARBITRATORS ARE SELECTED?

• by agreement of the parties;

• by an arbitral institution;

• by means of a list system;

• by means of the co-arbitrators appointing a presiding arbitrator;

• by a professional institution or a trade association; or

• by a national court
 APPOINTMENT PROCEDURE
Ad Hoc Arbitration Institutional Arbitration

● After the interviews of various prospective
arbitrators, parties choose one to be
appointed
● The nominee will simply be informed of
his nomination
● Once the nominee accepts, the
appointment will be concluded and the
other party notified of the names and
details of the appointee
● The parties can agree on the
appointment procedure
● However, the institution retains
ultimate control over who is
appointed arbitrator, irrespective
of how predisposed and not overtly
biased a party nominee may be

● The other party would possibly go

through the same process to appoint its
arbitrator and give necessary notifications
PARTY SELECTION

SOLE ARBITRATORS

● Where the arbitration agreement requires a sole arbitrator to

be appointed, it may provide the method or means of
appointment

FACTORS TO CONSIDER:

● In international arbitrations (as distinct from domestic

arbitrations), it is usual to appoint a lawyer
 PARTY SELECTION
PANEL OF THREE ARBITRATORS

● Generally, it is acknowledged that in a panel of uneven number of arbitrators,

each party appoints one arbitrator and the two party-appointed arbitrators
would jointly appoint the third arbitrator to act as chairman

FACTORS TO CONSIDER:

● At least one member of the arbitral tribunal (preferably the presiding arbitrator)
should be a lawyer, or at least a person who has considerable experience of
acting as arbitrator in international disputes, since someone will need to
understand how to drive the process forward.

● There is no reason why the other two members of the arbitral tribunal should
also always be lawyers, unless the dispute is one in which the issues involved
are principally complex issues of law.
SELECTION CRITERIA
● The criteria parties would take into consideration in selecting arbitrators
depend on what the goals of the selecting party are with regards to its
participation in the arbitration.

● In most arbitration systems, any natural person may be chosen to act as an

arbitrator, the only general requirement being that the person chosen must
have legal capacity.

● Some institutional rules require that the arbitrator be nominated from a list
held by that institution; others require that the chairman or sole arbitrator be
a qualified lawyer

○ In general terms, it is not advisable to fix a list of arbitrator

qualifications, since there may not be someone who fulfils those
criteria and is available to act as arbitrator at the time that a dispute
arises, with the corresponding risk that the arbitral clause will be
inoperable.
SELECTION CRITERIA

Acceptable limitations:

● fluent in the language of the contract (or the likely language

of the dispute)

● occasionally, there are limitations on the residence or

nationality of the arbitrators (with the aim of avoiding
arbitrators with the same nationality as one of the parties)
FACTORS TO CONSIDER IN APPOINTING AN
ARBITRATOR (Other Considerations)
● Language proficiency

● Experience and Outlook

● Availability

● Nationality

● Education and Training

● Independence and Impartiality

○ Disclosure of grounds for disqualification

POINTS TO SPECIFY IN ARBITRATION
AGREEMENT

PRIMARY CONSIDERATIONS:

(1) Number of Arbitrators

(2) Method of Arbitrator Selection

(3) Criteria for Selection

NUMBER OF ARBITRATORS

● Pick one or three.

● To allow more flexibility, sometimes the parties agree that

they shall attempt, within a stated period of time after
commencing the arbitration, to agree on a sole arbitrator,
but if they fail to reach an agreement within such timeframe,
the default mechanism will be a panel of three arbitrators.
NUMBER OF ARBITRATORS

● Keep in mind that the number of arbitrators has an impact on the

overall cost, duration, and quality of the arbitral proceedings:

○ Arbitration before three-person tribunals is usually lengthier

and more expensive than before a sole arbitrator.

○ A three-person tribunal may be better equipped to address

complex issues of fact and law, reducing the risk of irrational or
unfair results.

○ A three-person tribunal allows each party to select one

arbitrator (who in addition may be selecting the chair), thus
having an increased control of the process and reducing the
risk of the other side unduly influencing the arbitrator.
METHOD OF SELECTING AN ARBITRATOR
● The selection of the arbitrators is crucial, as the arbitration is
only as good as the arbitrators. Parties often consider it to be
one of the biggest advantages of arbitration that they can freely
choose who decides their case, as opposed to a randomly-
assigned judge in a court case.

● The applicable arbitration rules should be reviewed for the

default mechanism (including timing). If the parties decide to
depart from the default mechanism, they should use language
consistent with the terminology of the applicable arbitration
rules: Under certain institutional rules, the parties “nominate”
arbitrators, and only the institution is empowered to “appoint”
them.
CRITERIA FOR SELECTION
● A clause in the agreement providing for settling the dispute by
arbitration through arbitrators having certain qualifications or in
certain agreed manner is normally adhered to by the courts and
not departed with unless there are strong grounds for doing so

● However, establishment of strict qualifications prior to the

dispute arising may give rise to problems, since the same
contract may generate disputes of a very differing nature

● As a matter of experience, it is best not to stipulate criteria

before a particular dispute has arisen

● This then gives the parties the greatest flexibility to nominate

the most appropriate arbitrators for the circumstances of the
particular dispute.
What should be specified in the arbitration
agreement?

● Most arbitration agreements are pre-dispute and do not

contain the name(s) of the arbitrator(s)

● The arbitration agreement may however, indicate the

number of arbitrators and how they would be appointed.

● The arbitration agreement may also give guidelines on

relevant qualifications, skills, expertise, or otherwise
required of the appointee.
CONCLUSION
What do you have to be careful if you appoint arbitrators in a
dispute?

● Personal competence, intelligence, diligence, availability,

nationality, integrity, experience in arbitration, linguistic
abilities, knowledge of particular industry of field of law
● Openness of the arbitrator to work with the other members
of the arbitral tribunal, particularly with the presiding
arbitrator
● Take into consideration of the national law applicable to the
matter, the international guidelines and rules regulating the
selection of arbitrators and the factual aspects of the case
What do you have to be careful if you appoint arbitrators in a
dispute?

BUT MORE IMPORTANTLY:

1. Choose an Arbitrator with a Manageable Caseload

○ Inquire into their caseloads. Ask whether the arbitrator can

devote sufficient time and attention to the parties’ dispute, and
nominate the arbitrator whose schedule permits taking on the
case.

2. Choose an Arbitrator with the Requisite Legal and Professional

Expertise

○ A significant advantage of participating in the selection process

is the ability to choose a decision maker with expertise that
mirrors the nature of the dispute.
What you have to be careful if you appoint arbitrators in a dispute?

3. Take into Consideration the Arbitrator’s Nationality

○ In arbitrations where the parties are of different nationalities, arbitral

institutions (i.e. DIFC-LCIA) often direct that a sole arbitrator or
chairman of the tribunal cannot have the same nationality as one of
the parties. The parties are of course permitted to agree otherwise
in writing. The rationale behind this rule is to prevent a real or
perceived bias in the proceedings.

4. Choose an Arbitrator with Strong Management Skills

○ To ensure the arbitral process is administered in an efficient, cost-

effective manner, the parties should choose a strong arbitrator
capable of managing people as well as the process.
What then would you like to specify in the arbitration agreement?

1. Decide between administered or ad hoc arbitration?

○ This will affect the manner of selecting an arbitrator as well as

setting the arbitrator’s fee

2. Method of Selection and Number of Arbitrators

○ Sole or Panel of Three?

■ The cost and the speed of the arbitration would be

affected by this choice

○ Criteria

■ The importance of setting a criteria is to ensure that the

arbitrator chosen is the right person to settle the dispute