May 8th

Evolving Standards: Key Changes in the 2024 IBA Guidelines on Conflicts of Interest

Queenie Cheung

In February 2024, the International Bar Association (“ IBA”) updated its Guidelines on Conflicts of Interest in International Arbitration (the “2024 IBA Guidelines”).

The 2024 IBA Guidelines aim to establish and enforce a consistent set of globally recognized standards for identifying and handling conflicts of interest. Although not legally binding, these guidelines are widely regarded as reflecting the best international practices and are commonly adopted by parties and tribunals.¹

The 2024 IBA Guidelines consists of two parts:

Part I: General Standards regarding Impartiality, Independence and Disclosure
- General Standard 1: General Principle
- General Standard 2: Conflicts of Interest
- General Standard 3: Disclosure by the Arbitrator
- General Standard 4: Waiver by the Parties
- General Standard 5: Scope
- General Standard 6: Relationships
- General Standard 7: Duty of the Parties and the Arbitrator
Part II: Practical Application of the General Standards

Key Changes to Part I “General Standards”

General Standard 1: General Principle

General Standard 1 provides that “[e]very arbitrator shall be impartial and independent of the parties at the time of accepting an appointment to serve and shall remain so until the final award has been rendered or the proceedings have otherwise finally terminated”.

The 2024 IBA Guidelines now clarify that the duration of this obligation is not to be extended to the period during which the award may be challenged before any relevant courts or bodies.

General Standard 2: Conflicts of Interest

General Standard 2 states that when an arbitrator has doubts as to the arbitrator’s ability to be impartial and independent, the arbitrator must decline the appointment, or refuse to continue to act.

The 2024 IBA Guidelines explain the differences between Waivable Red List and Non-Waivable Red List.When a justifiable doubt exists and is listed on the Non-Waivable Red List, an arbitrator should decline the appointment or refuse to continue to act. When a justifiable doubt exists but is listed on the Waivable Red List, an arbitrator may make a disclosure according to General Standard 3 and after the disclosure, the arbitrator may accept the appointment or continue to act if the parties have expressly waived pursuant to General Standard

General Standard 3: Disclosure by the Arbitrator

General Standard 3 introduced that if, after taking into account all facts and circumstances known, an arbitrator finds themselves required to make a disclosure, but the professional secrecy rules or other rules of practice or professional conduct prevent such disclosure, the arbitrator should not accept the appointment or should resign. However, failure to disclosure does not necessarily mean a conflict of interest exists or a disqualification should ensue, even that may give rise to doubts as to the arbitrator’s impartiality or independence in the eyes of the parties.

General Standard 4: Waiver by the Parties

General Standard 4 added the concept of constructive knowledge, stipulating that a party shall be deemed to be aware of any facts or circumstances that could constitute a potential conflict of interest, which a reasonable enquiry would have yielded at the beginning or during the course of proceedings.

General Standard 5: Scope

There are no key changes under this standard.

General Standard 6: Relationships

General Standard 6 emphasizes when deciding whether a potential conflict of interest exists, or whether disclosure should be made, the relationship between the arbitrator and another party must be considered on a case-by-case basis. There is no catch-all rule. Nonetheless, the 2024 IBA Guidelines provide some guidance on this issue:

An arbitrator in principle considered to bear the identity not just of their law firm, but also their employer.
Any legal entity or natural person over which a party has a controlling influence may be considered to bear the identity of such party.
As a general proposition, a law firm for these purposes is any firm in which the arbitrator is a partner or with which the arbitrator is formally associated, including in the capacity of an employee of any designation, as counsel, or of counsel.Structures through which different law firms cooperate and/or share profits may provide a basis for deeming an arbitrator to bear the identity of such other firms.
Relationships with third party funders, insurers, States and their respective State entity or subdivision should also be taken into consideration.

General Standard 7: Duty of the Parties and the Arbitrator

General Standard 7 now obligates a party’s duty to disclose a person or entity over which a party has a controlling influence to be consistent with General Standard 6.

Key Changes to Part II to “Practical Application”

2024 IBA Guidelines are still keeping the “traffic light” system:

The Red List is categorized into two parts: the ‘Non-Waivable Red List’ and the 'Waivable Red List.' In cases covered by the Non-Waivable Red List, where there are justifiable doubts as to the arbitrator’s impartiality and independence, an arbitrator is expected to decline their appointment orrefuse to continue to act. On the other hand, situations falling under the Waivable Red List may be overlooked if all parties, having been informed of the conflict of interest, expressly agree to proceed with the arbitrator in question.
Situations under Orange List will prompt arbitrator a duty to disclose the situation. If timely objection is not made, the parties are deemed to have accepted the arbitrator.
Situations under Green List do not obligate arbitrators to disclose.

It should be noted that all these lists of specific situations are not exhaustive. Arbitrators and parties should always assess the facts and circumstances relevant to the case.

The 2024 IBA Guidelines mainly expanded the Orange List, which includes:

The arbitrator currently serves, or has acted within the past three years, as an expert for one of the parties, or an affiliate of one of the parties in an unrelated matter. (Section 3.1.6);
The arbitrator has, within the past three years, been appointed as an expert on more than three occasions by the same counsel, or the same law firm (Section 3.2.9);
The arbitrator has, within the past three years, been appointed to assist in mock trials or hearing preparations on more than three occasions by the same counsel, or the same law firm (Section 3.2.10);
An arbitrator and counsel for one of the parties currently serve together as arbitrators in another arbitration (Section 3.2.12);
An arbitrator and their fellow arbitrator(s) currently serve together as arbitrators in another arbitration (Section 3.2.13); and
The arbitrator is instructing an expert appearing in the arbitration proceedings for another matter where the arbitrator acts as counsel (Section 3.6).

In conclusion, the 2024 IBA Guidelines thoughtfully expand their scope to address contemporary elements of arbitration practice, acknowledging the roles of arbitrators' employers, third-party funders, insurers, and the diverse configurations of law firms. These refinements exemplify the IBA’s deliberate efforts to align the IBA Guidelines with the current intricacies of the arbitration landscape, ensuring that the standards for identifying conflicts of interest remain robust and relevant.

¹ Alpha Projektholding GmbH v. Ukraine, Decision on Respondent’s Proposal to Disqualify Arbitrator Dr. Yoram Turbowicz in ICSID Case No. ARB/07/16 of 19 March 2010 (citing G. Born, International Commercial Arbitration 1391 (2009)), at para. 56.