Death or Resignation of an Arbitrator

The figures published for the ICC for 2018 show that the average age of arbitrators confirmed or appointed was 56, with 35% below 50. That leaves a substantial number above 56, with quite a few being retired judges or senior legal practitioners.

The Secretariat’s Guide to ICC Arbitration at 3-597 reports that the ICC is faced with the deaths of several acting arbitrators each year. You may have spent years preparing your case and battled against a recalcitrant opponent. Unexpectedly, you receive news that the arbitrator has passed away. What now?

The issues that arise are relevant when an arbitrator dies but also when an arbitrator resigns. The effect can be different where there is a sole arbitrator, or where there is a board of arbitrators and one of them is no longer involved in the case. This article will discuss the ICC rules and how they assist in such a situation. Should the reconstituted arbitral tribunal re-hear the dispute, or should it proceed based on the evidence already submitted? What is the effect on your arbitration and on any partial and interim awards or orders that have been granted along the journey?

Replacement of Arbitrators

The ICC rules contain a provision for the death or resignation of an arbitrator so that the arbitration can continue if either of these events occur. Article 15(1) of the ICC rules provides for an arbitrator to be replaced upon death or upon the Court’s acceptance of the arbitrator’s resignation.

Resignation

It is interesting to note that where the replacement is for the resignation of an arbitrator, the Court must first accept the resignation – that is, the Court has the power to deny the arbitrator’s resignation. An arbitrator could hand in his/her resignation for a variety of reasons, such as when a conflict of interest is discovered (for example, where an arbitrator may move to another law firm which has a conflict of interest), for personal reasons or illness, or simply because the arbitrator feels he/she does not have the requisite expertise for the arbitration.

The ICC commentary warns against an arbitrator resigning and advises arbitrators to think very carefully before resigning, as a resignation could cause unnecessary delay which would disrupt the proceedings and potentially be unfair to the parties. It is for this reason that the Court has the power to decide whether or not to accept the arbitrator’s resignation or whether it would be in the parties’ best interests to continue with the same arbitrator. Between 2001 and 2010, a total of 208 resignations were tendered, six of which were rejected (at 3-604 of the Secretariat’s Guide to ICC Arbitration).

Process for Replacing an Arbitrator

When replacing an arbitrator who has died or resigned, the Court may decide not to follow the original nominating process, if the Court considers it unnecessary (see article 15(4) of the ICC rules). This may be when the parties have, for example, agreed on a replacement arbitrator.

It is unusual for the Court to immediately appoint a replacement arbitrator following the death or resignation of an arbitrator. The parties will therefore usually have an opportunity to make comments in relation to the selection process, simply because of the time between the death or resignation of the arbitrator and the time when the Court will look at finding a replacement. This is the case even if the secretariat does not invite comment. Any comments made, whether invited or not will be taken into account. For example, in a 2011 case the parties agreed on a replacement arbitrator who was subsequently appointed by the Court. This expedited the appointment process considerably, rather than following the request, acceptance and appointment process.

The Effect of a Reconstituted Tribunal on the Proceedings

When an arbitrator is replaced, to what extent are the prior proceedings repeated? What is the effect on a partial award that had been made by the previous tribunal?

Prior Proceedings

When an arbitrator is replaced and the Tribunal reconstituted, it has the discretion to determine if and to what extent prior proceedings shall be repeated (see rule 15(4) of the ICC rules). The Tribunal must allow the parties to comment in this regard and must take the parties’ views into account.

Arbitral hearings can of course be expensive and time-consuming. Repeating an entire hearing for the benefit of the new tribunal member is therefore not usually the best option for the parties. Other options are for the arbitrator to rely on the documents filed to date, or in the case where the replacement arbitrator is engaged following the hearing, for the arbitrator to rely on recordings or transcripts. Where the parties and the new arbitrator agree, this is usually the approach taken, rather than having to repeat the entire proceedings.

It is possible, however, that one of the parties may have good reasons for requesting a hearing before the tribunal. If the grounds are good, tribunals are likely to allow this, in order to reduce the possible grounds upon which their decision could be challenged. This may be, for example, where the case heavily depends on the credibility of witnesses. On the other hand, if the tribunal feels the parties have already had a sufficient opportunity to present their cases, it may decline to re-hear the proceedings.

On an administrative and procedural note, the terms of reference are usually considered to be accepted by the new arbitrator upon agreement to serve and so do not generally pose a problem.

Interim and Partial Awards

With a different arbitrator, or Tribunal, what is the effect of the previous arbitrator’s awards or the previous Tribunal’s awards?

Article 28 of the ICC rules grants the arbitral tribunal the power to “order any interim or conservatory measure it deems appropriate. Any such measure shall take the form of an order, giving reasons, or of an award, as the arbitral tribunal considers appropriate.”

When delivered, a partial award “decides that part of the submission as irrevocably as the final award decides the rest. A partial award may therefore be sustained even though the final award is set aside.”[1]

The partial award has therefore, finally determined a section of the dispute. There is, in effect, a final award in relation to that portion of the dispute. It cannot, therefore, be in the reconstituted arbitral tribunal’s power to revisit that award. The award made by the arbitrator was final and that element of the dispute has been concluded. The death or resignation of the arbitrator cannot have any effect on it. This includes where there is a sole arbitrator who has resigned or died. The award has been made and it is final and has a res judicata effect. Any part of the proceedings (i.e. submissions or evidence) which cover matters which have already been concluded and were the subject of a partial award, are treated as irrelevant to the remainder of the proceedings.

This would not however, be the case if that partial award was set aside by a competent court, in which case, the reconstituted tribunal would have the ability to revisit those matters.

Truncation of Arbitral Tribunal

The Court also has the power to allow for a truncated tribunal – that is, for the remaining members of a panel of arbitrators to conclude the tribunal’s duties. However, this is restricted to cases in which the proceedings have closed. The Court will consider whether the additional time and expense of finding a replacement and briefing the replacement arbitrator outweighs the benefit to the parties. In making such a decision, the views of the remaining arbitrators and parties must be considered as well as any other relevant circumstances. This option is obviously only available where there is a panel of arbitrators and cannot be used where there is a sole arbitrator.

Conclusion

When considering the best approach to take upon the death or resignation of an arbitrator, it is important to balance the time and cost impact to the parties. It is expensive and time consuming to go through the process of appointing an arbitrator and then potentially repeating steps. This consideration needs to be balanced with ensuring that the proceedings are fair and that each party has been able to adequately present its case.

If an arbitrator dies or resigns then, it is most likely for the arbitrator to be replaced, briefed and then for the proceedings to continue without interruption.

If the proceedings have closed and there are remaining members of the arbitral tribunal, it is possible for the remaining members to conclude the tribunal’s duties, as this would save time and cost to the parties.

Prior proceedings are unlikely to be repeated, due to the cost and time impact this would have, and partial awards will still stand (unless set aside by a competent court), as they have a final and binding effect. There is the option of having part of the proceedings reheard, if it is considered to be necessary and where a partial award has been set aside by a competent court, the reconstituted tribunal can revisit the matters concluded by that partial award.

---

[1] ICC Final Report on Interim and Partial Awards at [11].