Sitong Li
PhD Student (Chinese University of Hong Kong)

International dispute settlement mechanisms have significantly proliferated in recent decades, playing a central role in global governance. The volume of litigation before these international courts and tribunals is also on the rise. Among the various international dispute settlement mechanisms, investor-State arbitration plays a significant role. Investor-State arbitration can take place under various rules, one of which is the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention).

ICSID arbitrators’ lack of independence and impartiality has long been considered a threat to the legitimacy of the ICSID system. Considering the large sums of money involved in ICSID arbitration and the public interests at stake, the obligations of arbitrators to be impartial and independent are crucial in today’s international arbitration landscape.

The existing substantive standard for the challenge and disqualification of ICSID arbitrators is stipulated in Article 57 and Article 14 of the ICSID Convention, which is the “manifest lack of” independence and impartiality standard. Article 14(1) of the ICSID Convention sets forth the qualities that ICSID arbitrators should possess, which stipulates “persons designated to serve on Panels shall be persons, …who may be relied upon to exercise independent judgment.” According to Article 57, a party may propose the disqualification of an arbitrator “on account of any fact indicating a manifest lack of qualities required by paragraph (1) of Article 14…” This specific standard of ‘manifest lack’ of independence and impartiality is unique among arbitration rules, as no other arbitral institutions or arbitration legislation uses this expression.

The language of Article 57 and Article 14 indicates a relatively high burden on the party that seeks to challenge the arbitrator compared with the standards adopted in international commercial arbitration. However, it is troubling that the existing legislation does not offer clear guidance for the understanding of this standard, and therefore, the interpretations adopted by different ICSID tribunals are often ambiguous and extend beyond a strict application of legal rules.

Decision-makers have developed various new interpretations of the ‘manifest lack of’ standard. In Amco Asia Corporation and others v. Republic of Indonesia, ICSID Case No. ARB/81/1, which is the first ICSID challenge decision (not public), the two unchallenged arbitrators held that the facts for the disqualification of an arbitrator must be established to show: “not a possible lack of the quality [of independent judgment under Article 14] but a quasi-certain, or go as far as possible, a highly probable one.”[i] Some subsequent challenge followed this strict interpretation. For example, Suez, Sociedad General de Aguas de Barcelona SA and InterAguas Servicios Integrales del Agua SA v. The Argentine Republic, ICSID Case No ARB/03/17 and Participaciones Inversiones Portuarias SARL v Gabonese Republic, ICSID Case No ARB/08/17.

However, the development trend reveals that, this strict “quasi-certain” approach has been substituted by other interpretations. For example, in Compañia de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic, ICSID Case No. ARB/97/3, the unchallenged members criticized the high bar standard (the “quasi-certain” standard) established in Amco Asia and argued that the appropriate standard should be whether the relationship is “significant enough” to raise a “reasonable doubt” about the challenged member’s capacity to render a decision independently and impartially.

While several scholars have examined this development process, most existing studies focus on cases resolved at least nine years ago. Recent disqualification decisions represent an under-explored area containing several new issues that warrant further research. The author has examined all publicly available decisions on the challenge of ICSID arbitrators, in order to take a critical look at the standard for challenging ICSID arbitrators. Special attention is given to new developments and obstacles raised in recent years by conducting a thorough case study. The author finds that in recent years, the ICSID tribunals introduced additional supplementary requirements when interpreting this “manifest lack of independence” standard.

For example, in İmeks İnşaat Makina Elektrik Konstrüksiyon Sanayi Limited Şirketi v. Turkmenistan, ICSID Case No. ARB/21/23, the unchallenged arbitrators argued that whether the lack of independence is ‘manifest’ should be the result of an “extensive argumentation and analysis…as long as it is sufficiently clear and serious.” ‘Manifest’ does not mean that “the process of analysis must necessarily be easy or simple, or that little reasoning or argumentation is needed to justify a disqualification.” The unchallenged arbitrators therefore emphasized that the process of interpretation requires extensive discussion.

Another development is manifested in Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A. (formerly Aguas Argentinas, S.A., Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A.) v. Argentine Republic, ICSID Case No. ARB/03/19, where the Annulment Committee did not adopt any specific interpretation established by ICSID jurisprudence; instead, the Committee proposed that “it is within the Tribunal’s reasonable discretion to perform a qualitative assessment” in terms of the examining whether or not there is a “manifest lack” of independence and impartiality and to “identify certain criteria” that the Tribunal considers “particularly relevant” concerning the assessment.

As a consequence, the interpretation of this “manifest lack of independence” standard has undergone a process of evolution, and in recent years, some ICSID tribunals have further supplemented their rulings with new interpretations of this standard. However, the ICSID tribunal’s interpretation of this standard should not be unrestricted and entirely unfettered. It is a broadly recognized phenomenon that, when an adjudicator is determining disputes based on the text of a treaty or a statute, it may give the relevant provisions a meaning different from what their drafters intended. The reasons for this deviation of rules in judicial practice are multiple. In order to examine to what extent this deviation is permissible, the functions of the dispute settlement mechanism and the functions of the adjudicator within that dispute settlement mechanism should be examined. A proper interpretation of the ICSID arbitrator’s functions requires a precise analysis of the functions of ICSID as an investor-state dispute settlement mechanism.

Author Biography

Sitong Li is a PhD student at the Chinese University of Hong Kong. She is an awardee of the Hong Kong PhD Fellowship Scheme (HKPFS) and a recipient of the CUHK Vice-Chancellor’s PhD Scholarship Scheme. She graduated with an LLB from Shandong University (2021, China). She holds two LLM degrees, the first from Cornell Law School (2022, US) and the second from Leiden University (2024, Netherlands, Cum Laude, Adv. LLM in International Dispute Settlement and Arbitration). She pursues her research on international commercial and investment arbitration, private international law, and comparative law.

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[i] Tupman., W. Michael, “Challenge and Disqualification of Arbitrators in International Commercial Arbitration,” in International and Comparative Law Quarterly 38, no.1 (1989): 26-52, at 44.