Selection and Appointment of Arbitrators by Parties and Institutions

10-1 “The arbitrator is the sine qua non of the arbitral process. The process cannot rise
above the quality of the arbitrator.”(1) This statement describes the key role the arbitrator
plays in every arbitration. To a large extent the realisation of the advantages of arbitration
depends on the person appointed as arbitrator.(2) Since arbitration is based on a contract the
parties are in principle free to choose their arbitrator. They can appoint any person with legal
capacity to act as "223"arbitrator. The diversity in the subject matter of potential disputes
makes it impossible to identify the perfect arbitrator for all cases. There are, however, a
number of issues the parties should consider in making their choice as certain qualifications
are useful in the majority of cases. The parties or specific rules of law governing the
arbitration may even determine conditions for any appointment.

10-2 Unlike state courts, arbitration tribunals are in general not permanent institutions with a
given legal status. They have to be constituted for every case. Only after the arbitrators have
been appointed will there be a body with jurisdiction to decide a dispute or to order
provisional measures. In this respect the actual arbitration tribunal must be distinguished
from the arbitration institution under the auspices of which the arbitration may be conducted
and which is a pre-existing organisation of a certain permanence. Though the institution
administers and in some cases supervises the arbitration proceedings it does not decide the
disputes between the parties. This task is reserved to the actual arbitration tribunal
specifically appointed for the particular dispute.

10-3 This non-existence of a permanent organisation which is immediately available for

deciding the parties' disputes is at the same time one of the great strengths of arbitration as
well as one of its weaknesses.

10-4 On the one hand it is a major advantage of arbitration that the parties can submit the
settlement of their dispute to a tribunal of their choice. They do not have to rely on an
appointee of the state as in a national court, where they have no influence on who is dealing
with their dispute. The parties can appoint persons in whom they have confidence, and who
have the necessary legal and technical expertise for the determination of the particular
dispute. They can decide whether their dispute should be decided by a tribunal of one or
more arbitrators, and how those arbitrators are appointed.

10-5 On the other hand the lack of a permanent organization means that there is no
competent authority to decide a dispute until the arbitration tribunal is formed. The
appointment of the arbitrators can take some time while immediate action may be required to
preserve the rights of a party. Parties may refuse to co-operate in the appointment process
and try to prevent the creation of the tribunal or at least delay the proceedings. A party may
also try to misuse the freedom of appointment to gain procedural advantages by appointing a
biased arbitrator.

10-6 Since the constitution of the tribunal is indispensable for every arbitration, all
arbitration rules and national laws, contain detailed provisions "224"dealing with the
appointment of arbitrators. Furthermore, they often regulate what is to happen if, before
rendering an award, the tribunal becomes incomplete, e.g., one of the arbitrators dies,
becomes incapacitated or just refuses to co-operate with the other arbitrators.
10-7 This chapter considers the composition of the arbitration tribunal. It deals with (1) the
number of arbitrators, (2) the selection of arbitrators, (3) responsibility for their appointment,
(4) the procedures for appointing the tribunal, and (5) the limits on the parties' freedom to
decide on the appointment process.

1. Number of Arbitrators

10-8 The first question is whether there should be one or more arbitrators. In general the
number of arbitrators can be determined by the parties. The Model Law, for example,
provides in Article 10(1) that “The parties are free to determine the numbers of arbitrators.”

10-9 Similar provisions can be found in most other arbitration laws.(3) However, some laws
limit the parties' freedom to agree on an even number of arbitrators.(4)

10-10 In the majority of cases parties make use of their right to determine the numbers of
arbitrators either in their arbitration agreement or after the dispute has arisen. Where this is
not the case it will be determined in accordance with the chosen arbitration rules or, if no
rules have been agreed, on the basis of the applicable law. In practice most arbitration
tribunals are composed either of a sole arbitrator or three arbitrators. Other numbers of
arbitrators are extremely rare in international arbitration since they are invariably impractical
and unsuitable for most cases. Therefore the fall-back provisions in the different arbitration
rules and laws provide either for one or for three arbitrators. As a rule of thumb it can be said
that in common law countries there exists a certain preference for a sole "225"arbitrator
while in civil law countries a three member tribunal is the preferred method.(5)

1.1. Sole Arbitrator

10-11 Sole arbitrators have the major advantage of costing less than a three member
tribunal. The parties only have to pay for one arbitrator instead of three. This is an important
consideration in small and medium sized cases.(6) A sole arbitrator is potentially faster than
a three member tribunal. It is not necessary to co-ordinate the busy schedules of three
arbitrators to find time for a hearing and there is no danger of a party appointed arbitrator
trying to delay the proceedings.(7) More importantly, a sole arbitrator will undoubtedly
avoid the natural tendency of a tribunal with arbitrators appointed by the parties to reach a
compromise solution. The sole arbitrator is beholden to no one and renders a decision
without regard to who the parties are.

10-12 A number of arbitration rules and laws, in particular in common law countries,
provide that if the parties have not agreed on the number of arbitrators a sole arbitrator is to
be appointed.

10-13 In institutional rules this is often only a presumption from which the institution may
deviate where it is appropriate. The ICC Rules, for example, provide in Article 8(2)

Where the parties have not agreed upon the number of arbitrators, the Court shall
appoint a sole arbitrator, save where it appears to the Court that the dispute is such as
to warrant the appointment of three arbitrators.

10-14 Few rules contain guidelines as to when, in deviation from the general rule, a three
member tribunal should be appointed.(8) In most cases the amount in "226"dispute will be an
important factor. The decision in favour of appointing a sole arbitrator is strongly influenced
by the higher cost which is less an argument if the amount in dispute is high. Other factors
which will be taken into consideration are the nature and complexity of the claim, the
number of parties involved and the parties' preferences.(9)

10-15 By contrast, no such flexibility exists under most arbitration laws which provide for
the appointment of a sole arbitrator if the parties have not agreed on the number of
arbitrators. The English Arbitration Act for example provides in section 15(3)

If there is no agreement as to the number of arbitrators, the tribunal shall consist of a

sole arbitrator.(10)

10-16 In addition to following the former English law, the drafters were of the opinion that
parties should only be burdened with the extra-costs involved in a three member tribunal if
they agreed on such a tribunal. Furthermore, they thought that a sole arbitrator may be able
to overcome the difficulties existing if more than two parties are involved.(11)

10-17 A comparable flexibility in relation to the number of arbitrators is found in the

Netherlands arbitration law. Instead of providing for a fixed number, the number of
arbitrators is determined by the President of the District Court if the parties cannot agree on
it.(12) In deciding whether a sole arbitrator or a three member tribunal is more appropriate
the President of the District court can take into account the particular circumstances of each
case.

1.2. Three Member Tribunals

10-18 The main advantages of three arbitrator tribunals are

• the arbitrators can discuss the case with each other

which may improve the quality of the award and
limit the possibility of erratic or
eccentric "227"awards. It also reduces the risk of
an arbitrator completely misunderstanding the
case;
• in cases involving sophisticated scientific or
technical issues, it is possible to have within the
tribunal one or more arbitrators with the required
scientific or technical knowledge;
• where parties come from different cultural or legal
backgrounds the presence of an arbitrator with a
similar background appointed by a party can be
very reassuring for that party. It may make the
arbitration and the award of a tribunal more
acceptable to the parties. Not only may an
arbitrator with such a background be helpful in
understanding the case put forward but it is
reassuring for the appointing party that its
arguments will be considered by the tribunal
during its deliberations.
10-19 The major drawbacks of a three member tribunal are potentially the higher costs and
increased delay. If arbitrators with busy schedules are chosen it may be difficult to convene
meetings, arrange hearings or reach an agreement on the award. A party appointed arbitrator
may use delaying tactics such as refusing to co-operate or unilaterally resigning in the middle
of the proceedings.(13) Furthermore, there may be problems within the tribunal if one of the
arbitrators is violating the confidentiality of the tribunal's deliberations.

10-20 Nevertheless, a number of institutional arbitration rules, such as CIETAC and

DIS,(14) as well as the UNCITRAL Rules, provide for a three member tribunal if the parties
have not agreed differently. In general these rules do not allow for any discretion. For
example, Article 5 UNCITRAL Rules provides

If the parties have not previously agreed on the number of arbitrators (i.e. one or
three), and if within fifteen days after the receipt by the respondent of the notice of
arbitration the parties have not agreed that there shall be only one arbitrator, three
arbitrators shall be appointed.

10-21 When the parties have selected any of these rules to be applicable the institution
cannot appoint a sole arbitrator without the parties' consent even if a one member tribunal is
more appropriate. If the institution did so without any prior consent of the parties the award
rendered would be open to appeal under "228"Article V(1)(d) New York Convention: the
tribunal rendering the award would not be the one the parties contracted for by submitting to
arbitration under those rules.

10-22 The Stockholm Chamber of Commerce is an exception to this rule. Article 16(1) SCC
Rules contains a presumption in favour of a three member tribunal but allows the institution
a discretion to appoint a sole arbitrator where appropriate. A more limited discretion in
deciding whether a sole arbitrator or a three member tribunal is to be appointed is foreseen in
the International Arbitration Rules of the Zurich Chamber of Commerce. According to
Article 10 the discretion of the President of the Zurich Chamber of Commerce to decide on
the number of arbitrators is limited to disputes where the amount in dispute does not exceed
SFr 1,000,000 and no more than two parties are involved. In all other cases a three member
tribunal has to be appointed.

10-23 No such discretion exists under the national arbitration laws which anticipate a three
member tribunal, as is the case of the Model Law and most laws in civil law
countries.(15) The drafters of the Model Law were of the opinion that three member
tribunals were the most common configuration in international trade. Parties who preferred,
for time and cost reasons, a sole arbitrator would expressly provide for such in their
arbitration agreement.(16) In addition, since the Model Law was drafted for international
arbitration which often involves parties from different countries it seems sensible to have a
three member tribunal as the general rule if the parties cannot agree otherwise. Furthermore,
the absence of an experienced institution which can decide whether a sole arbitrator or a
three member tribunal is more appropriate in a particular case, justifies having a rule which
does not leave any place for arguments.

1.3. Even Number of Arbitrators and Umpires

10-24 Even numbers of arbitrators are very rare in international arbitration since they always
entail the danger of a deadlock if the arbitrators cannot agree. A certain exception is
the umpire system in England and a number of other common law countries.(17) In addition
to the two party appointed arbitrators, an "229"umpire is appointed. Unlike the chairman of a
tribunal who necessarily is involved in rendering the award, the umpire usually only steps in
if the party appointed arbitrators cannot agree on an award. Then the award is not rendered
by all three arbitrators but only by the umpire as a kind of sole arbitrator.(18)

10-25 Outside the umpire system the threat of a deadlock has led to some national laws
including provisions prohibiting arbitration tribunals with an even numbers of arbitrators.
The Egyptian Arbitration Act, for example, provides in Article 15(2) “the Tribunal must, on
pain of nullity, be composed of an odd number.”(19) Since the Act does not provide for a
mechanism of how to arrive at an odd number of arbitrators in these situations, arbitration
clauses providing for an even number of arbitrators will probably be invalid under Egyptian
law.(20)

10-26 To avoid such a result other arbitration laws which do not allow for an even number
of arbitrators, such as Article 1026(3) Netherlands Code of Civil Procedure, provide in those
situations for the appointment of an additional arbitrator.(21) Where the law does not
expressly do so, as in India, the courts apply the default provisions for cases where the
parties have not agreed on an appointment procedure.(22) In comparison to the Egyptian
solution, this has the advantage of interfering to a lesser extent with the parties' intention to
arbitrate while at the same time avoiding the threat of deadlocks. One can presume that most
parties to an arbitration agreement with an even number of arbitrators "230"would prefer to
arbitrate in front of a three member tribunal than to litigate in state courts, which would be
the effect of the Egyptian rule.

10-27 The English Arbitration Act does not make the appointment of an additional arbitrator
compulsory. It provides only for a rebuttable presumption in favour of having an uneven
number of arbitrators. Section 15(2) provides

Unless otherwise agreed by the parties, an agreement that the number of arbitrators
shall be two or any other even number shall be understood as requiring the
appointment of an additional arbitrator as chairman of the tribunal.

10-28 In other common law countries the presumption is in favour of the appointment of an
umpire rather than a chairman.(23) This is in line with the old English tradition of having
two arbitrators and an umpire. This can also be found in various types of contracts, in
particular in shipping and insurance.(24)

1.4. Five or more Arbitrators

10-29 The decision making process in tribunals with five or more members is cumbersome
and expensive. Co-ordinating the busy schedule of five or more arbitrators, who all have to
be paid for by the parties, involves considerable administrative effort and inevitable delays.
Therefore, tribunals with more than three arbitrators are only appropriate in very exceptional
circumstance where the number or type of parties involved and the amount in dispute justify
such efforts.(25) The few examples in practice often have some kind of state involvement
and relate to questions of public international law. For example, the full tribunal of the Iran-
US Claims Tribunal is composed of nine arbitrators.(26)
2. Selection of Arbitrators

10-30 The quality of arbitration proceedings depends to a large extent on the quality and the
skill of the arbitrators chosen. The same dispute which might be resolved in a speedy,
satisfactory and cost effective way by a strong and well chosen tribunal might turn into a
lengthy, hard fought arbitration in the hand of a weak tribunal, leading to an award which is
open to challenge and anti-enforcement actions. For this reason the choice of arbitrators is
one if not the crucial part of every arbitration.(27) The question for the parties is how to
identify suitable arbitrators.

10-31 An element arising from the parties' right to select is the fact that they are paying for
the services of the arbitrators. It is essential that arbitrators remember they are being paid for
their services which include not only professional skill and judgment, but also independence
and impartiality, efficiency and expedition. By meeting and talking to potential arbitrators
before nomination or appointment parties have an opportunity to appraise the arbitrators'
approach on these issues.

2.1. Interviewing Potential Arbitrators

10-32 Given the importance of the appointment parties increasingly seek to interview
potential arbitrators. Beyond the mere data which can be derived from a written curriculum
vitae they may wish to know more about the arbitrators personally so that they are able to
assess their attitudes and personality. There is a difference with respect to the sole arbitrator
or chairman of the tribunal and the party appointed arbitrator. Interviews of potential sole
arbitrators or chairmen should and are generally only held with both parties present.

10-33 The criteria for selecting party appointed arbitrators are often personal to the
appointing party. In such a situation the borderline between a justified quest for information
and an objectionable ex parte communication about the case is very slim and easy to
transgress. To make an informed decision whether an "232"arbitrator has the required
knowledge and experience, and to assess the arbitrator's attitude to certain issues, the party as
well as the arbitrator need at least general information about the case. To deal with that
problem arbitrators have developed different approaches.

10-34 Some arbitrators refuse to communicate ex parte with the parties beyond supplying
certain relevant information such as their curriculum vitae, fees and availability. They do,
however, seek from the parties information about the case so that they can determine conflict
of interests, their own suitability and availability,e.g. if hearings are necessary. Others agree
to be interviewed and be informed about the case in greater detail as long as a transcript of
the interview is made available to the other side and the co-arbitrators.(28)

10-35 The AAA ICDR Rules addresses this specific point stating where ex
parte communications with arbitrators are acceptable. Article 7(2) provides

No party or anyone acting on its behalf shall have any ex parte communication
relating to the case with any arbitrator, or with any candidate for appointment as
party-appointed arbitrator except to advise the candidate of the general nature of the
controversy and of the anticipated proceedings and to discuss the candidate's
qualifications, availability or independence in relation to the parties, or to discuss the
suitability of candidates for selection as a third arbitrator where the parties or party-
 designated arbitrators are to participate in that selection. No party or anyone acting on
its behalf shall have any ex parte communication relating to the case with any
candidate for presiding arbitrator.

10-36 The IBA Rules of Ethics also allow for ex parte contacts as long as the parties'
enquiries are designed to determine the arbitrator's “suitability and availability for the
appointment and provided that the merits of the case are not discussed.”(29) Independent of
what approach is taken, to avoid any appearance of improper behaviour and conspiracy, the
other side should be informed about any meetings or general briefings. Meetings should
preferably not take place at the party's office but at the arbitrator's office or neutral place.

10-37 Where the party appointed arbitrators have the responsibility of selecting the
chairman, it is generally accepted that parties may communicate with the arbitrator they have
appointed to make known the type of arbitrator they would like to see appointed. This is a
basic entitlement of the parties to prevent an "233"arbitrator who, for some reason, is totally
unacceptable being appointed as the chairman. The parties are paying for the process and
should not have an arbitrator in whom one of them has no confidence or has had a bad
experience in the past, or whose views are considered inappropriate for this case. It is a fine
line between not allowing a party a veto but giving it the right to tell the arbitrator it has
appointed that a particular arbitrator, or type of individual, is unacceptable. To overcome this
potential difficulty, some party appointed arbitrators either ask for or give their appointing
party a list of acceptable potential arbitrators or criteria which can be shared with the other
party appointed arbitrator. This is an instance where party autonomy does control. Once the
chairman has been appointed the avenue for unilateral discussion between a party and its
appointed arbitrator is generally closed.(30)

2.2. Qualifications

10-38 An important issue in the selection process is the professional and commercial
background of the arbitrator. Disputes about charter-parties require completely different
experience and knowledge than financial transaction disputes. In international commercial
arbitration it is usual that at least one member of the tribunal is a lawyer or a person with
sufficient knowledge about arbitration law and practice. Even simple disputes may, in an
international context, lead to difficult problems of procedure or conflict of laws. These
problems are generally better handled by a lawyer than by a lay person with expertise in
another area.

10-39 In a three member tribunal it is often possible to have the legal as well as the technical
expertise within the tribunal. In those situations preferably the chairman should be a lawyer
with the two party appointed arbitrators having the necessary non-legal expertise. The
chairman will primarily be in charge of the conduct of the proceedings and therefore should
have some knowledge of the relevant arbitration law.(31) It is important that the sole
arbitrator or chairman has the ability to conduct the proceedings properly as any misconduct
or irregularity in the arbitration proceedings may lead to delay, deprive a party of a fair
chance to present its case or result in an unenforceable award.

10-40 What problems may arise where a tribunal is composed of non-lawyers is illustrated
by a decision of the Italian Supreme Court in an action for the annulment of an award. The
dispute concerned construction works and none of the arbitrators was legally trained.
Therefore they decided to delegate to a lawyer, who had been appointed as an expert, to draw
up the award since they considered themselves unable to do so. The Supreme Court annulled
the award as it was not possible to delegate essential decision making powers.(32)

10-41 Adequate international experience of the arbitrators will facilitate an understanding of

parties coming from different legal or cultural backgrounds. This in turn can lead to a greater
acceptance of the tribunal and even the award by those parties. A party, which considers that
an arbitrator has not given appropriate consideration to its presentation because it is not in
conformity with the ordinary way of presentation in the arbitrator's country of origin, will
consider itself treated unfairly. By contrast an awareness of the different legal traditions, as
well as the different non-legal environments, will help to avoid such intercultural
misunderstandings.

10-42 One further issue in international arbitration is the arbitrator's command of the
language of the arbitration proceedings. An arbitrator should be able to follow the
proceedings without the need for translation. The principal reason for this is to enable the
arbitrator to understand the lawyers and the witnesses. Niceties and undertones will be lost in
the translation which despite being accurate may therefore not give an accurate picture.

2.3. Requirements Imposed by the Parties

10-43 Parties can make specific qualifications or experience a condition for the appointment
of potential arbitrators. This may be done through the wording in the arbitration clause, e.g.,
the arbitrator must be a “commercial man”.(33) Such required qualifications can also arise
out of the chosen arbitration rules or the applicable arbitration law.(34) For example, some of
the institutional rules require "235"that the arbitrator be a member of the institution or appear
on a list maintained by the institution or has been engaged in a specific area of
trade.(35) Others require that the sole arbitrator or the chairman should be a lawyer.(36) If
such an agreement exists and an arbitrator who does not have the necessary qualifications is
appointed, the other party can either challenge the arbitrator or attack the award on the basis
that the tribunal was not properly composed.(37)

10-44 Appointing authorities are bound by the parties' agreement on required qualifications.
However, they are not bound by unilateral instructions of a party which did not fulfil its
appointing obligations. Deviations from these instructions do not lead to an improperly
composed tribunal which would justify a refusal of enforcement.(38) The same applies to the
appointment of arbitrators who have been rejected by one of the parties during prior efforts
to agree on an arbitrator. Appointing authorities may find themselves confronted with the
situation that the most suitable nominees in their view have been rejected by one of the
parties merely because they were suggested by the other party. Though there is no rule that
these people may not be appointed their appointment should be avoided if other suitable
arbitrators exist. A different approach may give rise to a greater unwillingness to co-operate
and lead to challenge procedures in court.(39)

3. Participants in the Appointment Process

10-45 Party autonomy is the principal controller of the appointment process. Article 11(2)
Model Law and most other arbitration laws(40) provide that the "236"parties are generally
free to agree on how the arbitration tribunal will be appointed. This can be done by including
a special provision for the appointment of the tribunal into the arbitration
agreement.(41) Alternatively, the parties can agree on an appointment procedure by
submitting their dispute to arbitration rules which provide for the appointment of arbitrators.
Furthermore, most national arbitration laws contain provisions dealing with those cases
where the parties have not agreed on an appointment mechanism or the expected procedure
did not work. These provisions have led national courts to decide that, despite the lack of
specific agreements on the appointment process, arbitration agreements are valid.(42)

10-46 Parties, appointing authorities and state courts all have a distinct role to play in the
appointment process. The procedure to be followed as well as the role of the different actors
varies depending on whether a single or three member tribunal is to be appointed.

3.1. Role of the Parties

10-47 Appointment by the parties is invariably the best method of appointment. It ensures
that the tribunal will be composed of persons who have the confidence of the parties. This
increases the likelihood of co-operation during the proceedings as well as the voluntary
enforcement of the award rendered. More importantly, as the parties are familiar with their
case they are more likely to select appropriate arbitrators than an appointing authority. For
these reasons arbitration agreements, and the various fall-back provisions in various
arbitration rules and laws, generally give a strong role to the parties in the appointment
process. In addition to the nomination of the party appointed arbitrators in a three member
tribunal, often also the appointment of the chairman or a sole arbitrator is, in the first
instance, submitted to the agreement of the parties.

10-48 Appointment by the parties, however, requires that the parties co-operate, in particular
when they have to agree on an arbitrator. Practice shows that once a dispute has arisen even
parties acting in good faith often have difficulties in "237"agreeing anything. A perfectly
suitable nomination may be rejected merely because it has been suggested by the other party.
To avoid this and to improve the probability of an agreement between the parties some type
of list procedure is often used.(43) One option is that each party draws up a list of arbitrators
it considers suitable and who are acceptable to it; these lists are then exchanged and form the
basis for discussion as to the sole or third arbitrator. A variant is for one party to propose a
list of several potential arbitrators from which the other party will select or it must propose
its own. Another version requires the parties to number persons from a list according to their
preferences. The person with the lowest numbers will be appointed as an arbitrator.(44)

10-49 In this respect it is noteworthy that under most institutional rules the parties do not
actually appoint the arbitrators but just nominate them for appointment by the institution.
Though the institution will usually follow the nomination of the parties(45) it is by no means
required to do so. This is clearly so under Article 7(1) LCI A Rules which provides that

If the parties have agreed that any arbitrator is to be appointed by one or more of
them or by any third person, that agreement shall be treated as an agreement to
nominate an arbitrator for all purposes. Such nominee may only be appointed by the
LCIA Court as arbitrator subject to his prior compliance with Article 5.3 [declaration
of independence]. The LCIA Court may refuse to appoint any such nominee if it
determines that he is not suitable or independent or impartial. [Emphasis added]

10-50 This limitation is particularly relevant in the context of a party appointed arbitrator
where the institution is to ensure the independence and impartiality of the tribunal. It helps to
protect the reputation of the institution and of the whole arbitration process which could be
tarnished by the appointment of unsuitable or partial arbitrators. Where it is obvious that an
arbitrator lacks the necessary qualification or impartiality or independence and will be open
to challenge it is a "238"waste of resources to appoint this arbitrator and refer the other party
to the challenge procedure.

3.2. Role of Appointing Authorities

10-51 Appointing authorities have an important role to play where an appointment by the
parties is impossible because they cannot reach the necessary agreement or one party takes
an obstructive role in the appointment procedure.(46) In these situations it is crucial that a
default mechanism exists and ensures that despite a party's failure to co-operate the
arbitration can nevertheless be constituted. Otherwise the whole arbitration process may be
frustrated for lack of a tribunal. Therefore the arbitration agreement or the applicable
arbitration rules and laws generally provide that the necessary appointments are made by an
appointing authority if the parties fail to do so within a certain time.

10-52 However, the role of appointing authorities is not limited to that of a fall-back
mechanism. In the light of the problems involved in reaching an agreement by the parties the
appointment of the chairman or a sole arbitrator is often from the outset submitted to an
appointing authority.(47) This may not only be faster but the appointing authority may also
have a better overview about the potential arbitrators than the parties. It may possess a
formal list or a database of potential arbitrators who it often knows from earlier arbitrations.
Furthermore, no suitable arbitrator will be excluded just because he has been suggested by
one party and rejected by the other and delays involved in party appointment may be
prevented.

10-53 The parties are free to choose whichever appointing authority they consider
appropriate. They can nominate an arbitration institution or trade association as appointing
authority but can also entrust any other professional organisation, natural person or even
state courts with the task. It is essential that the parties check in advance that the institution
or body is willing and able to act as an appointing authority. Otherwise the refusal of the
chosen authority to act can considerably delay the arbitration proceedings. In these cases the
parties will either have to agree on a different appointing authority or apply to the courts for
an appointment under the applicable arbitration law.

10-54 The selection of the appointing authority has a considerable impact on the type of
arbitrators appointed and should therefore be made with care. Every organisation has its own
preferences (e.g. common or civil lawyers, persons with expertise in the subject matter or in
arbitration procedure, etc.), its own guidelines as to the factors to be taken into account and
often also its own procedures for appointment.(48) Some institutions require that the
arbitrators are chosen from a list or panel of arbitrators or are members of an association
which may considerably limit the possible choices.(49) By contrast, the ICC takes a very
liberal approach and just determines the nationality of the arbitrator while referring the actual
selection to the relevant national committee.(50) Furthermore, it is important that the
institution or person chosen has sufficient experience and an overview of the potential
candidates. That is definitively the case with the leading arbitration institutions which have a
considerable track record.(51)

10-55 An agreement by the parties on an appointing authority is of vital importance in ad

hoc arbitration. Institutional rules generally entrust the administering institution with the task
of the appointing authority failing an agreement by the parties to the contrary.(52) In ad
hoc arbitration no administering institution is readily available which could act as appointing
authority. Therefore the parties should always agree on an appointing authority, if they do
not want to rely on the provisions in the national arbitration law.(53) Many arbitration
institutions offer their services as an appointing authority for arbitrations not conducted
under their rules,(54)e.g. the ICC and the LCIA.

10-56 An appointing authority must ensure that the arbitrator appointed has the
qualifications required by the parties. The relevant rules often set out other factors which the
appointing authority should take into account. For example Article 9(1) ICC Rules provides

In confirming or appointing arbitrators, the Court shall consider the prospective

arbitrator's nationality, residence and other relationships with the countries of which
the parties or the other arbitrators are nationals and the prospective arbitrator's
availability and ability to conduct the arbitration in accordance with these Rules. The
same shall apply where the Secretary General confirms arbitrators pursuant to Article
9(2).

10-57 Most of these factors relate to the independence and impartiality of the arbitrators and
may trigger challenge proceedings. However, at the appointment or confirmation stage the
institutions also take into consideration facts which would not justify a challenge but
nevertheless may appear to favour one party, e.g.nationality of an arbitrator.(55)

3.3. Role of National Courts

10-58 The primary role of national courts in the appointment process in arbitration is that of
a default mechanism. To ensure that the arbitration tribunal can be constituted, even where
the parties have not agreed on any form of appointment procedure or the procedure provided
for does not operate, most arbitration laws contain provisions which allow for appointment
of the arbitrators by the courts.

10-59 The Model Law provides in Article 11(4)

Where, under an appointment procedure agreed upon by the parties,

(a) a party fails to act as required under such
procedure, or
(b) the parties, or two arbitrators, are unable to
reach an agreement expected of them under
such procedure, or
(c) a third party, including an institution, fails to
perform any function entrusted to it under such
procedure,
"241"
any party may request the court or other authority specified in article 6 to take the
necessary measure, unless the agreement on the appointment procedure provides
other means for securing the appointment.

10-60 In addition, Article 11(3) Model Law, which deals with cases where the parties have
not agreed on an appointment procedure, also provides for court appointment as a last
resort.(56)

10-61 It is rare in international contracts to entrust the appointment of the arbitrators to a

national court, as national courts often lack the necessary experience required for
appointments in an international setting. For these cases, which are more common in
domestic arbitration, the Swiss arbitration law provides in Article 179(3) that any court so
chosen is under an obligation to act as an appointing authority. Most other arbitration laws
do not contain such a provision and the courts have the discretion to accept the nomination as
an appointing authority. In exercising its discretion a court should take into account the fall
back provisions contained in the applicable arbitration law according to which a failure of
the appointment procedure foreseen by the parties often leads to an appointment by the
courts. In such cases it makes little sense that a judge or court chosen by the parties as
appointing authority refuses to act and thereby forces a different court to make the
appointment on the basis of the applicable arbitration law.(57)

10-62 Which national court has jurisdiction to make the appointment is determined by the
relevant arbitration law. Most national laws contain special provisions as to jurisdiction for
supportive matters. They usually make the existence of jurisdiction dependant on the place of
arbitration either being in the country or not being yet determined or at least require that the
proceedings must be based on the law of the country.(58) In Europe, Regulation 44/2001 and
the Lugano Convention regulating jurisdiction within Europe are not applicable to
international arbitration. All proceedings in relation to the appointment of an "242"arbitrator
are ancillary proceedings to an arbitration and are therefore covered by the arbitration
exception contained in Article 1(2)(d).(59)

10-63 To avoid a denial of justice the Paris Court of Appeal in National Iran Oil Company v
State of Israel has also made the necessary appointments in a case where the statutory
requirements were not met but which had certain connections with France.(60) In the case
arising out of a contract for the construction and maintenance of a pipeline the ad
hoc arbitration agreement provided that each party was to appoint an arbitrator. These were
to agree on a chairman which in the absence of an agreement was to be appointed by the
Chairman of the ICC. Israel, however, did not appoint its own arbitrator and in 1996 the
Paris Court of Appeal first rejected an application to appoint the arbitrator on Israel's behalf,
since the jurisdictional requirements under Article 1493(2) NCPC were not met. When due
to a “Manbar”, a judgment declaring Iran to be an enemy of Israel, it became obvious that
Iran could also not apply to the courts in Israel for appointment, the Paris Court of Appeal
made the requested appointment. The required link to France was seen in the choice of the
chairman of the ICC as appointing authority for the chairman.(61)

10-64 In making its appointment the national court is bound by any requirements as to the
arbitrator's qualities agreed on by the parties. This is provided for in the Model Law where
Article 11(5) states

… The court or other authority, in appointing an arbitrator, shall have due regard to
any qualifications required of the arbitrator by the agreement of the parties and to
such considerations as are likely to secure the appointment of an independent and
impartial arbitrator and, in the case of a sole or third arbitrator, shall take into account
as well the advisability of appointing an arbitrator of a nationality other than those of
the parties.
10-65 Comparable provisions can be found in a number of other national arbitration
laws.(62) However, given the fact that arbitration is a creature of party autonomy courts
should always give due regard to the parties intentions even where the applicable law does
not expressly provide for it.

4. Procedures for Appointing Arbitrators

10-66 There is a fundamental difference in the arrangements for the appointment of

arbitrators depending on whether there is to be one or three arbitrators. Whilst the basic
principle of party autonomy prevails, the absence of agreement cannot be allowed to prevent
or frustrate the arbitration. In any event it is necessary to ensure that there is fairness in the
appointment process.

4.1. Appointment of a Sole Arbitrator

10-67 The appointment of a sole arbitrator is generally submitted to the agreement of the
parties. Unless the parties have provided for a different appointment mechanism, this is the
approach under most arbitration rules or laws.(63) A typical example is ICC Rules Article
8(3)

Where the parties have agreed that the dispute shall be settled by a sole arbitrator,
they may, by agreement, nominate the sole arbitrator for confirmation. If the parties
fail to nominate a sole arbitrator within 30 days from the date when the Claimant's
Request for Arbitration has been received by the other party, or within such
additional time as may be allowed by the Secretariat, the sole arbitrator shall be
appointed by the Court.(64)

10-68 This provision not only provides that the parties shall agree on a joint nominee but
also provides that if no agreement can be reached the sole arbitrator is to be appointed by the
ICC. It furthermore sets a time limit within which the parties shall agree on the sole arbitrator
before the ICC will make an appointment. Such time limit is important to prevent one party
delaying the constitution of the tribunal by negotiating in bad faith without any intention of
reaching an agreement. The time limit can be extended by the ICC or by the "244"parties, if
they want to continue their search for a joint nominee, and its expiry does not deprive the
parties of the possibility to agree on an arbitrator but gives each party the right to rely on the
default provisions if necessary.

10-69 Comparable procedures are provided for in other institutional rules. Differences exist
in relation to the time limit after which the appointing authority can appoint the sole
arbitrator. Under the WIPO Rules, for example, the institution can provide for a longer
period of 45 days(65) while under GAFTA Rules only nine days are available.

10-70 A slightly different appointment procedure is provided for in the LCIA and SCC
Rules. Under both sets of rules the appointment of the sole arbitrator is, from the outset, a
matter for the institution. Article 16(5) SCC Rules provides that

Where the dispute is to be decided by a sole arbitrator, the SCC Institute shall make
the appointment, unless otherwise agreed by the parties.(66)
10-71 Similarly, Article 5(4) LCIA Rules provides that

A sole arbitrator shall be appointed unless the parties have agreed in writing
otherwise, or unless the LCIA Court determines that in view of all the circumstances
of the case a three-member tribunal is appropriate.

10-72 Since the parties do not have to try to reach an agreement, but can leave it
immediately to the institution, this procedure may be faster than the procedure in the ICC
Rules. Furthermore, it avoids the problem of the most suitable arbitrators in the view of the
institution having been rejected by one party during the negotiations on the mere fact that the
names were suggested by the other party. This procedure may, however, deprive the parties
of their influence on the appointment process even in cases where an agreement between the
parties on a sole arbitrator may have been possible.

10-73 A more elaborate provision can be found in the UNCITRAL Rules which is in part
due to the potential lack of an appointing authority. Therefore, the rules, in addition to
providing a procedure to appoint the arbitrator, must also deal with the procedure of
determining an appointing authority where it is required. Article 6 provides, in pertinent part

1. If a sole arbitrator is to be appointed, either party

may propose to the other: "245"
(a) The names of one or more
persons, one of whom
would serve as the sole
arbitrator; and
(b) If no appointing authority
has been agreed upon by
the parties, the name or
names of one or more
institutions or persons,
one of whom would serve
as appointing authority.
2. If within 30 days after receipt by a party of a
proposal made in accordance with paragraph 1
the parties have not reached agreement on the
choice of a sole arbitrator, the sole arbitrator
shall be appointed by the appointing authority
agreed upon by the parties. If no appointing
authority has been agreed upon by the parties, or
if the appointing authority agreed upon refuses
to act or fails to appoint the arbitrator within 60
days of the receipt of a party's request therefore,
either party may request the Secretary-General
of the Permanent Court of Arbitration at the
Hague to designate an appointing authority.

10-74 According to established practice, an application to the Secretary-General should set

out why the appointment of an appointing authority is needed and should be accompanied by
the documents required under Article 8(1).(67) Eventually, further information as to potential
arbitrators or appointing authorities will be required by the Secretary-General who also
consults with other persons on an anonymous basis before nominating an appointing
authority.(68)

10-75 Furthermore, UNCITRAL Rules also differ from other rules as they require the
appointing authority to resort to a list procedure which strengthens the influence of the
parties on the appointment process. Article 6(3) UNCITRAL Rules provides

The appointing authority shall, at the request of one of the parties, appoint the sole
arbitrator as promptly as possible. In making the appointment the appointing
authority shall use the following list-procedure, unless both parties agree that the list-
procedure should not be used or unless the appointing authority determines in its
discretion that the use of the list-procedure is not appropriate for the case:
(a) At the request of one of the parties the
appointing authority shall communicate to both
parties an identical list containing at least three
names;
(b) Within 15 days after the receipt of this list, each
party may return the list to the appointing
authority after having deleted the name or
names to which "246"he objects and numbered
the remaining names on the list in the order of
his preference;
(c) After the expiration of the above period of time
the appointing authority shall appoint the sole
arbitrator from among the names approved on
the lists returned to it and in accordance with
the order of preference indicated by the parties;
(d) If for any reason the appointment cannot be
made according to this procedure, the
appointing authority may exercise its discretion
in appointing the sole arbitrator.(69)

10-76 National arbitration laws generally contain fall back provisions which are similar to
the solution under the ICC Rules: sole arbitrators are to be appointed by agreement of the
parties or, should no agreement by reached, by the courts. For example, Article 11(3)(b)
Model Law provides

in an arbitration with a sole arbitrator, if the parties are unable to agree on the
arbitrator, he shall be appointed, upon request of a party, by the court or other
authority specified in article 6.(70)

10-77 Since the provision does not contain a time limit for an agreement on a sole arbitrator
the question arises whether a party can immediately apply to the court if its suggestion of an
arbitrator is turned down or must it engage in further negotiations. Pursuant to laws which
contain a time limit, no further efforts to reach an agreement can be required once this time
has expired.
10-78 A slightly different procedure is contained in the English Arbitration Act where,
under section 16(3), the parties have to agree on an arbitrator within 28 days.(71) If no
agreement can be reached and the parties have not provided for that contingency they can
apply to the court to make the appointment. The court's powers, set out in Article 18(3), are

"247"
(a) to give directions as to the making of any
necessary appointments;
(b) to direct that the tribunal shall be constituted by
such appointments (or any one or more of them)
as have been made;
(c) to revoke any appointments already made;
(d) to make any necessary appointments itself.

10-79 In most cases the court will appoint the sole arbitrator itself as provided for under
section 18(3)(d). It is, however, also conceivable that a court uses its power under section
18(3)(a) to give the parties directions to reach a settlement by the use of a list procedure and
any other means.(72)

4.2. Appointment of a Three Member Tribunal

10-80 Three member tribunals are usually composed of two party appointed arbitrators and
a chairman. While this basic structure can be found in nearly all arbitration rules and laws,
differences exist as to the mechanics of the appointment process, in particular the procedure
for the appointment of the chairman.

a. Party appointed arbitrators

10-81 With parties from different legal and cultural backgrounds, the arbitration agreements
often provide expressly that each party has a right to appoint an arbitrator. A good example is
the arbitration clause contained in the contract for the construction of the Channel Tunnel. It
stated that the “employer and the contractor shall each nominate one arbitrator.”

10-82 Where the arbitration agreement does not contain such a provision the right for each
party to appoint an arbitrator is generally granted by the applicable arbitration laws or rules.
For example, Article 8(4) ICC Rules provides in the relevant part

Where the dispute is to be referred to three arbitrators, each party shall nominate in
the Request and the Answer respectively, one arbitrator for confirmation. If a party
fails to nominate an arbitrator, the appointment shall be made by the Court. […]

10-83 The provision is very specific as to when the party appointed arbitrator is to be named
and provides what is to happen if this is not the case. How the appointment actually takes
place is regulated in Article 7. Before the arbitrator nominated by a party is actually
appointed by the ICC Court, he must sign a statement of independence which will then be
transmitted to the other party for "248"comments. On the basis of this information the ICC
Court will make a decision for which no reasons are given.(73)

10-84 Comparable provisions providing for the nomination and a certain scrutiny of party
appointed arbitrators can also be found in most other institutional rules. Though the
institutions are not bound by any objections raised against the party nominated arbitrators,
the role of this process should not be underestimated. Practice shows that institutions are
more willing to refuse the confirmation of party nominated arbitrators for an alleged lack of
independence than sustain challenges for the same reasons at a later stage.(74)

10-85 The appointment process for party appointed arbitrators in institutional rules differs
from the procedure provided for under the UNCITRAL Rules and the arbitration laws. There
the party appointed arbitrators are appointed directly by the parties without any control by an
institution or the other side.(75) This does not mean that the party appointed arbitrators do
not have to be independent or impartial. It only has the consequence that objections against
an arbitrator must be raised in a separate challenge procedure and not during the appointment
procedure.

10-86 To avoid a party misusing its appointing right and delaying the proceedings, this right
must generally be exercised within a certain time limit. After this time the right to appoint is
often transferred to an appointing authority or the courts. An appointment made after the
expiry of the time limit by a defaulting party may only be valid if consented to by the other
party.(76)

10-87 In making appointments for a defaulting party the appointing authority has to ensure
that the arbitrator has the qualifications agreed on by the parties. It should also take into
account any qualification requested by the defaulting party. However, a German court held
that enforcement of an award cannot be resisted if "249"the arbitrator does not possess the
qualification asked for unilaterally by the defaulting party.(77)

10-88 A special provision dealing with the default of a party in the appointment procedure
for a three member tribunal can be found in section 17 English Arbitration Act. This gives
the opportunity for the party which has nominated an arbitrator to require its nominee to act
as a sole arbitrator if the other party fails to appoint within the agreed time period. If this
occurs the defaulting party can only challenge the appointment by applying to the court to set
aside the award.

10-89 Awards of tribunals consisting of one party appointed arbitrator have been challenged
on several occasions.(78) It was alleged that the appointment of a sole arbitrator by one party
not only conflicts with the principle of neutrality of the tribunal, but also violates the parties'
agreement on the composition of the arbitration tribunal. In cases where the parties expressly
or by choosing the place of arbitration determine the applicable arbitration law, the
provisions of that law become part of the parties agreement on the constitution of the
arbitration tribunal.(79) Therefore, reliance on default provisions contained in the applicable
arbitration rules or law cannot, in most countries, be invoked as a ground to resist
enforcement on the basis of Article V(1)(d) New York Convention.(80)

b. Chairman or third arbitrator

10-90 The appointment of the third arbitrator, who acts as the chairman of the tribunal, is
generally effected by an agreement of the parties, by selection of the party appointed
arbitrators, or by an appointing authority. Each of these procedures can be found in practice
and has its advantages.
10-91 Appointment of the chairman by the parties has the advantage of ensuring the greatest
possible influence of the parties on the composition of the tribunal. For this reason it is often
provided for in the arbitration agreement or in the rules of some institutions.(81) However,
where an agreement of the parties is not possible, appointment will be in accordance with the
applicable rules or law.

10-92 Many institutional rules entrust the appointment of the chairman directly to the
institution, if the parties have not agreed otherwise. For example Article 8(4) ICC Rules
provides

The third arbitrator, who will act as chairman of the Arbitral Tribunal, shall be
appointed by the Court, unless the parties have agreed upon another procedure for
such appointment, in which case the nomination will be subject to confirmation
pursuant to Article 9. Should such procedure not result in a nomination within the
time limit fixed by the parties or the Court, the third arbitrator shall be appointed by
the Court.(82)

10-93 The ICC Court will not consult with the party appointed arbitrators or with the parties
who therefore do not have any influence on the selection of the chairman. To avoid such a
result the parties often agree either in advance or after the dispute has arisen that the party
appointed arbitrators should try to agree on a chairman.(83)

10-94 Other institutional rules(84) as well as the UNCITRAL Rules(85) submit the
appointment of the chairman to the agreement of the party appointed arbitrators. This has the
advantage of increasing the probability of a good working relationship within the tribunal
and gives the parties at least an indirect influence on the appointment of the chairman. It is
generally accepted that the two party "251"appointed arbitrators should consult with the
parties who appointed them. Though they are not bound by any suggestions of the parties
they should avoid appointing a chairman unacceptable to one of the parties.

10-95 Since the party appointed arbitrators may not be able to reach an agreement, a fall
back procedure must be available. In institutional arbitration the appointment is then
generally made by the institution. The UNCITRAL Rules provide in Article 7(3)

If within 30 days after the appointment of the second arbitrator the two arbitrators
have not agreed on the choice of the presiding arbitrator, the presiding arbitrator shall
be appointed by an appointing authority in the same way as a sole arbitrator would be
appointed under article 6.

10-96 Most arbitration laws also submit the appointment of the third arbitrator to the two
party appointed arbitrators.(86) In case of a failure of the procedure, however, appointment is
in general made by the national courts. Model Law Article 11(3)(a) provides that

in an arbitration with three arbitrators, each party shall appoint one arbitrator, and the
two party-appointed arbitrators should appoint the third arbitrator. If one party fails to
appoint an arbitrator within thirty days of receipt of a request to do so from the other
party, or if the two arbitrators fail to agree on the third arbitrator within thirty days of
their appointment, then either party can request the competent national court to make
the appointment.
5. Limits on the Parties Freedom to Determine the Appointment Process

10-97 Submitting the appointment process to party autonomy carries the danger that a
stronger party can impose appointment procedures which are disadvantageous to the weaker
party. These are not limited to the obvious cases where the tribunal is to be appointed by one
party alone. This may be the case where, e.g.each party appoints one arbitrator and if they
cannot agree on a chairman, one of the parties has the final choice. The composition of the
tribunal may be influenced also by a requirement in the applicable rules that
only "252"members of a particular organisation can be appointed as arbitrators even in cases
with non-members.(87)

10-98 Given the importance of the equality of the parties some national laws provide that
appointment may be effected by the courts where the procedure agreed by the parties gives
one party an unfair influence on the appointment of arbitrators. The German arbitration law
provides in section 1034(2) ZPO

If the arbitration agreement grants preponderant rights to one party with regard to the
composition of the arbitration tribunal which place the other party at a disadvantage,
that other party may request the court to appoint the arbitrator or arbitrators in
deviation from the nomination made, or from the agreed nomination procedure. The
request must be submitted at the latest within two weeks of the party becoming aware
of the constitution of the arbitral tribunal. Section 1032 subs. 3 applies mutatis
mutandis.

10-99 A similar provision can be found in Article 1028 Netherlands CCP. Since under both
laws the appointment by the courts can only be requested within a short time period, a
preponderant influence on the composition of the tribunal will not affect the validity of an
award rendered. This may be different where the other side was not aware of the constitution
of the tribunal and did not participate in the arbitration. In such cases the annulment of an
award may be sought on the basis of an incorrectly constituted tribunal.(88)

10-100 These provisions gain a certain practical importance in multiparty

proceedings.(89) In a three member tribunal one party may appoint an arbitrator, and the
several parties on the other side have to agree on one arbitrator. This may be considered as a
preponderant right with regard to the composition of the tribunal. In that case the
appointment procedure foreseen by the parties would be replaced by appointment through
the state courts. This would be in line with the special provisions dealing with appointment
in multiparty situations provided in some arbitration rules.(90)"253"