How does the London Court of International Arbitration select arbitrators?: Peeking inside the ‘black box’
One of the hallmarks of international arbitration is the ability of parties to select the arbitrators who will decide their dispute. When a three-member tribunal is appointed, the claimant and respondent typically each nominate one co-arbitrator. Parties also either jointly select the presiding arbitrator, or have their co-arbitrators do so.
Likewise, in cases submitted to a sole arbitrator, parties normally nominate that arbitrator jointly. But what happens when a party fails to nominate a co-arbitrator, or when there is no agreement on a chairperson or sole arbitrator?
If the proceedings are conducted under the auspices of an arbitral institution such as the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR), or the London Court of International Arbitration (LCIA), responsibility for selecting the arbitrator falls to the institution. Each institution has its own internal process and selection criteria. Below, we explore how the LCIA approaches that task.
How often does the LCIA select arbitrators?
The LCIA selects approximately 40% of arbitrators appointed under its rules, the rest being selected by the parties or by co-arbitrators. The LCIA selects over 150 arbitrators a year. But how does it do so? And what criteria does it apply?
The selection process: peeking inside the ‘black box’
The LCIA follows a centralized process for selecting arbitrators, involving both its secretariat and court. It uses a database of several thousand potential arbitrators. For each candidate, the database contains relevant information, such as nationality, languages, experience, or familiarity with industry sectors or legal systems.
The selection process starts with LCIA counsel identifying, in consultation with the registrar or deputy registrar, relevant case-specific criteria. The purpose is to define a preferred profile reflecting the specific circumstances of the case. LCIA Rules require the LCIA to take into account the transaction(s) at issue, the nature and circumstances of the dispute, its monetary amount or value, the location and languages of the parties, and the number of parties. In practice, the LCIA will also look at the substantive law of the matter and the law of the seat, the language(s) of the arbitration, and the industry sector or the type of contract concerned (e.g., joint venture, loan, charterparty).
The institution will always take into account any criteria agreed by the parties, as mandated by its rules. Failing to do so could potentially render an award unenforceable down the line. But a little known fact is that the LCIA will sometimes try to accommodate criteria put forward by one party only, especially if the other party has not objected to that criteria. It is thus always worth pitching preferred criteria, regardless of whether an agreement can be reached with the other side.
The nationalities of the parties are also an important factor. To ensure neutrality, where the parties are different nationalities, the LCIA Rules state that, unless otherwise agreed, a sole arbitrator or a chairperson may not be the same nationality as of one of the parties. For instance, if the claimant is an American company and the respondent is German, the sole arbitrator or chairperson cannot be German or American.
More art than science
Criteria are input into the database to yield candidate results. Using the search-results list, the secretariat assembles a shortlist, usually containing 3 to 6 candidates. At this stage, the process is more art than science.
If the database does not return enough viable candidates, the secretariat can add names to the list. Often, however, the database returns too many names, and the institution needs to hand pick candidates. When that happens, the institution leverages its extensive knowledge of, and past experiences with, arbitrators who have acted in LCIA arbitrations.
Once a shortlist is established, the secretariat refers the matter to the LCIA court for a formal decision. The court is a diverse group of practitioners and arbitrators who are at the peak of the profession. In practice, however, appointment decisions are most often undertaken by a single vice president or the president of the LCIA court acting on the court’s behalf.
In many cases, the vice president or president will select one of the names put forward by the secretariat. But where, based on their experience, a vice president or the president believes a different profile is needed for the case, the court will either send the secretariat back to the drawing board, or suggest alternative names directly.
Ultimately, the LCIA’s approach rarely gives rise to surprising appointments. The quality of the individuals appointed by the institution is remarkably consistent across cases. That has contributed to the continued success of the London-based arbitration center.
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