Article 14(1) of the ICSID Convention requires arbitrators to be "persons of high moral character…who may be relied upon to exercise independent judgment". Under Article 57 of the Convention, a party may propose to a tribunal the disqualification of any of its members "on account of any fact indicating a manifest lack of the qualities" required by Article 14(1).

Rule 6(2) of the ICSID Arbitration Rules requires arbitrators promptly to notify the Secretary-General of ICSID of any relationship with the parties or circumstances that might cause an arbitrator's reliability for independent judgment to be questioned.

General Standard 7(c) of the IBA Guidelines on Conflicts of Interest in International Arbitration provides that:

For further information about arbitrator challenges in ICSID arbitration see Practice notes:

The respondent, Venezuela, proposed the disqualification of Mr Yves Fortier following the announcement of the merger of his law firm, Norton Rose OR LLP, with Macleod Dixon LLP. Mr Fortier disclosed the merger to ICSID on 4 October 2011, immediately after the partners' vote on, and the subsequent announcement of, the merger.

The respondent argued that the Caracas office of Macleod Dixon had:

It argued that Macleod Dixon had been for many years "more adverse to [the respondent] than any other law firm in the world" and relied on Mr Fortier's failure to disclose the fact that Macleod Dixon had targeted Norton Rose as a merger partner, on the basis of Norton Rose's arbitration expertise. Referring to Rules 6(2) of the ICSID Arbitration Rules, and General Standard 7(c) of the IBA Guidelines, the respondent argued that a continuing obligation of disclosure arose long before the formal vote on the merger and the formal announcement. It argued that Mr Fortier must have known of Macleod Dixon's involvement with the claimant, and of its adverse relationship with the respondent, long before he disclosed the actual merger.

The respondent maintained its proposal even following the resignation of Mr Fortier from the law firm on 21 October 2011 (effective 31 December 2011). Mr Fortier's resignation was not sufficient to solve the problem: the merger presented a serious risk of conscious or unconscious bias, and the "emotional decision" to resign had been compelled by the proposal for disqualification.

Having considered all the evidence, including various statements made by Mr Fortier, the tribunal rejected the proposal.

The tribunal noted a discrepancy between the English and French texts of Article 14(1) (which refer to "independent" judgment) on the one hand, and the Spanish version (which refers to "impartiality") on the other. Following previous decisions of ICSID tribunals, it applied both the tests of independence and impartiality.

The thrust of the respondent's case was the failure to disclose the merger negotiations at an earlier stage. It was clear from ICSID Arbitration Rule 6 that information actually known to an arbitrator potentially fell to be disclosed. But did an arbitrator have an obligation to investigate? In the tribunal's view, this must depend on the facts of the case. In this regard, the IBA General Standards were "not law for ICSID tribunals" and in any event were only guidelines. Furthermore, even if a breach of the obligation to disclose was established, that would not in itself result in disqualification unless the non-disclosure gave rise to a reasonable suspicion of bias (conscious or unconscious).

Turning to the facts, the tribunal noted the respondent's case that, had the merger proposal been disclosed promptly, it would immediately have applied to disqualify Mr Fortier. The respondent's characterisation of Macleod Dixon as "adverse" to the respondent had not been contested. However, the issue before the tribunal was the state of Mr Fortier's knowledge. Mr Fortier had stated very clearly that he had no knowledge of any such matters in which Macleod Dixon had acted against the respondent or for the claimant. There was no reason to doubt the accuracy of this statement. Furthermore, there was no evidence for saying that Mr Fortier should have known the relevant information at an earlier stage. There were, therefore, no grounds for disqualification.

The tribunal's decision essentially turned on the evidence and, in particular, the fact that there was no basis for refusing to accept Mr Fortier's account of his state of knowledge at relevant times. It is interesting to note, however, that the tribunal was unwilling to apply the IBA Guidelines (which in terms require arbitrators to make reasonable attempts to investigate). One strand of its reasoning was that the conflict of interest standard imposed by the IBA Guidelines (in General Standard 2(b)) was significantly different (and easier to satisfy) than that imposed by the ICSID Convention. However, in relation to the issue of whether Mr Fortier was under a duty to investigate, the tribunal's reasoning is very shortly stated, and appears to turn primarily on the facts of the case.