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Swiss Supreme Court clarifies standard of impartiality required of party-appointed arbitrators
Practical Law Legal Update 2-504-0957 (Approx. 5 pages)
Swiss Supreme Court clarifies standard of impartiality required of party-appointed arbitrators
| Published on 01 Dec 2010 • Switzerland |
PD Dr. Nathalie Voser (Partner) and Anya George (Associate), Schellenberg Wittmer (Zurich)
In a lengthy French-language decision dated 29 October 2010 and published on 19 November 2010, the Swiss Supreme Court dismissed, among other claims, an impartiality challenge against a party-appointed arbitrator of the Court of Arbitration for Sport (CAS). In its ruling, it clarified several issues of general interest, chief among which was the question of whether party-appointed arbitrators are to be held to the same standard of independence and impartiality as the chairperson of the tribunal or a sole arbitrator.
Background
The following provisions are of relevance in this case:
- Article 180(1)(c) of the Swiss Private International Law Act (PILA), according to which an arbitrator may be challenged if circumstances exist that give rise to justifiable doubts as to his or her independence.
- Article 190(2)(a) PILA, according to which an award may be set aside if the arbitral tribunal was not properly constituted.
- Article 30(1) of the Swiss Constitution, according to which everyone has the right to have his or her case heard by a legally constituted, competent, independent and impartial court.
Facts
The case originated in 2009, when the Anti-Doping Tribunal of the Italian National Olympic Committee (CONI) imposed a two-year national ban on Alejandro Valverde Belmonte, a Spanish cyclist who had been found guilty of infringements of Italian anti-doping laws. Valverde (petitioner) lodged an appeal against the decision with the CAS. The CONI nominated a Swiss law professor, Ulrich Haas, as its party-appointed arbitrator. In his letter of acceptance, Haas indicated that, between 2006 and 2007, he was a member of the World Anti-Doping Agency's (WADA) Code Project Team, whose task it was to revise the World Anti-Doping Code. The petitioner did not object to the appointment at the time and the CAS Panel was constituted.
Upon request of the CONI, the CAS agreed to the joinder of two other parties to the proceedings, one of which was the WADA. The petitioner then questioned the independence of Haas, referring to his former mandate within the Code Project Team. After being invited by the CAS to supplement his declaration of independence, Haas indicated that, in addition to his aforementioned role within the WADA Code Project Team, he had acted as Chair of the WADA independent observer team for the Athens 2004 Olympic Games.
Following this declaration, the petitioner brought a formal challenge against Haas. The Board of the International Council of Arbitration for Sport (ICAS) dismissed the challenge, on the ground that Haas never represented any of the parties, but had merely been appointed by the WADA as a neutral and independent expert for two mandates, both of which were over by the time the arbitration proceedings were initiated.
In its substantive award, the CAS confirmed the two-year ban imposed by the CONI Anti-Doping Tribunal. The petitioner filed a motion to set aside the award with the Swiss Supreme Court, claiming that the CAS was improperly constituted and that it had moreover violated his right to be heard and the principle of equal treatment of the parties.
Decision
The Swiss Supreme Court rejected the petition to set aside the award. However, in its ruling, it clarified several issues which have long been subject to debate.
Factual basis for the Supreme Court's decision
Both the petitioner and the CONI indicated that they would complement the factual findings of the CAS by referring to evidence submitted during the arbitration proceedings. The Supreme Court ruled that this was not admissible. It held that, in proceedings to set aside an arbitral award, it must base its decision on the facts established by the arbitral tribunal. It may only review the evidence submitted to the arbitral tribunal to the extent that one of the parties challenges the factual findings of the latter under Article 190(2) PILA or if, exceptionally, new evidence is submitted and allowed within the context of the setting aside proceedings. Other exceptional circumstances may justify a derogation from this rule, but such circumstances were not present in this case.
Therefore, the Supreme Court held that, with regard to the issue of impartiality, it could only take into account the facts set out in the decision of the Bureau of the ICAS. All further evidence submitted in the course of the arbitration proceedings could not be considered.
Challenge of an arbitrator because of lack of independence/irregular constitution of the arbitral tribunal
Prior to the entry into force of PILA on 1 January 1989, the Supreme Court had held that the standard of impartiality required of party-appointed arbitrators was no lower than that required of the president of the tribunal. However, after the new Act entered into force, the Supreme Court, with reference to the fact that Article 180(1)(c) PILA makes no mention of the notion of impartiality, came to the conclusion that identical standards did not apply. Nevertheless, in a more recent ruling, the Supreme Court left this issue open.
In the decision under discussion, the Supreme Court pointed out that legal authors are divided on this issue. Some – whom the Supreme Court terms "pragmatists" – consider that it is illusory to expect an arbitrator appointed by a party to satisfy the same standard of independence and impartiality as the president of a tribunal or a sole arbitrator. Others, invoking the need for credibility in international arbitration, argue that the guarantees of independence and impartiality must apply to all arbitrators, irrespective of who appointed them.
The Supreme Court chose to follow the latter approach. Rejecting its earlier case law, it held that, when examining whether an international arbitral tribunal was improperly constituted within the meaning of Article 190(2)(a) PILA, the fact that Article 180(1)(c) PILA only referred to independence and not impartiality was not determinative. Rather, reference is to be made to Article 30(1) of the Swiss Constitution as a "norm of higher rank". Accordingly, an arbitral tribunal must fulfill sufficient guarantees of both independence and impartiality, as would a state court. In this regard, the same standards must apply to party-appointed arbitrators as to the president of the arbitral tribunal.
The Supreme Court further pointed out that this position is in line with both the IBA Guidelines on Conflicts of Interest in International Arbitration and the new Swiss Code of Civil Procedure, which enters into force on 1 January 2011 and contains an explicit requirement of impartiality for arbitrators in national proceedings.
The Supreme Court qualified this finding by adding that the particularities of international arbitration must be taken into consideration when determining the standard of impartiality to be met. Indeed the very system by which each party may appoint a member of the tribunal creates an objective link between the arbitrator and the appointing party. However, this does not in itself constitute sufficient grounds for an impartiality challenge. Further specificities apply in sports arbitration. In proceedings before the CAS, the choice of arbitrators is restricted to a list of personalities who must have full legal training and recognised competence with regard to sports. These requirements mean that, by definition, CAS arbitrators are often persons who come into frequent contact with sports organisations.
This does not however mean that such contact is necessarily sufficient to compromise their impartiality. Nor does it follow that a more stringent test should be applied to CAS arbitrators than to arbitrators in other fields.
Power of the Supreme Court to recuse an arbitrator
Another issue which required clarification was whether the Supreme Court has the power to recuse an arbitrator or whether, in accordance with the principle of cassation applicable in setting aside proceeding, it may merely annul the award. The Supreme Court held that exceptions to the principle of cassation may be recognised for reasons of procedural economy and legal certainty. If it were merely to annul the award, a new award would, in principle, have to be rendered by the same arbitral tribunal. If the arbitrator who was found to lack independence or impartiality were to refuse to spontaneously step down, the challenging party would have no choice but to repeat the whole process of a formal challenge. Therefore, the Supreme Court found that it had the power to directly recuse an arbitrator.
Independence and impartiality of the arbitrator in the case at issue
With regard to the merits of the case, the Supreme Court found that only two circumstances were relevant with regard to the impartiality challenge against Haas, namely his position on the WADA Code Project Team and his function as Chair of the WADA independent observers team during the 2004 Athens Olympic Games. It pointed out that Haas had acted as an independent expert and was not bound by instructions of the WADA. The petitioner's assimilation of Haas' relationship with the WADA to that of a lawyer and a client who may bestow further mandates was therefore considered to be baseless.
Moreover, reference was made to the particularities of CAS arbitrations. The fact that Haas had had previous contact with the WADA was the near inevitable corollary of the closed-list system for the appointment of CAS arbitrators. Bearing this in mind, the two isolated missions carried out by Haas for the WADA did not in and of themselves constitute sufficient grounds to set aside the award for improper constitution of the Panel. In addition, the Supreme Court held that the petitioner could not reasonably have been in ignorance of these circumstances at the time Haas accepted his mandate as arbitrator, given that the facts could be found on the internet. The Supreme Court confirmed the imposition of a "duty of curiosity", as it is termed, which to a certain extent imposes a burden of doing a conflict check also on the parties.
Furthermore, the decision contains a contradiction. The Supreme Court initially held that the fact that the award was rendered unanimously was irrelevant to the issue of impartiality. A party raising an impartiality challenge need not demonstrate that the outcome of the proceedings might have been different if the arbitral tribunal had been properly constituted. Conversely however, the Supreme Court found that, in the case at issue, the fact that Haas had joined his co-arbitrators in unanimously rejecting the request entered by the WADA to impose a worldwide (rather than merely national) ban on the petitioner showed that he was impartial.
Comment
Because of the clarification of a long open question within the Swiss lex arbitri regarding impartiality and independence, this decision, which will be published in the official court reporter, should come to rank as a leading case. The issue of whether party-appointed arbitrators must fulfill the same standard of impartiality and independence as the chairperson of the arbitral tribunal or as a sole arbitrator has long been subject of discussion and continues to be, although there is, as was confirmed by the decision of the Supreme Court, a clear trend towards an all-compassing definition which does not distinguish between the roles of the chairperson and the co-arbitrators. After it had left the issue open for many years, the Supreme Court chose a surprisingly hard-line approach, favouring the credibility of arbitral tribunals over pragmatic considerations. The decision, which is meticulously reasoned, contains unexpectedly strong language and a clear stand was taken against "a system where arbitrators act as advocates for their respective appointing parties".
Another unexpected element of the decision is the Supreme Court's finding – in contradiction to its previous case law – that the wording of Article 180(1)(c) PILA is not determinative in this context.
It should also be mentioned that the decision confirms the imposition of a "duty of curiosity", as it was termed by the Supreme Court, which, to a certain extent, imposes a burden of doing a conflict check on the parties as well and obliges them to do reasonable research with regard to links between arbitrators and parties immediately after their nomination.
Altogether, the decision is a welcome addition to the case law on impartiality in arbitration. It does however remain to be seen whether, in light of the "specificities" of international sports arbitration, a strict standard of impartiality can be applied in this area. Although the case states that no difference should be made, the application to the specific facts shows that the Supreme Court is prepared to accept a certain leniency.