Doctrine Of “Nemo Judex in Causa Sua” in Arbitration Proceedings

Mainstream International Arbitration practice is made up of a familiar network of individuals and law firms within the arbitration community, sometimes as a result of school affiliation, Co-barristers in chambers, previous appointments or legal representation as counsel. The relationship between the parties and the arbitrator is usually consensual and contractual, in which the arbitrator agrees to settle the dispute between the parties for a certain remuneration. However, the judicial nature of the arbitration process, imposes practical limits on the parties’ freedom when choosing the arbitrators.

Principles of International Arbitration

As the state lends its authority for enforcement of the awards, it requires that the arbitration proceedings, as well as the composition of the tribunal, to meet certain minimum standards, which are considered to be indispensable characteristics of fair trial. In keeping with his adjudicatory functions, the arbitrator has to maintain his/her impartiality and independence, as well as full and frank disclosure of all relevant facts. A violation of any of these cardinal and universally accepted principle of International Arbitration, which are corollary to the competence of the arbitrator, may result in the removal of the arbitrator and possibly annulment of any order reached by way of an award rendered either preliminary or final. In some cases, it may also lead to the arbitrator being personally liable for damages depending on the degree of immunity afforded him by the relevant laws. Arbitrator Must Not Have Interest in Dispute The principle of Nemo Judex in Causa

Sua in this context connotes that an arbitrator should not be a judge in his own cause, i.e an arbitrator presiding over a dispute should not have substantial interest in the dispute or any of the parties to the dispute, to the extent of influencing the outcome, or to be seen to have influenced the outcome of the award. The requirement of disclosure in arbitration proceedings, has now formed an integral part of the proceedings in order to ensure fairness and transparency. Various arbitration rules provide for obligation of an arbitrator to disclose and the effect of non- disclosure. Article 12 Uncitral Rules for example, provides that any arbitrator may be challenged if circumstances exist that give rise to justiciable doubts as to the arbitrator’s impartiality or independence.

In the context of challenging an arbitrator or an award for lack of “independence” or impartiality courts have come to different conclusions as to whether arbitrators are subjected to the same requirements of independence and impartiality as Judges. While the US Supreme Court held in 1968 in COMMONWEALTH COATINGS v CONTINENTAL CASUALTY CO. 393 US 145, 149 that arbitrators should submit to stricter requirements than courts, since there is no appeal against their awards, the English Court of Appeal held in AT &T v

SAUDI CABLE (2000) 2 Lloyd’s Rep 127 (CA) that the same requirements apply. Divergent positions still exist depending on the jurisdiction. The underlining consideration is that the arbitrator is not predisposed as to the question in dispute. However, impartiality must be distinguished from neutrality, as is provided in some types of arbitration such as party-appointed arbitration, i.e., arbitrators do not have to be neutral. This does not imply that those arbitrators can be biased. It only means that from the legal, social and cultural background, they may be favourably disposed towards the appointing party which may even be necessary to fulfil the special functions of a party appointed arbitrator in an arbitration with parties from different countries. It is the writers position however, that as long as this proximity is not allowed to dictate the outcome of the proceedings the so-called lack of neutrality should not impair the impartiality.

Duty to Disclose

Generally, the duty to disclose extends to all information, which could be brought to the fore by the arbitrators before the consideration of the dispute. The big question is what information is relevant and what is sufficient to justify an objection to the arbitrator. Due to different perceptions as to what facts may be relevant, some institutions prescribe in detail what types of information is required. Extensive guidelines can be found in Article 4.2 of the IBA Rules of Ethics of International

Arbitrators. Disclosure factors are generally professional and personal contacts, which the arbitrator has with either or both of the parties. Clearly, if the party arbitrator has advised, represented or worked with a party, even many years previously, this might be considered relevant and capable or affecting an award if not disclosed.

Less clear is where a law firm (maybe a global law firm) has previously represented a company within a multinational group where the company concerned and the party to the arbitration has little or no connection other than common shareholding. It is even likely that the service rendered was in a different jurisdiction with respect to transactions unconnected to the dispute, or even before the subsidiary became part of

the group. The reality is that the arbitration community is relatively interconnected and in many cases arbitrators are selected because the lawyers involved know them, either personally or by professional reputation. Frequently, well known arbitrators will have to be involved in several arbitrations with the same lawyers, an arbitrator may have been appointed in another case by the lawyer representing the other party. Non-disclosure of facts has been considered to justify the challenge of an arbitrator. The recent decision of the Court of Appeal, Lagos Division per OGAKWU JCA in ADDAX PETROLEUM EXPLORATION (NIG) LTD v PEACEGATE

OIL & GAS LIMITED (unreported) in CA/L/765/2014 delivered on the 10th of March, 2017, expounded this doctrine. The facts culminating to this appeal was a successful challenge by the Respondent at the trial Court of part of the award, after enforcing the favourable part of the award. The Arbitrator had disclosed at the preliminary stages of the proceedings, his involvement with the Appellant as counsel previously and asked to disqualify himself subject to the agreement of the parties. The parties unanimously expressed their confidence in the Arbitrator to proceed with the conduct of the proceedings. The Proceedings continued and the award was rendered in favour of the Respondent. The Respondent in a volte-face approached the trial Court to set aside the award on the grounds that the participation of the Arbitrator who indicated that he had acted for ADDAX SA GENEVA in the arbitration breached the Nemo Judex in Causa

sua rule of natural justice. The Court of Appeal in upturning the decision of the trial court relied and reproduced in extensio the decision of OKORO JCA (as he then was) in KANO STATE URBAN DEVELOPMENT BOARD v FANZ held at page 12 thus: “.... It is evident on the face of the

records that the arbitrator informed the parties that he acted for one Addax S.A of Geneva in respect of an on-going dispute, and sought to know if the appellant is an affiliate of the said company in which case he would disqualify himself from acting as an arbitrator. The respondent counsel expressed confidence and stated that the respondent did not object to the arbitrator acting as an arbitrator in the disclosed event. .......

Justice is rooted in confidence and confidence is destroyed when rightminded people go away thinking that the judge was biased. .... This is a pointer to the fact that the respondent reposed confidence in the process that resulted in the award which it enforced. The law remains that in arbitration proceedings, the general rule is that the parties choose their arbitrator or arbitrators to judge both as to decisions of law and facts in the dispute between them. Thus, where as in this case, an award is prima facie good on the face of it, as evidenced by the facts that the respondent has enforced part of the award, it does not lie in the mouth of one the parties to object simply because the award is not his favour...” The most profound part of this decision is at page 15 where the Court held that

“where parties to a dispute appoint an arbitrator with full knowledge of the facts and circumstances relating to the arbitration before his appointment, they will be stopped from objecting to such as invalidating the proceedings”

The writer posits that this reasoning is unassailable, as it conforms with established practice and procedure in arbitration. See the Model Law Article 13(2) which sets 15 days time limit for challenge of arbitrators. The law is that facts that have been disclosed at the appointment stage cannot be relied on at a later stage to challenge the arbitrator or the award. Parties have to raise their objections immediately or they are considered to have waived their rights to rely on them. See the Case of ODUNEYE v

FRN (2014) 13 NWLR Pt 1425 at 545 at Page 586.

Conclusion

Ultimately, it is the arbitrator who decides what information he is going to disclose. Article 4.1 of the IBA Rules of Ethics

provides that arbitrators should declare important factors that may cause justifiable doubt about the individual’s independence. The form of disclosure to be used by the arbitrator, depends on the applicable arbitration rules. To ensure compliance with this duty, many institutions have a standard form that must be signed before appointment by the parties.

Arbitrators should be mindful not only about their own conduct and business affairs, but also those with whom they are associated, during the arbitration process. This is because, losing parties often look for a way to avoid the effect of an award against them. Attacking the independence and impartiality of the arbitrator is one such way. The effects of a violation of the duty to disclose and the sanctions involved, depend to a large extent on the approach adopted to check the challenges of the arbitrators by the relevant law. In AT&T v SAUDI CABLE

(SUPRA) the English Court of Appeal held that, an inadvertent non-disclosure of a fact that might not have affected the appointment process, is insufficient to lead to a real danger of bias. Consequently, the non-disclosure did not lead to the sanction.

"ARBITRATORS SHOULD BE MINDFUL, NOT ONLY ABOUT THEIR OWN CONDUCT AND BUSINESS AFFAIRS, BUT ALSO THOSE WITH WHOM THEY ARE ASSOCIATED, DURING THE ARBITRATION PROCESS. THIS IS BECAUSE, LOSING PARTIES OFTEN LOOK FOR A WAY TO AVOID THE EFFECT OF AN AWARD AGAINST THEM. ATTACKING THE INDEPENDENCE AND IMPARTIALITY OF THE ARBITRATOR IS ONE SUCH WAY"