Article 14(1) of the ICSID Convention requires that arbitrators:

Article 57 of the Convention provides for challenges to arbitrators where the arbitrator has exhibited a "manifest lack of the qualities required by paragraph 1 of Article 14". It is generally accepted that manifest lack in Article 57 means an obvious or evident lack, and the facts alleged must be proven by objective evidence.

Until April 2006, Rule 6(2) of the ICSID Arbitration Rules (2003) required each arbitrator to sign a declaration of independence, disclosing "past and present professional, business and other relationships" with the parties. The rule was amended in April 2006 to require arbitrators, in addition, to disclose "any other circumstance that might cause reliability for independent judgment to be questioned" (Rule 6(2)(b)).

For further discussion, see Practice note, Procedure in ICSID arbitration: Arbitrator qualifications and challenges.

The ICSID Arbitration Rules do not contain any guidance on the matters that should be disclosed by arbitrators when accepting an appointment. However, arbitrators may refer to the IBA Guidelines on Conflicts of Interest in International Arbitration (IBA Guidelines). The IBA Guidelines contain a series of general standards, followed by non-exhaustive lists of circumstances, divided by colour (red, orange and green). There are different disclosure requirements and consequences for each colour, ranging from circumstances which must be disclosed (red) to those which need not be disclosed (green).

For further discussion about the IBA Guidelines, see Practice note, Selection of party-nominated arbitrators: The IBA guidelines on conflicts of interest.

In October 2007, the claimant appointed Dr Yoram Turbowicz as arbitrator (the arbitrator). The arbitrator's CV, which was sent to the parties, stated that he had studied at Harvard Law School between 1987 and 1990. The arbitrator did not declare any relationships or circumstances under Rule 6(2) of the ICSID Arbitration Rules. The tribunal was duly constituted and the arbitration proceeded. In December 2009, following an oral hearing on jurisdiction and the merits, and two rounds of written post-hearing submissions, but before an award was made by the tribunal, the respondent said that it had recently been informed that the arbitrator "maintained personal relations" with counsel for the claimant, arising from the fact that they had studied at Harvard together between 1988 and 1990.

The respondent subsequently formally proposed the arbitrator's disqualification under Article 57 of the ICSID Convention, on the following grounds:

The respondent was forced to drop its objection that the arbitrator and the claimant's counsel "maintained personal relations", as it refused to provide any evidence in support of that assertion.

The decision on the challenge was made by the two other arbitrators (the tribunal), in accordance with Article 58 of the ICSID Convention.

The tribunal dismissed the challenge on its merits and declined to decide whether the challenge was made in time.

The tribunal followed previous ICSID tribunals in finding that the requirement for independent judgment meant that an arbitrator had to be both impartial and independent. Further, a challenge under Article 57 could only succeed if the arbitrator's lack of impartiality and independence was manifest in the sense of obvious or evident. The required manifest lack of independence and impartiality could only be inferred from conduct.

The tribunal gave fairly short shrift to the respondent's objections arising out of the fact that the arbitrator and claimant's counsel studied together at Harvard, the arbitrator's alleged lack of investment treaty arbitration experience, and the claimant's counsel's brief telephone call to the arbitrator in 2007. It concluded that:

In analysing the respondent's objections regarding the arbitrator's non-disclosure of his shared educational experience with the claimant's counsel and of the brief telephone call between them in 2007, the tribunal considered the relationship between the disclosure requirements in Rule 6(2) and the grounds for challenge in Article 57 of the ICSID Convention. The question was whether the non-disclosures, in and of themselves, indicated a manifest lack of the qualities required under Article 14(1) of the ICSID Convention. To determine this question, the tribunal analysed the scope of Rule 6(2) before considering whether the circumstances identified by the respondent should have been disclosed and whether their non-disclosure could sustain a challenge under Article 57.

Whereas Rule 6(2)(a) related to disclosure of any relationship, past or present, between the arbitrator and one of the parties (as opposed to their counsel), the drafting history of Rule 6(2)(b) indicated that it was intended to be akin to the requirement in Article 9 of the UNCITRAL Rules for arbitrators to disclose any circumstances which might give rise to justifiable doubts as to their impartiality or independence.

Noting that there was no guidance in the ICSID Arbitration Rules as to the sort of circumstances that should (or should not) be disclosed, the tribunal referred to the IBA Guidelines. It justified its reliance on the IBA Guidelines on the basis that they applied the UNCITRAL justifiable doubts test, which was effectively the same as the test in Rule 6(2)(b) of the ICSID Arbitration Rules. Further, many ICSID tribunals had recognised the persuasive authority of the IBA Guidelines. The state of international law as to the duty of disclosure was best evidenced by the IBA Guidelines.

Applying the IBA Guidelines to the facts of this case, the tribunal found it striking that the fact of the arbitrator having attended university with a party's counsel was not even mentioned in the IBA "green" list of circumstances not requiring disclosure, let alone the red or orange lists. This strongly suggested that it did not need to be disclosed. In any event, whether disclosed or not, this circumstance did not meet the standard for disqualification in Article 57 of the ICSID Convention.

Regarding the telephone call in 2007, it was notable that the IBA Guidelines' green list indicated that an arbitrator did not need to disclose initial contact with the appointing party or counsel, if that contact was limited to the arbitrator's availability and qualifications to serve. There was no evidence in this case that anything else was discussed in the telephone call, or of any impropriety. Therefore, the arbitrator was not obliged to disclose the telephone call, nor did the call give cause for any doubt as to the independence or impartiality of the arbitrator.

This decision provides a useful analysis of the relationship between the disclosure requirements under ICSID Arbitration Rule 6(2) and the test for arbitrator challenges under Article 57 of the ICSID Convention. It emphasises that a failure to disclose a particular circumstance will not necessarily suffice to sustain a challenge.

The tribunal's reliance on the IBA Guidelines is also noteworthy, as it effectively held them up as the international law standard for disclosure by arbitrators. This approach can be contrasted with that of the tribunal in, for example, Participaciones Inversiones Portuarias SARL v Gabonais Republic (ICSID Case No ARB/08/17), which considered the IBA Guidelines to be of informative value only (see Legal update, Impartiality of ICSID arbitrator where arbitrator had presided over an earlier tribunal).

The tribunal also identified an interesting point relating to the timing of the respondent's challenge: should the respondent have discovered earlier that the arbitrator and claimant's counsel were at Harvard together, for example, by internet searches? If so, its challenge would have been time-barred anyway. Because it rejected the challenge on the merits, the tribunal did not have to decide this question, and expressly declined to do so. However, the tribunal clearly thought that the respondent should have done some basic research, which would have revealed that the claimant's counsel also went to Harvard and would have required it to make any challenge at a much earlier stage.