Revised 2024 IBA Guidelines on Conflicts of Interest in International Arbitration: Important Takeaways for Parties

In recent decades, arbitration has built up a reputation as a fair and efficient way to resolve disputes through a neutral forum, before an independent and impartial tribunal, leading to final and enforceable awards. To preserve the fairness and integrity of arbitration, it is important to avoid conflicts of interest, which are broadly defined as situations where an arbitrator’s personal or professional connections may call their impartiality and independence into question. The presence of a conflict of interest can have serious consequences, including challenge and replacement of an arbitrator, refusal to recognise and enforce an award or its annulment.

As legal practices globalize and professional networks expand, identifying and addressing potential conflicts becomes more complex. With the method and intensity of human connections continuously changing, not every potential conflict can be anticipated and addressed through a fixed set of rules. This complexity is heightened by the absence of a universally binding legal framework as international arbitration operates across jurisdictions with different legal systems and traditions, each of which has its own approach to dealing with conflicts of interest.

Due to these factors, the arbitration community routinely resorts to non-binding instruments (so-called soft law) such as guidelines, rules, and codes of conduct, with the IBA Guidelines on Conflicts of Interest in International Arbitration (the IBA Guidelines) serving as a leading instrument for dealing with conflicts of interest in arbitration. These IBA Guidelines reflect widely accepted best practices and are regularly cited by arbitration institutions, arbitral tribunals and national courts.

For example, the Supreme Court of Ukraine has referred to the IBA Guidelines on several occasions as a supplementary source for interpreting the requirements of independence and impartiality of arbitrators (cases No. 824/16/24, No. 870/89/20). Although arbitral awards in cases administered by Ukrainian arbitral institutions are typically not published, in our experience, the IBA Guidelines are commonly used as benchmarks in Ukraine-seated arbitrations. Importantly, they may also be incorporated into arbitration agreements or procedural orders as applicable rules.

In February 2024, following its traditional 10-year review cycle, a revised edition of the IBA Guidelines was released introducing several notable changes, including provisions that directly pertain to the duties of the parties. Considering the widespread use of IBA Guidelines, including in Ukraine-seated arbitration, this publication aims to highlight important aspects of the revised 2024 IBA Guidelines for the attention and benefit of the parties.

2024 IBA Guidelines: Roadmap

Similarly, to their previous versions, the 2024 IBA Guidelines are divided into two main parts.

Part I: General Standards

Part I focuses on the core requirements of impartiality, independence, and disclosure. In simple terms, impartiality refers to the arbitrator’s personal attitude toward the case, meaning the absence of bias. Independence, on the other hand, concerns the arbitrator’s relationship with the parties and their counsel.

To uphold these principles, arbitrators must conduct reasonable inquiries into any facts or circumstances that could potentially compromise their impartiality or independence.

If relevant facts are identified, the arbitrator must disclose them to the parties, co-arbitrators, or appointing authority (if any). The need for disclosure is assessed from the perspective of whether the disclosed facts may potentially give rise to doubts as to the arbitrator’s independence or impartiality in the eyes of the parties – a “subjective test”. Disclosure itself does not automatically indicate a conflict of interest. A conflict only arises if the disclosed facts raise justifiable doubts about the arbitrator’s impartiality or independence. This is to be evaluated through a stricter standard than the one for the need to make a disclosure, namely through the eyes of the reasonable third person with knowledge of the relevant facts and circumstances – the “objective test”.

For the same reason, the failure of the arbitrator to make a disclosure does not automatically indicate the presence of the conflict of interests as this is still to be assessed through the objective test and not merely based on the perception of the parties. For the sake of good order and transparency, the IBA Guidelines do, however, suggest that arbitrators make the disclosure if there is any doubt as to whether they should disclose certain facts or circumstances.

If the arbitrator believes that disclosed factors result in an objective conflict of interest, they must decline the appointment or cease acting as an arbitrator. If the arbitrator does not refuse to accept the appointment, the parties can either accept the arbitrator or challenge the appointment of the arbitrator.

General Standard 4 of the 2024 IBA Guidelines maintains the concept of waiver: if no objection to the appointment of the arbitrator is raised by the parties within 30 days after disclosure or availability of the facts and circumstances that could constitute a potential conflict of interest, it is assumed that the parties accept the arbitrator and waive their right to challenge this arbitrator based on disclosed or available facts and circumstances. At the same time, important amendments were made in General Standard 4, which now provides for an additional duty of “reasonable enquiries” for the parties.

General Standard 6 further clarifies that an arbitrator’s potential conflicts of interest may or may not arise from various forms of cooperation between lawyers or law firms, as well as the emergence of complex or non-traditional business structures and arrangements. For instance, third-party funders and insurers may have a direct economic interest in the outcome of the case and with that, they may be considered to bear the identity of a party. The possibility of unconventional business arrangements and non-obvious personal or professional connections is also accounted for in General Standard 7, which sets out broader duties of the parties to inform of potential conflicts of interest.

Below we will address these additional duties of the parties under General Standards 4 and 7 in more detail.

• General Standard 4: Duty of Reasonable Enquiries

Under the last sub-paragraph of General Standard 4(a), to establish a waiver, party shall be deemed to have learned of any facts or circumstances that could constitute a potential conflict of interest for an arbitrator if “a reasonable inquiry would have yielded [them] if conducted at the outset or during the proceedings.” In other words, if, at the time of the appointment of the arbitrator, certain publicly available information indicating a potential conflict existed, but the party failed to discover it and did not challenge the arbitrator on that basis, the party is considered to have waived its right to raise such a challenge later.

This introduces what is often referred to as a “duty of curiosity”. According to it, to preserve the right to challenge the arbitrator, each party must make a reasonable effort to review information that is reasonably available regarding potential conflicts involving this arbitrator.

The exact scope of “reasonably available information” is not resolved. At the same time, commentators agree that a reasonable inquiry does not amount to a full-scale investigation. Efforts such as attending conferences to gather information (Dommo Energia v. Enauta Energia and Barra Energia, 2020) or analysing biased tweets (WADA v. Sun Yang and FINA, 2019) are seen as beyond what is required.^[1] In the absence of established practice and as it is usually the case with application of general standards and guidelines, the assessment of compliance with this “duty of curiosity” will be case-specific. Still, in our view, it may be reasonable for the parties and their counsel:

• to review the website of the arbitrator or their law firm, the arbitrator’s LinkedIn page or other professional profiles,
• to enter the arbitrator’s name in the Google search bar and review the first pages of results to locate their published articles and public engagements,
• to review the arbitrator’s recent cases or appointments using publicly accessible sources such as the ICSID website, Jus Mundi, or Global Arbitration Review (although the parties are generally not expected to purchase a subscription to a particular service if the relevant information is behind a paywall).

Importantly, the “duty of curiosity” under the 2024 IBA Guidelines is a continuing (ongoing) obligation as the last sub-paragraph of General Standard 4(a) uses the wording “at the outset or during the proceedings”. Accordingly, parties should remain alert to publicly accessible information, including online sources, and act without delay upon discovering any relevant facts or circumstances.

• General Standard 7: Duty to Inform

Under General Standard 7(a), a party must inform of its initiative and at the earliest opportunity the arbitral tribunal, other parties, administering institution or appointing authority of the following direct or indirect relationships between the arbitrator and:

• the party;
• another company within the same group of companies;
• a person or entity having controlling influence over the party in the arbitration;
• a person or entity over which the party has controlling influence; or
• any person or entity with a direct economic interest in, or a duty to indemnify the party for, the award to be rendered in the arbitration.

The rationale for disclosing the last three categories of entities is that, as explained above, General Standards 6(b) and (c) treat these entities as sharing the party’s identity. This includes, inter alia, third-party funders, insurers, and parent companies.

Additionally, a party shall, on its initiative and at the earliest opportunity, also identify any other person or entity it believes an arbitrator should take into account when making disclosures and inform of them. This ensures that potential indirect personal or professional connections are not overlooked, and the arbitrator can make fully informed disclosures, even in complex cases involving multi-layered relationships or state entities.

At the same time, when providing the list of persons or entities the parties believe an arbitrator should take into consideration during disclosures, the parties are required to explain the relationship of these persons and entities to the dispute. This requirement seems to be a safeguard against parties artificially expanding the list of potentially interested persons or entities to disqualify an unfavorable arbitrator or delay the constitution of the tribunal.

To comply with the duty to inform under General Standard 7, a party shall make reasonable enquiries and provide all relevant information available to it. It seems to be the same standard of care as under General Standard 4 addressed above. Similarly, the duty to inform is a continuing obligation, requiring the party to make reasonable efforts throughout the proceedings to identify and disclose relevant information.

Part II: Practical Application of General Standards

Part II aims to categorise specific instances of potential conflicts and includes four color-coded lists, each designed to help determine the level of conflict and the corresponding procedural response:

• Non-Waivable Red List covers situations that inherently create a conflict of interest and necessitate refusal of appointment or disqualification. These are situations that violate the principle that no one can be a judge in their own case.
• Waivable Red List covers situations that also create a conflict but only warrant refusal of appointment or disqualification if not expressly accepted by the parties. These are serious conflicts, though not as severe as those in the Non-Waivable Red List.
• Orange List covers situations requiring disclosure. They are deemed to be accepted by the parties unless there is a timely and explicit objection.
• Green List sets out situations where no disclosure is required, or where disclosure is limited based on reasonableness.

Notably, the borderline between these lists is very thin, and the lists themselves are not exhaustive. Each case requires individual examination guided primarily by the General Standards.

The revised edition of the IBA Guidelines also introduces changes to the examples of specific situations that may give rise to potential conflicts. Parties are encouraged to consult these examples closely, particularly when selecting a party-appointed arbitrator, as well as when conducting reasonable inquiries into the background of arbitrators appointed by the other party, an institution, or an appointing authority.

Summary

Understanding and complying with applicable rules and standards regarding conflicts of interest is essential to ensure that the time and resources which the parties invest in arbitration proceedings result in a fair and enforceable outcome. This helps avoid the risk of late-stage disqualification of an arbitrator, which could disrupt the entire arbitration proceedings, and also ensures the validity and enforceability of the final award. It is, thus, in the best interests of parties to locate and address potential conflicts as early as possible.

The recent amendments to the IBA Guidelines introduce additional ongoing duties for the parties to make reasonable enquiries and inform of any potential conflict of interest. These updates aim to enhance transparency, promote early and complete disclosures, and discourage unscrupulous tactics such as withholding a challenge (where a party, despite being aware of a potential conflict, delays raising a challenge until a strategically convenient moment to disrupt proceedings, pressure the tribunal, or attempt to get rid of an unfavorable award).

By being aware of these duties and proactively engaging with the relevant standards, parties can better manage expectations, contribute to the integrity of the proceedings, and reduce the risk of procedural disruptions.

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