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ICSID Arbitration: Arbitral Tribunal Disqualification Fails

10/02/2017 by Aceris Law LLC

Arbitral Tribunal DisqualificationIn the context of the ICSID Arbitration BSG Resources Limited and others v. Republic of Guinea, concerning a mining concession, an arbitral tribunal disqualification aimed at an entire arbitral tribunal has failed.

The ICSID Administrative Council dismissed a request for the disqualification of the entire arbitral panel by Claimants, which was based on an adverse procedural ruling by an Arbitral Tribunal composed of Ms. Gabrielle Kaufmann-Kohler, Mr. Albert Jan van den Berg and Mr. Pierre Mayer.

More specifically, during requests for document production, Respondent did not produce certain documents allegedly in its possession. Despite Claimants’ protests, the Arbitral Tribunal declared that “pursuing these issues of document production at this stage of the proceedings will make no meaningful contribution to the resolution of this dispute”.

Claimants argued that the Arbitral Tribunal did not act impartially, by prejudging a central issue to the dispute, namely the legality of their mining rights, when it declared that documents pertaining to the issue were irrelevant.

Additionally, they claimed that the Arbitral Tribunal acted favourably toward the State by ignoring its withholding of documents and that they violated the investors’ due process rights, by denying them a chance to prove their case.

The legal framework for the disqualification of arbitrators during ICSID Arbitrations consists of Articles 57 and 14 of the ICSID Convention, along with ICSID Arbitration Rule 9. Article 57 requires that there is a “manifest” lack of the qualities described in Article 14. The Administrative Council accepted that this “means ‘evident’ or ‘obvious’, and that it relates to the ease with which the alleged lack of the required qualities can be perceived”. According to the correct interpretation of Article 14, which considers the equivalent translations of the ICSID Convention in Spanish and English, arbitrators must be both impartial and independent. Impartiality denotes objectivity or lack of bias towards parties, and independence the lack of external control.

Pursuant to ICSID Arbitration Rule 9, since the request related to the entirety of the Arbitral Tribunal, the challenge was examined by the ICSID Administrative Council, which asked the question of what an objective third party would reasonably assume, after reviewing the circumstances of the arbitrators’ behaviour.

The fact that the Arbitral Tribunal encouraged Claimants to further discuss the document requests in later stages, as well as the express reservation regarding the drawing of adverse inferences against the State, convinced the Administrative Council that the Arbitrators had not prejudged the issue or violated due process. A mere adverse procedural ruling by the Arbitral Tribunal could not, it reasoned, reasonably convince an objective third party of a manifest lack of the qualities required under the Convention.

At first glance, it may seem that this ruling permitted a State party to get away with withholding essential documents. However, the ICSID must legitimately consider other factors in such challenges against arbitrators. A finding of disqualification based on an adverse procedural ruling, and lacking other indications of a ‘manifest lack of article 14 qualities’, could entail dangers of abuse of process, by enabling all dissatisfied parties to challenge arbitrators after adverse procedural orders, causing delays and undermining the quality of ICSID arbitrations.


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Filed Under: ICSID Arbitration, International Arbitration

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